SEC to Ease Financial Reporting for More Small CompaniesBy
The U.S. Securities & Exchange Commission (SEC) eased financial reporting requirements for smaller reporting companies (SRCs)—a category established by the SEC in 2008—by increasing the thresholds below which companies can provide scaled-down disclosures under Regulations S-K and S-X.
The new, higher threshold is set at a public float—the shares outstanding that can be publicly traded—of less than $250 million (previously, it was $75 million). A company with no public float or one that’s less than $700 million will qualify as an SRC if it had annual revenues of less than $100 million (previously, $50 million) during its most recently completed fiscal year.
The House Financial Services Committee Chairman Jeb Hensarling (R.-Texas) said he was pleased with the SEC’s raising of SRC thresholds. But he added, “It is essential for the Commission to explore other pro-growth reforms to open our public markets, including addressing the accelerated filer threshold that imposes disproportionate compliance costs on companies that can’t operate with such a burden.”
Both the House and Senate are considering a slew of bills that would further reduce company financial reporting requirements for companies of various sizes and could result, for example, in fewer companies having to report 10-Qs and more having the ability to use alternative formats for quarterly reporting.