The SEC issued a Proposed Rule
, Amendments to the Accelerated Filer and Large Accelerated Filer Definitions
, which would amend these terms in Exchange Act Rule 12b-2, Definitions
, to exclude an issuer that is eligible to be a smaller reporting company (SRC) and had annual revenues less than $100 million in its most recent fiscal year.
The proposal would also revise the transition provisions in Rule 12b-2 for exiting accelerated filer and large accelerated filer status by increasing the transition thresholds and adding a revenue test.
The proposed amendments are intended to reduce compliance costs for certain low-revenue issuers while maintaining investor protections.
Proposed revisions to exclude low-revenue SRCs
A company qualifies as an SRC during its initial determination when it meets at least one of two criteria:
- Its public float is less than $250 million, regardless of revenue levels.
- Its annual revenues are less than $100 million and it either has no public float or its public float is less than $700 million.
The proposed amendments would add a new condition to the definitions of “accelerated filer” and “large accelerated filer” to exclude from such definitions a subset of SRCs that are eligible to be an SRC based on their revenue.
Only those SRCs that qualify as non-accelerated filers under the proposed amendments would not be subject to the accelerated or large accelerated filing deadlines for periodic reports and would not be required to comply with Sarbanes-Oxley Act Section 404(b), the auditor attestation requirement for an issuer’s internal control over financial reporting (ICFR). The proposal would not affect management’s responsibility to establish and maintain the effectiveness of its ICFR, or to perform its annual assessment of ICFR under Sarbanes-Oxley Act Section 404(a).
Proposed revisions to transition thresholds
The proposed amendments would also revise the transition provisions for issuers exiting accelerated filer and large accelerated filer status as follows:
Comment due date
- Increasing the public float transition threshold from $50 million to $60 million for an accelerated or large accelerated filer to become a non-accelerated filer.
- Increasing the public float transition threshold from $500 million to $560 million for a large accelerated filer to become an accelerated filer.
- Transitioning to non-accelerated filer status if the issuer becomes eligible to be an SRC under the SRC revenue test.
The comment period ends 60 days after the Proposed Rule is published in the Federal Register
SEC Regulatory Matters
+1 202 521 1530
SEC Regulatory Matters
+1 202 861 4110
© 2019 Grant Thornton LLP, U.S. member firm of Grant Thornton International Ltd. All rights reserved.
This Grant Thornton LLP bulletin provides information and comments on SEC reporting issues and developments. It is not a comprehensive analysis of the subject matter covered and is not intended to provide accounting or other advice or guidance with respect to the matters addressed in the bulletin. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this bulletin.
For additional information on topics covered in this bulletin, contact your Grant Thornton LLP professional.