KMK Law Corporate & Securities Blog

On May 9, 2019, the SEC voted to propose amendments to the definitions of accelerated filer and larger accelerated filer. The cost-reducing effects of the proposed amendments are discussed below. 

The amendments would exclude from the accelerated and large accelerated filer definitions certain issuers who are eligible to be smaller reporting companies and had no revenues or annual revenues of less than $100 million in the most recent fiscal year for which audited financial statements are available.  Additionally, for accelerated and large accelerated filers becoming non-accelerated filers, the applicable transition threshold would be increased from $50 million to $60 million, and for issuers exiting large accelerated filer status, the transition threshold would be increased from $500 million to $560 million.  The transition thresholds would also be subject to an additional revenue test to be added by the SEC.  [As of the date of this publication, the amendments are still subject to a 60-day public comment period.]

The proposed amendments would assist in reducing costs for companies with lower revenues by limiting the number of companies who actually qualify as accelerated and large accelerated filers.  For example, while the amendments would not modify the investor protections set forth by the Sarbanes-Oxley Act of 2002, a smaller reporting company with less than $100 million in revenues would not be required to obtain an attestation from an independent outside auditor regarding the company’s internal control over financial reporting.