In addition to yesterday’s proposal on registered offerings, the Commission issued a 318-page proposal on “Enhancement of Emerging Growth Company Accommodations and Simplification of Filer Status for Reporting Companies.” If adopted, these changes would simplify the public company reporting framework and recalibrate disclosure obligations to align with a company’s size and maturity. Specifically, the SEC’s fact sheet highlights that, if adopted, the proposal would:

• Raise the public float threshold for becoming a large accelerated filer from $700 million to $2 billion and calculate it based on the average stock price over the last 10 trading days of the second fiscal quarter.

• Require that the public float threshold be met two years consecutively so that a one-year swing alone does not change filer status.

• Require at least 60 consecutive calendar months of reporting before a company can become a large accelerated filer.

• Eliminate the categories of accelerated filer and smaller reporting company filer so that all companies that are not large accelerated filers simply become non-accelerated filers. Non-accelerated filers would not be required to obtain an auditor’s attestation on a company’s internal control over financial reporting.

• Extend to all non-accelerated filers the same disclosure scaling and other accommodations currently available to smaller reporting companies and emerging growth companies. This includes no say-on-pay or say-when-on-pay shareholder advisory votes, scaled executive compensation disclosure (including no pay versus performance disclosure), and fewer years of financial statements (with reduced presentation requirements).

• Establish a new sub-category of small non-accelerated filers for companies with total assets of $35 million or less for the two most recent years. Small non-accelerated filers would have an additional 30 days to file Form 10-K annual reports and an additional five days to file Form 10-Q quarterly reports.

• Update the Commission’s issuer “small entity” definitions for purposes of the Regulatory Flexibility Act.

The fact sheet notes that if the proposed amendments were in place today, 19.2 percent of current public companies would be large accelerated filers (compared to 35.4 percent currently) and 80.8 percent would be non-accelerated filers. A total of 17.9 percent of public companies (or 22.2 percent of non-accelerated filers) would be small non-accelerated filers. Taken together with the registered offerings proposal, these amendments could be especially helpful!

Comments are due 60 days after publication of the proposal in the Federal Register (which usually takes about 30 days). We’ll be posting memos that dive into the impact of the proposal in our “Filer Status” Practice Area for members.

– Liz Dunshee