Yesterday, the SEC voted 3-1 – with Commissioner Jackson dissenting – to propose changes to Exchange Act Rule 12b-2’s definitions of “accelerated filer” & “large accelerated filer.” Here’s the 150-page proposing release. This excerpt from the “fact sheet” in the SEC’s press release announcing the proposal summarizes the proposed changes (we’ll be posting memos in our “Accelerated Filers” Practice Area):
The proposed amendments would:
– Exclude from the accelerated and large accelerated filer definitions an issuer that is eligible to be an SRC 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
– Increase the transition thresholds for accelerated and large accelerated filers becoming a non-accelerated filer from $50 million to $60 million and for exiting large accelerated filer status from $500 million to $560 million
– Add a revenue test to the transition thresholds for exiting both accelerated and large accelerated filer status
As Liz noted in her blog last week about the SEC’s decision to put these proposals on the agenda for yesterday’s meeting, the SEC didn’t change these definitions last year when it adopted rules increasing the size limit for companies to qualify as “smaller reporting companies” from $75 million to $250 million in public float – and that was a point of contention among some Commissioners.
The rule proposals would allow more companies to file periodic reports on a non-accelerated basis. But seriously, who cares about that? What’s likely to generate some fireworks during the comment period is the fact that the proposals would increase the number of companies that won’t have to obtain an auditor’s attestation on management’s report on ICFR.
The two sides of the argument didn’t waste any time lining up – here’s SEC Chair Jay Clayton’s statement in favor of the rule proposals, and here’s Commissioner Jackson’s statement on his dissent from the SEC’s decision to issue them.
Written by John Jenkins
Originally published by The Corporate Counsel