The Securities and Exchange Commission voted May 9, 2019 to propose amendments to the accelerated filer and large accelerated filer definitions. The proposed amendments would reduce costs for certain lower-revenue smaller companies by more appropriately tailoring the types of companies that are categorized as accelerated and large accelerated filers while also maintaining effective investor protections.
In 2018, the SEC finalized rules to increase the Smaller Reporting Company threshold to includes registrants with a public float under $250 million. An unintended consequence of this change was that some SRC also qualified as an Accelerated filer. This dual status required these companies to meet several Accelerated filer mandates, including: filing deadlines for reports and filing an auditor’s attestation of their internal controls.
As a result of the proposed amendments, smaller reporting companies with less than $100 million in revenues would not be required to obtain an auditor’s attestation of their internal control over financial reporting (ICFR). The proposed amendments would not change key protections from the Sarbanes-Oxley Act of 2002 (“SOX”), such as independent audit committee requirements, CEO and CFO certifications of financial reports, or the requirement that companies continue to establish, maintain, and assess the effectiveness of their ICFR.
“The proposed rules build on the JOBS Act of 2012 and are aimed at a subset of smaller companies where the additional requirement of an ICFR auditor attestation may not be an efficient way of benefiting and protecting investors,” said SEC Chairman Jay Clayton. “Investors in these lower-revenue companies will benefit from more tailored control requirements. Many of these smaller companies – including biotech and health care companies – will be able to redirect the savings into growing their companies by investing in research and human capital.”
The public comment period will remain open for 60 days following publication of the proposing release in the Federal Register.
To view the full release click here.