By Mark S. Nelson, J.D.
The SEC’s Division of Corporation Finance issued a number of revised Compliance and Disclosure Interpretations regarding filings related to the definition of “smaller reporting company.” Although the changes are mostly non-substantive, they do purport to bring existing C&DIs into conformity with the Commission’s June 2018 release in which it re-defined “smaller reporting company.” Additionally, the Division re-organized how its collection of C&DIs are displayed on the SEC’s website.
Most of the revisions to the C&DIs alter the numerical thresholds and/or the date references mentioned in the existing C&DIs. The Commission recently adopted a new definition of “smaller reporting company” that would include a company that had public float of less than $250 million, or had annual revenues of less than $100 million and either had no public float or had public float of less than $700 million. The revised definition seeks to promote capital formation and reduce compliance costs to smaller companies. The definition of “smaller reporting company” was last revised by the Commission in 2007 and became effective in 2008. The 2018 changes to the definition became effective September 10, 2018.
The revised C&DIs also withdraw six C&DIs. The withdrawn C&DIs cover a range of topics, including when a smaller reporting company can remain a non-accelerated filer, the eligibility of smaller reporting companies for the prior delayed phase-in regarding Exchange Act Rule 14a-21, and the provision by a smaller reporting company of the audit committee financial expert disclosure.
For comparison purposes, the old text of the affected C&DIs includes the following: (1) Exchange Act Rules Question 130.04 and Questions 169.01 to 169.03; (2) Exchange Act Forms Question 104.13; (3) Regulation S-K Questions 102.01 and 102.02, Question 110.01, Question 133.09, and Question 202.01.