Cydney S. Posner is special counsel at Cooley LLP. This post is based on a Cooley publication by Ms. Posner.
The pressure has been coming from all directions—the Congress, the Treasury—indeed, there’s been nary an advisory committee that hasn’t weighed in on this topic: time for the SEC to change the definition of “smaller reporting company.” After all, the proposal has just celebrated its second birthday—has it aged like a fine wine or is it moldy and stinky like an old piece of cheese? The verdict: moldy cheese that made no one happy, but they all ate it anyway.
On Thursday June 28, 2018, the SEC voted unanimously to amend the definition of “smaller reporting company” to allow more companies to take advantage of the scaled disclosures permitted for companies that meet the definition. (Here is the press release.) The amendments raise the SRC cap from “less than $75 million” in public float to “less than $250 million” and also include as SRCs companies with less than $100 million in annual revenues if they also have either no public float or, in a change from the proposal, a public float that is less than $700 million. The change was intended to promote capital formation and to reduce compliance costs for small public companies, while maintaining “appropriate investor protections.” The amendments become effective 60 days after publication in the Federal Register. (The SEC also voted to mandate Inline XBRL and to propose a number of changes to the whistleblower program. See this PubCo post and this PubCo post.)