SEC eases financial reporting requirements for small companies

July 5, 2018

The SEC has adopted amendments that will make reporting requirements less stringent for nearly 1,000 firms that will soon qualify as “smaller sized.”

Currently, “smaller reporting company” is defined as one with less than $75 million in publicly traded shares. The amendment changes this to companies with less than $250 million in publicly traded shares and expands the definition to include companies with less than $100 million in annual revenue as long as they have no public float or publicly held shares of less than $700 million.


The SEC estimates these changes will make an additional 996 companies eligible for smaller reporting company status in the first year alone. These companies can provide less detailed disclosures, particularly related to executive compensation. The SEC also allows smaller reporting companies to provide audited financial statements for two fiscal years instead of three.

The SEC added that the amendments don’t change the thresholds for its “accelerated filer” definition. These filers, with a public float of $75 million or more, must still independently audit their internal controls over financial reporting.

However, an SEC press release says they’ve recommended changes to the accelerated filers definition to “reduce the number of companies that qualify as accelerated filers in order to further reduce compliance costs for those companies.”

Companies that qualify as smaller reporting companies will still face the requirements of accelerated filers, including the timing of periodic reports and the audit of internal controls.

← View All News