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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 210, 229, 230, 232, 239, 240, and 249

[Release Nos. 33-11419; 34-105515; File No. S7-2026-18]

RIN 3235-AN40

Enhancement of Emerging Growth Company Accommodations and Simplification of Filer

Status for Reporting Companies

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

SUMMARY: The Securities and Exchange Commission (“Commission”) proposes amendments

to streamline filer statuses for Securities Exchange Act of 1934 (“Exchange Act”) reporting

companies into two primary categories: large accelerated filers and non-accelerated filers. The

Commission further proposes to raise the threshold and seasoning requirements for large

accelerated filer status and extend certain existing accommodations and scaled disclosures,

including those for smaller reporting companies and emerging growth companies, to all nonaccelerated filers, while continuing to require compliance with non-scaled disclosure from large

accelerated filers. The Commission also proposes to extend the deadlines to file periodic reports

for the smallest non-accelerated filers, as measured by total assets. Finally, the Commission also

proposes to update the rules that define which issuers are considered small entities for purposes

of the Regulatory Flexibility Act (“RFA”).

DATES: Comments should be received on or before July 20, 2026.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic comments:

Use the Commission’s internet comment form

(https://www.sec.gov/comments/s7-2026-18/enhancement-emerging-growthcompany-accommodations-simplification-filer-status-reporting-companies#noback); or

Send an email to rule-comments@sec.gov. Please include File Number S7-202618 on the subject line.

Paper comments:

Send paper comments to Vanessa A. Countryman, Secretary, Securities and

Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number S7-2026-18. This file number should be

included on the subject line if email is used. To help the Commission process and review your

comments more efficiently, please use only one method of submission. The Commission will

post all comments on the Commission’s website (https://www.sec.gov/rules-regulations/publiccomments/s7-2026-18). Do not include personally identifiable information in submissions; you

should submit only information that you wish to make available publicly. The Commission may

redact in part or withhold entirely from publication submitted material that is obscene or subject

to copyright protection.

Studies, memoranda, or other substantive items may be added by the Commission or staff

to the comment file during this rulemaking. A notification of the inclusion in the comment file of

any such materials will be made available on the Commission’s website. To ensure direct

electronic receipt of such notifications, sign up through the “Stay Connected” option at

www.sec.gov to receive notifications by email.

A summary of the proposal of not more than 100 words is posted on the Commission’s

website (https://www.sec.gov/rules-regulations/2026/05/s7-2026-18).

FOR FURTHER INFORMATION CONTACT: Nabeel Cheema, Special Counsel, and

Stephanie Sullivan, Associate Chief Accountant, Division of Corporation Finance, at (202) 5513430, and Angela Mokodean, Senior Special Counsel, Division of Investment Management, at

(202) 551-6792, U.S. Securities and Exchange Commission, 100 F Street NE, Washington, DC

20549.

SUPPLEMENTARY INFORMATION: The Commission is proposing to amend or add the

following rules and forms:

Commission Reference

Regulation S-X 1

Regulation S-K 2

17 CFR 210.1-01 through 210.15-01.

17 CFR 229.10 through 229.1610.

Rule 2-02

Rule 3-01

Rule 3-02

Rule 3-09

Rule 3-12

Rule 3-19

Rule 8-01

Rule 8-02

Rule 8-03

Rule 8-04

Rule 8-05

Rule 8-06

Rule 8-07

Rule 8-08

Item 10

Item 101

Item 201

Item 302

Item 303

Item 305

CFR Citation

(17 CFR)

§ 210.2-02

§ 210.3-01

§ 210.3-02

§ 210.3-09

§ 210.3-12

§ 210.3-19

§ 210.8-01

§ 210.8-02

§ 210.8-03

§ 210.8-04

§ 210.8-05

§ 210.8-06

§ 210.8-07

§ 210.8-08

§ 229.10

§ 229.101

§ 229.201

§ 229.302

§ 229.303

§ 229.305

Regulation S-T 3

Securities Act of 1933

(“Securities Act”) 4

Securities Exchange Act of 1934

(“Exchange Act”) 5

17 CFR 232.10 through 232.501.

15 U.S.C. 77a et seq.

15 U.S.C. 78a et seq.

Item 308

Item 402

Item 404

Item 407

Item 504

Item 1011

Rule 405 of

Regulation S-T

Securities Act Rule

157

Securities Act Rule

405

Form S-1

Form S-3

Form S-4

Form S-8

Form S-11

Form 1-A

Rule 0-10

Rule 10A-3

Rule 10C-1

Rule 12b-2

Rule 13a-10

Rule 13a-13

Rule 13q-1

Rule 14a-3

Rule 14a-20

Rule 14a-21

Rule 15d-2

Rule 15d-10

Rule 15d-13

Form 10

Form 20-F

Form 8-K

Form 10-Q

Form 10-K

§ 229.308

§ 229.402

§ 229.404

§ 229.407

§ 229.504

§ 229.1011

§ 232.405

§ 230.157

§ 230.405

§ 239.11

§ 239.13

§ 239.25

§ 239.16b

§ 239.18

§ 239.90

§ 240.0-10

§ 240.10A-3

§ 240.10C-1

§ 240.12b-2

§ 240.13a-10

§ 240.13a-13

§ 240.13q-1

§ 240.14a-3

§ 240.14a-20

§ 240.14a-21

§ 240.15d-2

§ 240.15d-10

§ 240.15d-13

§ 249.210

§ 249.220f

§ 249.308

§ 249.308a

§ 249.310

Table of Contents

INTRODUCTION ................................................................................................................... 8

A. Exchange Act Reporting Prior to 2002 .............................................................................. 18

B. Accelerated Filer Status; Sarbanes-Oxley Act ................................................................... 19

C. ICFR Requirements ............................................................................................................ 22

D. Actions Related to Smaller Reporting and Emerging Growth Companies ........................ 26

1. Establishment of SRC Status ........................................................................................... 26

2. The JOBS Act and EGC Status ....................................................................................... 30

3. Recent Amendments and Filer Status Complexity.......................................................... 33

II. DISCUSSION OF PROPOSED RULES .............................................................................. 35

A. Large Accelerated Filer Status Amendments ..................................................................... 39

1. Public Float Threshold .................................................................................................... 40

2. Public Float Determination ............................................................................................. 43

3. Seasoning......................................................................................................................... 47

B. Non-Accelerated Filer Amendments .................................................................................. 54

1. Non-Accelerated Filer Definition .................................................................................... 55

2. ICFR and the Auditor Attestation Requirement .............................................................. 60

3. Extension of SRC and EGC Accommodations and Disclosure Requirements ............... 64

a. Application of SRC Accommodations........................................................................ 64

Scaled Disclosures under Regulation S-K and Other Accommodations .............. 65

ii.

Scaled Financial Statement Requirements under Regulation S-X ........................ 70

b. Application of Certain EGC Accommodations .......................................................... 79

4. Application to Other Filer Types..................................................................................... 86

5. Summary of Requirements for LAFs and NAFs under the Proposal .............................. 89

C. Small Non-Accelerated Filers .......................................................................................... 103

D. Proposed Transition Period .............................................................................................. 114

E. Updating Small Entity Definitions ................................................................................... 117

F. Other Amendments........................................................................................................... 120

III. OTHER MATTERS ............................................................................................................ 124

IV. ECONOMIC ANALYSIS ................................................................................................... 124

A. Baseline and Affected Parties........................................................................................... 127

1. Regulatory Baseline ...................................................................................................... 127

a. Filer Statuses ............................................................................................................. 127

b. Reporting Requirements; Scaled Disclosures and Other Accommodations ............. 128

c. Proposed Rules.......................................................................................................... 130

2. Affected Parties ............................................................................................................. 131

3. Registrant Characteristics .............................................................................................. 133

a. Public Float ............................................................................................................... 133

b. Assets ........................................................................................................................ 135

c. Timing of Filings ...................................................................................................... 137

d. Internal Controls and Restatements .......................................................................... 138

e. Regulatory Burden .................................................................................................... 143

B. Economic Benefits and Costs ........................................................................................... 145

1. General Economic Effects of the Proposed Amendments ............................................ 146

2. Amendments to LAF Definition.................................................................................... 149

3. Exemption from ICFR Auditor Attestation ................................................................... 152

a. Potential Benefits of Eliminating the ICFR Auditor Attestation Requirement for

Affected Registrants........................................................................................................ 153

b. Potential Costs of Eliminating the ICFR Auditor Attestation Requirement for

Affected Registrants........................................................................................................ 157

4. The Expansion of the Subset of Registrants Eligible for Extended Periodic Report Filing

Deadlines............................................................................................................................. 162

5. Extending SRC and Certain EGC Accommodations to All NAFs ............................... 166

a. Scaled Financial Disclosures .................................................................................... 170

b. Scaled Non-Financial and Business Disclosures ...................................................... 173

c. Scaled Executive Compensation and Corporate Governance Disclosures and Related

Accommodations ............................................................................................................ 174

6. Extending Filing Deadlines for the Smallest NAFs ...................................................... 184

7. Updating Small Entity Definition.................................................................................. 187

8. Additional Considerations ............................................................................................. 189

a. Differential Impacts Across Industries ..................................................................... 189

b. Other Commission Proposals.................................................................................... 192

c. Auditing Industry Impact .......................................................................................... 194

9. Aggregate Monetized Benefits and Costs ..................................................................... 195

a. Annual Monetized Benefits and Costs...................................................................... 195

b. Present Values and Annualized Values of Monetized Benefits and Costs ............... 197

C. Anticipated Effects on Efficiency, Competition, and Capital Formation ........................ 200

D. Reasonable Alternatives ................................................................................................... 206

1. LAF Public Float Threshold .......................................................................................... 206

2. Seasoning Requirement ................................................................................................. 207

3. Regulatory Accommodations for NAFs ........................................................................ 208

4. SNFs .............................................................................................................................. 208

E. Request for Comment ....................................................................................................... 210

V. PAPERWORK REDUCTION ACT ................................................................................... 212

A. Summary of the Collections of Information..................................................................... 212

B. Estimated Paperwork Burden Effects of the Proposed Amendments .............................. 214

C. Incremental and Aggregate Burden and Cost Estimates .................................................. 215

D. Request for Comment ....................................................................................................... 221

VI. CONGRESSIONAL REVIEW ACT .................................................................................. 222

VII. INITIAL REGULATORY FLEXIBILITY ACT ANALYSIS ........................................... 223

A. Reasons for, and Objectives of, the Proposed Action ...................................................... 223

B. Legal Basis ....................................................................................................................... 223

C. Small Entities Subject to the Proposed Amendments ...................................................... 224

D. Projected Reporting, Recordkeeping, and Other Compliance Requirements .................. 225

E. Duplicative, Overlapping, or Conflicting Federal Rules .................................................. 225

F. Significant Alternatives .................................................................................................... 225

STATUTORY AUTHORITY .................................................................................................... 228

INTRODUCTION

From their inception, the U.S. securities laws have sought to require full and fair

disclosure by companies seeking to raise capital from investors and access the public markets. 6

In enacting broad investor protections and disclosure requirements under the securities laws,

Congress also recognized the need to take into account the burdens of registration. 7 A core

function of the Exchange Act is to extend disclosure-based investor protections that are provided

for public offerings of securities under the Securities Act to post-distribution trading in the

secondary markets. This is accomplished primarily by sections 12, 8 13(a), 9 and 15(d) 10 of the

Exchange Act, which impose periodic and current reporting requirements on companies: with

exchange-listed securities (section 12(b)); with widely held classes of equity securities (section

12(g)); or that have completed a public offering registered under the Securities Act (section

15(d)). 11 These registrants 12 must file reports prescribed by the Commission, which generally

See, e.g., the preamble of the Securities Act, which sets forth the purpose of the Act: “[t]o provide full and fair

disclosure of the character of securities sold in interstate and foreign commerce and through the mails, and to

prevent frauds in the sale thereof, and for other purposes.” The antifraud provisions of the Securities Act

necessitate application of a materiality standard to disclosure. See Basic Inc. v. Levinson, 485 U.S. 224 (1988).

Information is material “if there is a substantial likelihood its disclosure would have been considered significant

by a reasonable investor.” Id. (citing TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976)).

See, e.g., Securities Act section 28, 15 U.S.C. 77z-3 (providing general exemptive authority to the extent that

such exemption is necessary or appropriate in the public interest); Jumpstart Our Business Startups Act, Pub. L.

No. 112–106, 126 Stat. 306 (2012) (easing the compliance burden for newly registered companies).

15 U.S.C. 78l.

15 U.S.C. 78m(a).

15 U.S.C. 78o(d).

In addition, any company that has voluntarily registered a class of equity securities under section 12(g) of the

Exchange Act and any company that has succeeded to the obligation of another reporting company

(17 CFR 240.12g-3 and 240.15d-5) are subject to the reporting requirements of the Exchange Act.

We use the terms “public companies,” “registrants,” and “issuers” interchangeably in this release. Unless

explained in the text, the use of different terms in different places is not meant to connote a substantive

difference.

include annual reports on Form 10-K and quarterly reports on Form 10-Q. 13 With respect to

investment companies, business development companies (“BDCs”) and face-amount certificate

companies are also subject to these reporting requirements. 14

Over time, the Commission and Congress have adopted various “filer statuses” to

establish tiers of registrants and offer certain accommodations by tier, including as to the timing

and content of this periodic reporting. Current filer statuses include:

•

Large accelerated filer (“LAF”), accelerated filer 15 (“AF”), and non-accelerated filer

(“NAF”).

o Filing deadlines for periodic reports depend on whether a registrant

is classified as an LAF, an AF, or neither of these, which we refer

to as an NAF. 16

The Exchange Act and related rules impose additional requirements on registrants that are not foreign private

issuers (“FPIs”), including obligations to provide current reports (on Form 8-K pursuant to section 13 or 15(d))

and certain proxy information and soliciting materials in connection with a shareholder meeting (on Schedule

14A or 14C pursuant to section 14). The Commission has recently proposed to allow all registrants the option to

report semiannually rather than quarterly on Form 10-Q. See Semiannual Reporting, Release No. 33-11414

(May 5, 2026) [91 FR 24968 (May 7, 2026)] (“Semiannual Proposing Release”). FPIs, by contrast, already have

more limited filing requirements, unless they elect to file on domestic issuer forms. See Concept Release on

Foreign Private Issuer Eligibility, Release No. 33-11376 (June 4, 2025) [90 FR 24232 (June 9, 2025)]. FPIs are

defined in 17 CFR 240.3b-4. While FPIs may file annual reports on Form 20-F or Form 40-F, FPIs are exempt

from the proxy rules, and their obligation to file current reports on Form 6-K is largely limited to circumstances

in which FPIs have already made a public filing or disclosure in their home country jurisdiction.

BDCs are a type of closed-end investment company that is not registered under the Investment Company Act of

1940 (“Investment Company Act”). Face-amount certificate companies are a type of registered investment

company that are engaged or propose to engage in the business of issuing face-amount certificates of the

installment type, or that have been engaged in such business and have any such certificate outstanding. In

general, other registered investment companies are subject to separate reporting requirements under the

Investment Company Act and are not affected by the filer statuses or other provisions discussed in this release.

“Accelerated filer” and “large accelerated filer” are defined in 17 CFR 240.12b-2.

While undefined currently in the rules, we generally refer to registrants that are not AFs or LAFs as NAFs.

o Only LAFs and AFs are required to have the registered public

accounting firm that prepares or issues their financial statement

audit report attest to, and report on, management’s assessment of

the effectiveness of internal control over financial reporting

(“ICFR”) (“ICFR auditor attestation”) under section 404(b) of the

Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”). 17

•

Smaller reporting company 18 (“SRC”) is a regulatory status that applies to smaller

registrants permitting those registrants to comply with a number of scaled disclosure

requirements, discussed in detail below, 19 which notably include scaled financial

statement disclosure and scaled executive compensation disclosure, among other

accommodations.

•

Emerging growth company (“EGC”) is a statutorily-defined status that applies to

registrants for the first five years after their initial public offering so long as they do

not become an LAF or surpass revenue and debt issuance limitations. 20 The EGC

accommodations are described more fully below 21 and notably include scaled

financial statement disclosure in an EGC’s initial public equity offering registration

15 U.S.C. 7262(b) and (c).

The term “smaller reporting company” is defined in 17 CFR 230.405 and 17 CFR 240.12b-2.

See section II.B below.

Section 101(a) of the JOBS Act amended section 2(a) of the Securities Act and section 3(a) of the Exchange

Act to define an “emerging growth company.” The JOBS Act initially defined “emerging growth company” as

an issuer with less than $1 billion in total annual gross revenues, indexed to inflation. Pursuant to the statutory

requirements, the current threshold is $1,235,000,000. See Inflation Adjustments Under Titles I and III of the

JOBS Act, Release No. 33-11098 (Sept. 9, 2022) [87 FR 57394 (Sept. 20, 2022)] (adopting amendments to

adjust the threshold to account for inflation).

See discussion of EGCs in section I.D.2 below.

statement, deferred adoption of certain new or revised financial accounting standards,

scaled executive compensation disclosure, and an exemption from the ICFR auditor

attestation requirement. 22

The table below lists the periodic reporting deadlines that currently apply to LAFs, AFs, and

NAFs. 23

Table 1. Filing Deadlines by Filer Status

Category of Filer

Calendar Days after the Period End

Annual Report on

Form 10-K

Quarterly Report on

Form 10-Q

Non-Accelerated Filer

90 days

45 days

Accelerated Filer

75 days

40 days

Large Accelerated Filer

60 days

40 days

The filer status framework that has developed is layered and complex. 24 Under the

current system, registrants must annually reevaluate their filer status at the end of their fiscal

year. To do so, they consider both their public float 25 as of the end of their second fiscal quarter

See 15 U.S.C. 7262(b).

See General Instruction A.2 of Form 10-K and General Instruction A.1 of Form 10-Q for the filing deadlines.

See, e.g., Fun in the Summer – Navigating the Filer Status Maze, THE CORPORATE COUNSEL (May-June 2021),

at 1-10 (suggesting that “the SEC and Congress have created what is often a bewildering maze of filer status

tests that are used to determine when a company files its reports with the SEC and the content of those

reports”). See also Transcript, U.S. Securities and Exchange Commission, Small Business Forum (Apr. 10,

2025), at 139-49, https://www.sec.gov/files/2025-SBF-508-Transcript.pdf (counsel panelist noting that “when I

have to sit there and explain to somebody how to navigate . . . whether you’re an emerging growth company or

a smaller reporting company or an [accelerated] filer, their eyes glaze over and they’re just like, ‘what are you

talking about?’ And I think that sort of complexity just adds to the compliance costs, it adds to the concern, and

then sometimes I think it adds to the inability to access the market and report and do things in a way that is most

effective for those companies”).

As used herein, “public float” is the aggregate worldwide market value of the voting and non-voting common

equity held by the issuer’s non-affiliates. 17 CFR 240.12b-2(i).

and their annual revenue, and compare those figures to thresholds that vary based on whether a

registrant is entering or exiting a particular filer status. Additionally, registrants qualifying as

EGCs must evaluate whether they met any of the disqualifying provisions of an EGC throughout

the year. The table below illustrates the combinations of filer statuses that are possible today,

highlights the overlap that can occur among filer statuses, and provides the entry thresholds for

each status and the proportion of registrants in each permutation: 26

Table 2. Filer Status Thresholds and Proportions

Filer Status

Public Float

Proportion of

Registrants

CY 2024

35.4%

Proportion of

Total Public

Float CY 2024

98.82%

12.7%

0.51%

$100M or

$100M to

< $1.235B

$100M to

< $1.235B

7.1%

0.36%

3.5%

0.08%

1.3%

0.06%

0.8%

0.02%

51.9%

0.67%

< $75M

$75M to $700M

No public float

N/A

< $100M

5.5%

0.23%

0.20%

< $75M

< $1.235B

2.1%

Large

$700M or more

Accelerated Filer

Accelerated Filer $75M to < $700M

AF Only

$250M to < $700M

AF + SRC

Only

AF + EGC

Only

AF + SRC +

EGC

Non-accelerated

Filer

NAF Only

NAF + SRC

Only

$75M to < $250M

NAF + EGC

Only

$250M to < $700M

$75M to < $250M

Annual

Revenues

N/A

26.0%

0.03%

The data used in preparing this table is based on registrants’ self-reported filer statuses on the cover page of

their calendar year (“CY”) 2024 annual filings and excludes asset-backed issuers and FPIs not filing on

domestic forms. While current NAFs may qualify as SRCs, registrants with no public float and annual revenues

of $100 million or more do not qualify as SRCs. The SRC definition also excludes any registrant that is an

investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not an SRC. See

17 CFR 229.10(f)(1).

NAF + SRC + < $75M

EGC

No public float

< $1.235B

< $100M

18.3%

0.22%

The table reflects the current thresholds for initially entering into a particular status, but,

under existing rules, the thresholds are often different for determining when a registrant

transitions out of that status. Under current rules, LAFs transition to AF status when their public

float falls below $560 million, and AFs and LAFs transition out of either such status when their

public float falls below $60 million or they determine that they are eligible to use the

requirements for SRCs under the revenue test in paragraph (2) or (3)(iii)(B) of the smaller

reporting company definitions in 17 CFR 230.405 and 17 CFR 240.12b-2. Similarly, once a

registrant exits SRC status, the registrant will only transition back into SRC status if its public

float falls below $200 million, or its public float falls below $560 million and its revenues fall

below $80 million. 27 In addition, because the definitions for the accelerated filer statuses rely in

part on SRC status, these transition thresholds also affect accelerated filer status determinations.

In addition to the complexity of the current filer status framework, we note that the

number of Exchange Act reporting companies filing on domestic forms fell from 6,996 in 2004

to 5,976 in 2024. 28 Unsurprisingly, a similar time period (2009-2017) saw significant growth in

For an SRC whose prior annual revenues were less than $100 million, the SRC may transition as long as it

meets the public float requirement and its current annual revenues are less than $100 million. See

17 CFR 230.405 and 17 CFR 240.12b-2.

This number of registrants is estimated as the number of unique registrants, identified by Central Index Key

(“CIK”), that filed a Form 10-K, or an amendment thereto, during each year. This estimate excludes registrants

that have not filed a Form 10-K and FPIs filing on Forms 20-F and 40-F. The estimate also excludes assetbacked issuers, because the disclosure and other accommodations addressed in the proposed amendments do not

apply to these issuers.

private markets, with private markets regularly outpacing public markets in capital raised. 29

Recent studies point to a variety of conditions influencing companies that might previously have

gone public to remain private, with the regulatory burdens and costs of being a public company

consistently considered to be among the factors that have led to this trend. 30 The Commission’s

two most recent Small Business Forums explored the obstacles facing smaller companies trying

to go public. In 2025, the issues discussed included having to produce three years of audited

financial statements, having to produce reports on a quarterly basis, the volume of disclosure

requirements, and the complexity of the filer status framework. 31 In 2026, many of the same

themes were explored, with notable discussion on the cost of compliance with section 404(b) of

the Sarbanes-Oxley Act, the impact on a registrant’s ability to plan for those costs in light of an

AF public float threshold that is based on a single measurement date, and the limited personnel

See Scott Bauguess, Rachita Gullapalli & Vladimir Ivanov, Capital Raising in the U.S.: An Analysis of the

Market for Unregistered Securities Offerings, 2009-2017, Division of Economic and Risk Analysis, U.S.

Securities and Exchange Commission (Aug. 2018), https://www.sec.gov/files/dera-white-paper_regulationd_082018.pdf .

See Rongbing Huang & Donghang Zhang, Initial Public Offerings: Motives, Mechanisms, and Pricing THE

OXFORD RSCH. ENCYCLOPEDIA OF ECON. & FIN. (Feb. 5, 2022) (surveying prior research on companies’

decisions on whether and how to go public citing conditions including: cash flow considerations and economies

of scope that favor mergers with larger companies, particularly in globalized industries; the centrality of

intellectual property to many new companies, which attracts venture capital; alternative exit strategies and

private capital availability more generally; and regulatory burden). See also Marshall Lux & Jack Pead, Hunting

High and Low; The Decline of the Small IPO and What to Do About It, (M-RCBG Associate Working Paper

Series No. 86), MOSSAVAR-RAHMANI CTR. FOR BUS. AND GOV’T (Apr. 2018) (exploring the factors causing the

decline in small company IPOs and finding motivating causes may include: reduced sell-side coverage; the

growth of institutional investors on the buy-side; the shift from active to passive investing; growth in private

capital; and increased regulatory pressures).

Transcript, U.S. Securities and Exchange Commission, Small Business Forum (Apr. 10, 2025), at 129-49,

https://www.sec.gov/files/2025-SBF-508-Transcript.pdf. See U.S. Securities and Exchange Commission, Report

on the 44th Annual Small Business Forum (Apr. 2025), at 22, https://www.sec.gov/files/2025-oasb-annualforum-report.pdf (recommendation that the Commission streamline the registration process for smaller

businesses).

and resources small companies can devote to such costs. 32 Similar recommendations came out of

prior years’ forums and other roundtables. 33

We are also aware of continued concerns regarding the cost of compliance with the ICFR

auditor attestation requirement under section 404(b) of the Sarbanes-Oxley Act. 34 Some

comments on the 2019 Accelerated Filer Release stated that the ICFR auditor attestation

requirement is the most costly aspect of being an AF and indicated that, in relative terms, it is

Transcript, U.S. Securities and Exchange Commission, Small Business Forum (Mar. 9, 2026),

https://www.sec.gov/files/transcript-45th-sb-forum.pdf

See, e.g., U.S. Securities and Exchange Commission, Report on the 43rd Annual Small Business Forum (Apr.

2024), at 27, https://www.sec.gov/files/2024-oasb-annual-forum-report.pdf (recommendation to increase AF

public float threshold “so that only larger filers are required to provide an auditor attestation”); U.S. Securities

and Exchange Commission, Report on the 40th Annual Small Business Forum (May 2021), at 25,

https://www.sec.gov/files/2021_OASB_Annual_Forum_Report_FINAL_508.pdf (recommendation to increase

SRC and AF public float thresholds); U.S. Securities and Exchange Commission, Report on the 39th Annual

Small Business Forum (Jun 2020), at 30, https://www.sec.gov/files/2020-oasb-forum-report-final_0.pdf

(recommendation to align the SRC and NAF definitions); U.S. Securities and Exchange Commission, Office of

the Advocate for Small Business Capital Formation, Small Cap Policy Roundtable: Reassessing the Framework

for Small Public Companies (July 2025), at 9-15, https://www.sec.gov/files/small-cap-policy-roundtabletranscript.pdf (discussion of the complexities of filer status designations with one participant suggesting, among

other things, to increase the LAF threshold up to “a $2 billion market cap” and to “eliminate the accelerated

filer status completely”); U.S. Securities and Exchange Commission, Office of the Advocate for Small Business

Capital Formation, IPO Policy Roundtable: Reexamining the IPO On-Ramp (July 2025), at 42,

https://www.sec.gov/files/ipo-roundtable-transcript.pdf (discussion about trying to “keep the costs of accessing

public markets proportionate for smaller companies”); U.S. Securities and Exchange Commission, Investor

Advisory Committee Meeting (Mar. 12, 2026), at 56:18-59:12, https://www.youtube.com/watch?v=y0ZrTZuUg0 (discussion related to reforming the categories of companies that are afforded the ability to provide scaled

disclosure). The Commission’s Office of the Advocate for Small Business Capital Formation has made similar

observations and recommended that the Commission “consider ways to harmonize the frameworks governing

Smaller Reporting Company (SRC) and Accelerated Filer definitions.” See U.S. Securities and Exchange

Commission, Office of the Advocate for Small Business Capital Formation, Annual Report Fiscal Year 2023 at

84, https://www.sec.gov/files/2023-oasb-annual-report.pdf. Additionally, the Commission’s Small Business

Capital Formation Advisory Committee has written that the Commission should “[e]nsure public company rules

are mindful of the unique circumstances of small public companies, so that these small companies can attract

capital, spur innovation, and create jobs.” Letter from U.S. Securities and Exchange Commission, Small

Business Capital Formation Advisory Committee (Feb. 28, 2023), at 2, https://www.sec.gov/files/committeeperspectives-letter-022823.pdf.

See section I.C.

particularly costly for low-revenue registrants. 35 In addition, a recent Government Accountability

Office (“GAO”) study found that Section 404(a) and (b) compliance costs are more burdensome

in relative terms for smaller companies. 36 At the same time, the ICFR auditor attestation

requirement has benefits for investors, including that it enhances the reliability of management’s

disclosure related to ICFR and may help a registrant identify a significant deficiency or identify

and disclose a material weakness in ICFR that had not been identified or properly characterized

by management. 37

While registration and entry into the public capital markets is not always necessary or

appropriate for smaller or emerging companies, 38 a robust pipeline of companies joining the

public markets benefits investors by providing them with a more diverse set of investment

opportunities and greater transparency. It also benefits companies in various ways, including by

providing them new sources of capital at a potentially lower cost. The Commission has long

considered the regulatory burdens of public company registration and ongoing compliance with

the regulations that apply to public companies. Indeed, the Commission has previously taken

steps with the aim of increasing the viability of entry into the public markets to more companies,

See Accelerated Filer and Large Accelerated Filer Definitions, Release No. 34-88365 (Mar. 12, 2020) [85 FR

17178, 17183 (Mar. 26, 2020)]. See also comments on the SRC Proposing Release described in the 2019

proposing release suggesting that these costs can divert capital from core business needs. Amendments to the

Accelerated Filer and Large Accelerated Filer Definitions, Release No. 34-85814 (May 9, 2019) [84 FR 24876,

24880 (May 29, 2019)] (“2019 Accelerated Filer Release”).

U.S. GOV’T ACCOUNTABILITY OFF., Sarbanes-Oxley Act: Compliance Costs are Higher for Larger Companies

but More Burdensome for Smaller Ones (June 2025), https://www.gao.gov/assets/gao-25-107500.pdf.

See infra notes 67, 170, and 175.

See, e.g., Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to

Capital in Private Markets, Release No. 33-10763 (Mar. 4, 2020) [85 FR 17956, 17957 (Mar. 31, 2020)] (“In

various circumstances, registration is not necessary, nor is it the most effective means, to achieve the objectives

of the Securities Act or the Commission’s mission more broadly. In recognition of the fact that registration is

not always necessary or appropriate, the Securities Act contains a number of exemptions from its registration

requirement and the Commission is authorized to adopt additional exemptions.”).

by adopting simplified registration rules and processes for issuers while carefully balancing

investors’ need for timely and appropriate disclosure. For example, in a series of actions

spanning decades, the Commission has routinely simplified and tailored smaller issuers’

disclosure obligations. 39 In 2005, the Commission reformed the securities offering process by,

among other actions, liberalizing permitted offering communications, updating prospectus

delivery requirements, and modernizing the shelf registration provisions. 40 Nonetheless, changes

in the securities laws have resulted in an increasingly complicated regulatory framework that

warrants reconsideration, including a reassessment of whether the disclosure burdens faced by

registrants are properly balanced with the corresponding benefits to investors and markets.

We are therefore proposing amendments to our regulations to rationalize the existing

Exchange Act filer status framework, which will simplify reporting and disclosure requirements

and reduce burdens on most reporting companies, while continuing to seek full and fair

disclosure for investors. To provide context to our proposed amendments, we briefly trace the

evolution of the current filer status framework below.

See, e.g., Simplified Registration and Reporting Requirements for Small Issuers, Release No. 33-6049 (Apr. 3,

1979) [44 FR 21562 (Apr. 10, 1979)]; Small Business Initiatives, Release No. 33-6949 (July 30, 1992) [57 FR

36442 (Aug. 13, 1992)] (adopting Regulation S-B); and Smaller Reporting Company Regulatory Relief and

Simplification, Release No. 33-8876 (Dec. 19, 2007) [73 FR 934 (Jan. 4, 2008)] (adopting the “smaller

reporting company” definition) (“SRC Adopting Release”).

Securities Offering Reform, Release No. 33-8591 (July 19, 2005) [70 FR 44722 (Aug. 3, 2005)] (“Offering

Reform Adopting Release”). See also Registered Offering Reform, Release No. 33-11418 (May 19, 2026)

(“Registered Offering Reform Proposal”).

Exchange Act Reporting Prior to 2002

The Commission adopted the “integrated disclosure system” in 1982 following several

years of analysis of the disclosure rules under the Securities Act and the Exchange Act. 41 Prior to

the adoption of the integrated disclosure system, separate disclosure regimes applied to

Securities Act registration statements and Exchange Act registration and periodic reporting,

which often resulted in overlapping and duplicative requirements. At the time the integrated

disclosure system was adopted, the Commission stated that the “goal of the Commission’s

integrated disclosure program has been to revise or eliminate overlapping or unnecessary

disclosure and dissemination requirements wherever possible, thereby reducing burdens on

registrants while at the same time ensuring that security holders, investors and the marketplace

have been provided with meaningful nonduplicative information upon which to base investment

decisions.” 42

Under the integrated disclosure system, most registration and reporting forms under the

Securities Act and the Exchange Act refer to common disclosure requirements codified in

Regulation S-K and Regulation S-X. In recognition of the difficulties that smaller issuers were

facing in accessing the capital markets, the Commission adopted Regulation S-B in 1992, an

integrated disclosure system tailored specifically to a set of “small business issuers,” as defined

See Adoption of Integrated Disclosure System, Release No. 33-6383 (Mar. 3, 1982) [47 FR 11380 (Mar. 16,

1982)].

Id. at 11382.

by revenues and public float, and provided specialized forms under the Securities Act and

Exchange Act that referenced simplified disclosure requirements for these issuers. 43

As a result of these accommodations, prior to 2002, there were effectively two Exchange

Act filer statuses: a “default” category of issuers that filed periodic reports on Forms 10-K and

10-Q under Regulation S-K, and a small business issuer category that filed periodic reports on

Forms 10-KSB and 10-QSB under Regulation S-B. Commission rules applied uniform filing

deadlines to all Exchange Act reporting companies’ periodic reports: 90 days after fiscal year

end for annual reports, and 45 days after quarter end for quarterly reports.

Accelerated Filer Status; Sarbanes-Oxley Act

Following a series of corporate and accounting scandals in the early 2000s that led to

financial restatements and bankruptcies and resulted in significant adverse effects on

shareholders, the Commission established “accelerated filer” status by adopting accelerated

filing deadlines for certain registrants. Congress subsequently enacted the Sarbanes-Oxley Act, 44

which included ICFR requirements intended to improve the accuracy and reliability of corporate

disclosures.

The Commission’s adoption of AF status was motivated in part by advances in

communication technology and companies’ growing practice of releasing quarterly earnings well

See Small Business Initiatives, Release No. 33-6949 (July 30, 1992) [57 FR 36442 (Aug. 13, 1992)]. Note that

in 2007 the Commission adopted amendments that moved the scaled disclosure requirements for smaller issuers

from Regulation S-B into Regulation S-K, as discussed below. See SRC Adopting Release.

Pub. L. No. 107–204, 116 Stat. 745 (2002).

before the Form 10-Q deadline. 45 The new “accelerated filer” status therefore accelerated the

periodic report filing deadlines for registrants with a public float of $75 million or more, who

had been subject to Exchange Act reporting requirements for at least 12 months, and had

previously filed at least one annual report. 46 In acting to further categorize the filer statuses in

this way, the Commission sought to “balance the market’s need for information with the time

companies need to prepare that information without undue burden.” 47

The Commission again amended the filer status rules in 2005 by introducing the LAF

status. 48 The Commission sought to avoid applying the shortest filing deadlines to registrants

with less than $700 million in public float by further dividing filers into LAFs (registrants with

$700 million or more in public float) and AFs (registrants with at least $75 million in public float

but less than $700 million). All remaining registrants with less than $75 million in public float

have become known as NAFs. While the Commission acknowledged the incremental benefit of

more timely accessibility to periodic reports, it was concerned with the added burdens associated

See Acceleration of Periodic Report Filing Dates and Disclosure Concerning Website Access to Reports,

Release No. 33-8089 (Apr. 12, 2002) [67 FR 19896, 19897 (Apr. 23, 2002)] (“[A]dvances in communications

and information technology have made it easier for companies to process and disseminate information swiftly.

Many large seasoned reporting companies capture and evaluate information and announce their quarterly and

annual financial results well before they file their formal reports with the Commission. These earnings

announcements are generally less complete in their disclosure than quarterly or annual reports and can

emphasize information that is less prominent in quarterly or annual reports. Investors also process, evaluate and

react to information on a much shorter timeframe. The delayed filing of reports, however, means investors often

make decisions without access to the more extensive disclosure in the company’s Exchange Act reports.”).

Acceleration of Periodic Report Filing Dates and Disclosure Concerning Web Site Access to Reports, Release

No. 33-8128 (Sept. 5, 2002) [67 FR 58480 (Sept. 16, 2002)].

Id. The Commission did not propose to accelerate the filing deadlines for newly public companies and smaller

issuers, recognizing that such companies need to develop experience with the preparation and filing of periodic

reports or may not have the resources or infrastructure to prepare their reports on a shorter timeframe without

undue burden or expense.

Revisions to Accelerated Filer Definition and Accelerated Deadlines for Filing Periodic Reports, Release No.

33-8644 (Dec. 21, 2005) [70 FR 76626 (Dec. 27, 2005)] (“Accelerated Filer Revisions Adopting Release”).

with the increased acceleration of the deadlines. 49 The Commission determined to limit the

shortest deadlines to the largest registrants, reasoning that LAFs, “are more likely than smaller

companies to have a well-developed infrastructure and financial reporting resources to support

further acceleration of the annual report deadline.” 50

As a result of this and later developments, 51 under the current definition in Rule 12b-2, an

LAF is a registrant that: (1) has a public float of $700 million or more, as of the last business day

of its most recently completed second fiscal quarter, calculated using either the closing price or

the average of the bid and ask prices that day; (2) has been subject to the requirements of

Exchange Act section 13(a) or 15(d) for at least 12 calendar months; (3) has filed at least one

annual report pursuant to the Exchange Act; and (4) is not eligible to be an SRC under the SRC

revenue test. LAFs’ periodic reporting deadlines are 60 days for Form 10-K, and 40 days for

Form 10-Q, while AFs’ deadlines are 75 and 40 days, respectively; and the deadlines for NAFs

remain at 90 and 45 days, respectively. 52

See Revisions to Accelerated Filer Definition and Accelerated Deadlines for Filing Periodic Reports, Release

No. 33-8617 (Sept. 22, 2005) [70 FR 56862, 56865 (Sept. 29, 2005)].

Id. The Commission confirmed this view in the Accelerated Filer Revisions Adopting Release. See supra note

48, at 76629.

The LAF definition was amended in 2020 to exclude certain low revenue registrants. Accelerated Filer and

Large Accelerated Filer Definitions, Release No. 34-88365 (Mar. 12, 2020) [85 FR 17178 (Mar. 26, 2020)]. See

discussion infra notes 108,109, and 110 and accompanying text.

See Accelerated Filer Revisions Adopting Release. Also in 2005, the Commission adopted a requirement that

AFs (and well-known seasoned issuers, as that term is defined in Securities Act Rule 405) disclose on

Form 10-K or Form 20-F material outstanding staff comments that were issued more than 180 days before the

end of the fiscal year covered by the report. See Offering Reform Adopting Release. The Commission

subsequently extended that disclosure requirement to LAFs as well. See Accelerated Filer Revisions Adopting

Release.

ICFR Requirements

In 2002, less than two months before the Commission adopted the rules for AFs,

Congress enacted the Sarbanes-Oxley Act. 53 One aspect of the Sarbanes-Oxley Act’s reforms

was the adoption of section 404. Section 404(a) mandates Commission rules requiring Exchange

Act reporting companies to include in their annual reports an internal control report that states

the responsibility of management for establishing and maintaining ICFR and that contains an

assessment of the effectiveness of the registrant’s ICFR as of the end of each fiscal year. 54

Section 404(b) requires that each registered public accounting firm that prepares or issues the

registrant’s financial statement audit report attest to, and report on, management’s assessment of

the effectiveness of the ICFR. 55 As discussed below, Congress took further action in the DoddFrank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) 56 and the

Jumpstart Our Business Startups (“JOBS”) Act, 57 to exempt from section 404(b): (1) any

registrant that is not an LAF or an AF and (2) any registrant that is an EGC, respectively.

As mandated by section 404, the Commission adopted rules in 2003 requiring registrants

that are subject to Exchange Act reporting requirements to include in their annual reports a report

of management on the registrant’s ICFR and an attestation report by the registrant’s auditors on

Pub. L. No. 107–204, 116 Stat. 745 (2002).

15 U.S.C. 7262(a).

15 U.S.C. 7262(b).

Pub. L. No. 111–203, 124 Stat. 1376 (2010), sec. 989G(a). Section 404(c), codified at 15 U.S.C. 7262(c),

provides that section 404(b) does not apply with respect to an audit report prepared for an issuer that is neither

an LAF nor an AF as defined by the Commission.

Pub. L. No. 112–106, 126 Stat. 306 (2012), sec. 103 (codified at 15 U.S.C. 7262(b)).

management’s assessment of the internal controls. 58 Although section 404 generally requires and

directs the Commission to adopt rules regarding ICFR that apply to every issuer that is required

to file reports pursuant to Exchange Act section 13(a) or 15(d), registered investment companies

(“RICs”) under section 8 of the Investment Company Act 59 are specifically exempted from

section 404 by section 405. 60 In addition, the Commission’s rules implementing section 404

exempted other types of issuers, such as asset-backed issuers, from the ICFR obligations. 61 The

Commission also determined that FPIs and Canadian multijurisdictional disclosure system

(“MJDS”) issuers must have their management assess and report annually on the effectiveness of

their ICFR as of the end of their fiscal year and include an auditor attestation report on ICFR in

their annual report form if the FPI or MJDS issuer is an AF or LAF, other than an EGC. 62 BDCs,

however, are subject to the rules adopted by the Commission to implement section 404. 63

Through a series of actions from 2003 through 2009, the Commission delayed

compliance with section 404 for NAFs, acknowledging that “non-accelerated filers, including

17 CFR 229.308. See also Management’s Report on Internal Control over Financial Reporting and

Certification of Disclosure in Exchange Act Periodic Reporting, Release No. 33-8238 (June 5, 2003) [68 FR

36636 (June 18, 2003)] (“ICFR Adopting Release”).

15 U.S.C 80a-8.

15 U.S.C. 7263. RICs are subject to Sarbanes-Oxley Act section 302, which requires management certifications,

including with respect to management’s responsibility for establishing and maintaining ICFR. See 17 CFR

270.30a-2 and 270.30a-3; see also ICFR Adopting Release. RICs that are management companies, other than

small business investment companies, are also required to file a copy of their independent public accountant’s

report on internal controls. See Form N-CEN (17 CFR 274.101); see also Investment Company Reporting

Modernization, Release No. IC-32314 (Oct. 13, 2016) [81 FR 81870, n.879-81 and accompanying text (Nov.

18, 2016)].

See Asset-Backed Securities, Release No. 33-8518 (Dec. 22, 2004) [70 FR 1506, 1510 n. 41. (Jan. 7, 2005)]

(“Regulation AB Adopting Release”). See also 17 CFR 240.13a-15(a) and 17 CFR 240.15d-15(a) and General

Instruction J to Form 10-K.

See Items 15(b) and (c) of Form 20-F and General Instruction B(6)(c) and (d) of Form 40-F.

BDCs are not registered under the Investment Company Act and, therefore, not within the exemption provided

by Sarbanes-Oxley Act section 405. See 17 CFR 230.405.

smaller companies and foreign private issuers, may have greater difficulty in preparing the

management report on internal control over financial reporting.” 64 Ultimately, Congress enacted

section 989G of the Dodd-Frank Act, which added section 404(c) to the Sarbanes-Oxley Act to

exempt issuers that are neither LAFs nor AFs, as defined by the Commission, from the ICFR

auditor attestation requirement of section 404(b). 65 Section 404(c) also directed the Commission

to conduct a study to determine how the Commission could reduce the burden of complying with

the section 404(b) ICFR auditor attestation requirement for companies with public float between

$75 million and $250 million. Congress further extended relief from section 404(b) in the JOBS

Act when it exempted EGCs from the requirement. 66

See ICFR Adopting Release. As initially adopted, AFs were to comply with the requirements for their first

fiscal year ending on or after June 15, 2004, and issuers that were not AFs on or after April 15, 2005. Through a

series of releases the Commission extended compliance for accelerated and non-accelerated filers. See, e.g.,

Management’s Report on Internal Control over Financial Reporting and Certification of Disclosure in

Exchange Act Periodic Reports, Release No. 33- 8392 (Feb. 24, 2004) [69 FR 9722 (Mar. 1, 2004)] (extending

compliance dates for accelerated and non-accelerated filers); Management’s Report on Internal Control over

Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports of Non-Accelerated

Filers and Foreign Private Issuers; Extension of Compliance Dates, Release No. 33-8545 (Mar. 2, 2005) [70

FR 11528 (Mar. 8, 2005)]; Management’s Report on Internal Control Over Financial Reporting and

Certification of Disclosure in Exchange Act Periodic Reports of Companies that Are Not Accelerated Filers,

Release No. 33-8618 (Sept. 22, 2005) [70 FR 56825 (Sept. 29, 2005)] (further postponing compliance dates for

NAFs); Internal Control over Financial Reporting in Exchange Act Periodic Reports of Foreign Private Issuers

that Are Accelerated Filers, Release No. 33-8730A (Aug. 9, 2006) [71 FR 47056 (Aug. 15, 2006)] (postponing

compliance dates for FPIs and NAFs). See also Internal Control over Financial Reporting in Exchange Act

Reports of Non-Accelerated Filers and Newly Public Companies, Release No. 33-8760 (Dec. 15, 2006) [71 FR

76580 (Dec. 21. 2006]; Internal Control over Financial Reporting in Exchange Act Periodic Reports of NonAccelerated Filers, Release No. 33-8934 (June 26, 2008) [73 FR 38094 (July 2, 2008)]; and Internal Control

over Financial Reporting in Exchange Act Reports of Non-Accelerated Filers, Release No. 33-9072 (Oct. 13,

2009) [74 FR 53628 (Oct. 19, 2009)] (further postponing compliance dates for NAFs).

15 U.S.C. 7262(c).

See supra note 57.

In April 2011, the Commission staff published the required study and recommendations

relating to section 404(b). 67 The study found that, while initial implementation of section 404

resulted in a steep increase in audit fees, there was a statistically significant decrease in

compliance costs (including audit fees) for registrants subsequent to the issuance of PCAOB

Auditing Standard No. 5 68 and related Commission guidance 69 on management’s report on

ICFR. Based on the study’s findings, the staff did not recommend changing the scope of the

ICFR auditor attestation requirement at that time, but encouraged activities to further improve

the effectiveness and efficiency of implementation of the ICFR requirements. 70

As discussed in more detail below, the Commission modified the definition of AF in

2020 to exclude a registrant that is eligible to be an SRC and has annual revenues of less than

$100 million. 71 In excluding low-revenue SRCs from AF status, the Commission also exempted

those registrants from the ICFR auditor attestation requirement. In the adopting release, the

Commission found that the ICFR auditor attestation requirement is disproportionately costly to

See Staff of the Office of the Chief Accountant, U.S. Securities and Exchange Commission, Study and

Recommendations on Section 404(b) of the Sarbanes-Oxley Act of 2002 for Issuers with Public Float Between

$75 and $250 Million (Apr. 2011), https://www.sec.gov/news/studies/2011/404bfloat-study.pdf (“Staff Study”).

See PCAOB Auditing Standard No. 5, An Audit of Internal Control over Financial Reporting that Is Integrated

with an Audit of Financial Statements, https://pcaobus.org/oversight/standards/archived-standards/prereorganized-auditing-standards-interpretations/details/Auditing_Standard_5.

See Commission Guidance Regarding Management‘s Report on Internal Control over Financial Reporting

Under Section 13(a) and 15(d) of the Securities Exchange Act of 1934, Release No. 33-8810 (June 20, 2007)

[72 FR 35324 (June 27, 2007)].

The staff noted that section 404(c) exempted approximately 60% of reporting issuers at that time and found

strong evidence that the auditor’s role in auditing the effectiveness of ICFR improves the reliability of internal

control disclosures and financial reporting overall and is useful to investors. See Staff Study.

Accelerated Filer and Large Accelerated Filer Definitions, Release No. 34-88365 (Mar. 12, 2020) [85 FR

17178 (Mar. 26, 2020)]. In expanding this exclusion, the Commission suggested, as a general matter, there may

be greater costs and relatively lower benefits in including these issuers as accelerated filers, in part because

these issuers may, on average, be less susceptible to certain types of restatements, such as those related to

revenue recognition.

small issuers, noting that the fixed costs of compliance are not scalable for smaller issuers and

that low-revenue issuers have limited access to internally generated capital such that the costs

may more directly constrain their ability to invest and hire. 72 Commentators and registrants

continue to express concerns regarding the costs of implementation of section 404 and the

disproportionate effect on smaller issuers. 73

Actions Related to Smaller Reporting and Emerging Growth Companies

Establishment of SRC Status

Through the course of implementing the enhanced disclosure and other requirements of

the Sarbanes-Oxley Act, the Commission recognized the increased regulatory burden faced by

registrants. 74 This eventually led in 2007 to the Commission reworking its regulatory framework

for smaller registrants by establishing the “smaller reporting company” filer status. 75 As part of

the revisions, the Commission rescinded Regulation S-B and the “small business issuer”

Id. at 17188. However, the release also acknowledged concerns that eliminating the requirement for these

registrants may adversely affect the effectiveness of ICFR and the reliability of the financial statements of the

affected issuers with data showing that, among low-revenue issuers, accelerated filers other than EGCs (filers

that are required to obtain an auditor’s attestation of ICFR) have fewer Item 4.02 restatements than nonaccelerated filers that are not required to comply with section 404(b).

See, e.g., Stephen M. Bainbridge, Sarbanes-Oxley § 404 at Twenty, Law-Econ Research Paper No. 22-05,

UCLA SCHOOL OF LAW (2022). See also Peter Iliev, The Effect of SOX Section 404: Costs, Earnings Quality,

and Stock Prices, 65 J. FIN. 1163 (2010) (seeking to measure the costs, benefits, and overall value impact of

Sarbanes-Oxley Act requirements on small firms and finding the ICFR auditor attestation requirement imposes

significant costs for small firms and suggesting that the costs associated with section 404 compliance outweigh

the benefits for small firms). See also Transcript, U.S. Securities and Exchange Commission, Small Business

Forum (Mar. 9, 2026), https://www.sec.gov/files/transcript-45th-sb-forum.pdf, at 141-143, 154 (participants

identified section 404(b) costs as an obstacle to companies going and staying public, and observed that, in

practice, the public float trigger for becoming subject to the ICFR auditor attestation requirement can be

unpredictable).

See, e.g., Revisions to Accelerated Filer Definition and Accelerated Deadlines for Filing Periodic Reports,

Release No. 33-8617 (Sept. 22, 2005) [70 FR 56862, 56863-64 (Sept. 29, 2005)] (acknowledging the burdens

registrants faced in complying with the section 404 requirements and recounting the compliance postponements

the Commission instituted in response).

See SRC Adopting Release.

definition. 76 Under the 2007 rules, all filers that were not AFs or LAFs—i.e., those with less than

$75 million in public float 77—were designated as SRCs, and granted most of the scaled

disclosure accommodations that had previously been provided to “small business issuers.” 78 The

SRC definition excludes asset-backed issuers, RICs, BDCs, and majority-owned subsidiaries of

issuers that do not qualify as an SRC. Additionally, FPIs are not eligible to use the requirements

for SRCs unless they use the forms and rules designated for domestic issuers and provide

financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles

(“U.S. GAAP”). 79

The revised streamlined regulatory framework moved all disclosure requirements back

into Regulation S-K and Regulation S-X, consolidated smaller issuers and NAFs into the same

filer status, and expanded the number of registrants eligible to use scaled disclosure

requirements. 80 The amendments effectively established a three-tier filer status framework:

Id.

Registrants without a calculable public float were accorded SRC status if their annual revenues were below $50

million.

See SRC Adopting Release.

The Commission has solicited comments on the definition of FPIs and is considering whether the current FPI

definition should be revised so that it better represents the issuers that the Commission intended to benefit from

current FPI accommodations while continuing to protect investors and promote capital formation. See Concept

Release on Foreign Private Issuer Eligibility, Release No. 33-11376 (June 4, 2025) [90 FR 24232 (June 9,

2025)] (“FPI Concept Release”). Further, concurrently with the proposed amendments outlined in this release,

the Commission separately is proposing amendments to revise, among other things, the eligibility requirements

for Forms S-3 and S-1. See Registration Offering Reform Proposal. Pursuant to the ongoing evaluation of the

issues raised in the FPI Concept Release, the Commission is proposing to prohibit FPIs from using Forms S-3

and S-1. See id.

Id. at 935. At the time of adoption, the Commission estimated that approximately 42% of registrants would be

eligible to use the scaled disclosure requirements (4,976 out of 11,898 reporting companies). Id. The

amendments also moved certain scaled financial statement requirements from Regulation S-B into Regulation

S-X. Id.

•

LAFs having a public float of $700 million or more, subject to the most accelerated

filing deadlines and the most comprehensive disclosure requirements;

•

AFs having a public float of $75 million or more, but less than $700 million, subject

to less accelerated filing deadlines and the most comprehensive disclosure

requirements; and

•

SRCs having a public float of less than $75 million (or, if without a calculable public

float, annual revenues below $50 million), subject to non-accelerated filing deadlines

and scaled disclosure requirements.

At the time of initial adoption of SRC status, LAFs and AFs were generally subject to the

same disclosure requirements as each other. SRCs, however, were (and currently remain)

permitted to avail themselves of certain scaled disclosure accommodations, which currently

include:

•

To provide two (instead of three) years of audited financial statements, and prepare

their financial statements in accordance with Article 8 of Regulation S-X; 81

•

To provide two (instead of three) years of summary compensation table information

and tabular and other compensation disclosure for three (instead of five) named

executive officers;

•

To omit the compensation discussion and analysis, compensation policies and

practices related to risk management, pay ratio disclosure, grants of plan-based

In conjunction with the two years of audited financial statements registrants are also permitted to provide a twoyear (instead of three-year) comparison in their Management’s Discussion and Analysis of Financial Condition

and Results of Operations (“MD&A”). See 17 CFR 240.14a-3(b)(1), 17 CFR 210.8-01 et seq., and

17 CFR 229.303.

awards table, pension benefits table, option exercises and stock vested table, and

nonqualified deferred compensation table; 82

•

To provide scaled golden parachute and pay versus performance disclosure; 83

•

To omit disclosure relating to risk factors in periodic reports; 84 a stock performance

graph; 85 quantitative and qualitative disclosure about market risk; 86 supplementary

financial information relating to the disclosure of material quarterly changes and

information about oil and gas activities; 87 policies and procedures for the review,

approval, or ratification of related party transactions; 88 and certain payments made by

resource extraction issuers; 89 and

•

To provide a simplified description of business. 90

By contrast, Item 404 of Regulation S-K, which addresses related-party transaction

disclosure, includes in Item 404(d) certain requirements for SRCs that are more rigorous than

those for other filers, 91 namely:

See 17 CFR 229.402. In addition, SRCs are only required to provide three (instead of five) years of pay versus

performance disclosure. See 17 CFR 229.402(v).

SRCs are only required to provide golden parachute disclosure generally for three executive officers (instead of

five). See 17 CFR 229.402(t). See also infra note 221 regarding golden parachute votes. SRCs are only required

to provide three (instead of five) years of pay versus performance disclosure and are permitted to omit peer

group total shareholder return and company selected measure disclosure. See 17 CFR 229.402(v).

See Form 10-K, Item 1A; Form 10-Q, Item 1A.

See 17 CFR 229.201(e).

See 17 CFR 229.305.

See 17 CFR 229.302.

See 17 CFR 229.404(b)(1); 17 CFR 229.404(d).

See 17 CFR 240.13q-1.

See 17 CFR 229.101(h).

See SRC Adopting Release at 941 (noting that one percent of an SRC’s total assets may not exceed $120,000 to

justify the lower threshold for SRCs).

•

Rather than a flat $120,000 threshold for the disclosure of related-party transactions,

the threshold is the lesser of $120,000 or one percent of total assets;

•

Disclosures are required about underwriting discounts and commissions where a

related person is a principal underwriter or a controlling person or member of a firm

that was or is going to be a principal underwriter;

•

Disclosures are required about the issuer’s parent(s) and their basis of control; and

•

An additional year of disclosures is required regarding transactions with related

persons. 92

The JOBS Act and EGC Status

In 2012, Congress enacted the JOBS Act, which established a new “emerging growth

company,” or EGC, filer status and provided disclosure and other accommodations to EGCs. 93

Currently, a company qualifies as an EGC if it has total gross revenues of less than $1.235

billion during its most recently completed fiscal year and continues to qualify as an EGC until

the earliest of: (1) the last day of the fiscal year of the issuer during which it has total annual

gross revenues of $1.235 billion or more; (2) the last day of its fiscal year following the fifth

anniversary of the first sale of its common equity securities pursuant to an effective registration

statement; (3) the date on which the issuer has, during the previous three-year period, issued

17 CFR 229.404(d).

Pub. L. No. 112–106, 126 Stat. 306 (2012). The EGC provisions of the JOBS Act were informed by a report

containing recommendations made by the IPO Task Force to the U.S. Department of the Treasury. See IPO

TASK FORCE, Rebuilding the IPO On-Ramp: Putting Emerging Companies and the Job Market Back on the

Road to Growth (Oct. 20, 2011). The task force was formed after a 2011 Department of the Treasury conference

on Access to Capital. The task force members spanned the emerging growth company ecosystem, including

venture capitalists, executives, investors, securities lawyers, accountants, academics, and investment bankers.

Its purpose was to examine the challenges facing emerging companies and develop recommendations to

improve their access to capital, with a goal of generating jobs and growth.

more than $1 billion in nonconvertible debt; or (4) the date on which the issuer is deemed to be

an LAF (as defined in Exchange Act Rule 12b-2). 94 Congress supplemented the JOBS Act by

enacting the Fixing America’s Surface Transportation (“FAST”) Act, 95 which provided for

targeted additional accommodations for EGCs and required the Commission “to further scale or

eliminate requirements of Regulation S-K, in order to reduce the burden on emerging growth

companies, accelerated filers, smaller reporting companies, and other smaller issuers, while still

providing all material information to investors.” 96

EGC status provides a registrant with accommodations that lower the costs and burdens

of registration and reporting and is generally seen as an “on-ramp” for newly public companies

to ease the burdens of transitioning from a private to a public company. 97 While there are

overlaps between the EGC and SRC populations and their respective accommodations, EGCs are

entitled to a similar but distinct set of accommodations. EGCs are:

See 15 U.S.C. 77b(a)(19) and 15 U.S.C. 78c(a)(80). Section 101(a) of the JOBS Act amended section 2(a) of

the Securities Act and section 3(a) of the Exchange Act to define an “emerging growth company.” Section

101(a) initially defined “emerging growth company” as an issuer with less than $1 billion in total annual gross

revenues. Pursuant to the statutory definition, the Commission is required every five years to index to inflation

the annual gross revenue amount used to determine EGC status to reflect the change in the Consumer Price

Index for All Urban Consumers published by the Bureau of Labor Statistics. In 2017, the Commission increased

the annual gross revenue amount from $1,000,000,000 to $1,070,000,000. Inflation Adjustments and Other

Technical Amendments Under Titles I and III of the Jobs Act, Release No. 33-10332 (Mar. 31, 2017) [82 FR

17545 (Apr. 12, 2017)]. In 2022, the Commission increased it to $1,235,000,000. Inflation Adjustments Under

Titles I and III of the JOBS Act, Release No. 33-11098 (Sept. 9, 2022) [87 FR 57394 (Sept. 20, 2022)].

Pub. L. No. 114-94, 129 Stat. 1312 (2015).

Id., secs. 72002 and 72003. The Commission adopted amendments to modernize and simplify disclosure

requirements in Regulation S-K in 2019. FAST Act Modernization and Simplification of Regulation S-K,

Release No. 33-10618 (Mar. 20, 2019) [84 FR 12674 (Apr. 2, 2019)].

See supra note 93.

•

Exempt from the ICFR auditor attestation requirement, 98 the requirement to hold

shareholder advisory votes on executive compensation, 99 pay ratio disclosure, 100 and

pay versus performance disclosure; 101

•

Permitted to provide two (instead of three) years of audited financial statements in the

registration statement for an initial public offering of common equity securities, and

to defer compliance with new or revised financial accounting standards until a

company that is not an issuer is required to comply with such standards, if such

standard applies to private companies; 102

•

Permitted to provide executive compensation disclosure to match the information

required from issuers with less than $75 million in public float (the SRC threshold at

the time of adoption of the JOBS Act); 103 and

•

Permitted to submit certain draft registration statements to the Commission on a

confidential basis. 104

See 15 U.S.C. 7262(b).

EGCs are exempt from the requirement to hold shareholder advisory votes to approve executive compensation

(“say-on-pay”), frequency of say-on-pay voting, and “golden parachute” compensation arrangements. See 15

U.S.C. 78n-1(e); Jumpstart Our Business Startups Act, Pub. L. No. 112–106, 126 Stat. 306 (2012), sec.

102(a)(1). See infra notes 219 through 221 for a discussion of these shareholder advisory votes.

100

Investor Protection and Securities Reform Act of 2010, Pub. L. No. 111–203, 124 Stat. 1904, sec. 953(b)(1);

Pub. L. No. 112–106, 126 Stat. 306 (2012), sec. 102(a)(3).

101

See 15 U.S.C. 78n(i); Pub. L. No. 112–106, 126 Stat. 306 (2012), sec. 102(a)(2).

102

See 15 U.S.C. 77g(a)(2); 15 U.S.C. 78m(a)(2).

103

See section 102(c) of the JOBS Act and 17 CFR 229.402(m) through (r).

104

See infra notes 222 through 227 and accompanying text.

Recent Amendments and Filer Status Complexity

While a registrant cannot be both an EGC and an LAF, 105 as shown in the table in section

I above, a registrant can be both an EGC and an SRC, or both an EGC and an AF. When the

Commission updated the SRC, AF, and LAF thresholds in 2018, the SRC public float threshold

was raised to $250 million, and the SRC revenue threshold was raised to $100 million. 106 Along

with the increase of these thresholds, the Commission removed the automatic exclusion of SRCs

from the definition of AF and LAF. As a result of these changes, SRCs went from being

exclusively NAFs to a separate, additional status (like EGC status) that could attach to either

NAFs or AFs. Further, SRCs can also be EGCs, and these statuses involve largely overlapping

but distinct obligations and accommodations.

When adopting the 2018 amendments to the SRC definition, the Commission

acknowledged the “regulatory complexity” created by this potential overlap between the SRC

and AF definitions. 107 Subsequently, in 2020, the Commission adopted amendments to the

definitions of AF and LAF seeking to tailor the types of issuers included in those filer statuses. 108

The rules, as amended, now exclude low-revenue SRCs (those with under $100 million in annual

revenues and either no public float or a public float of less than $700 million) from the

105

See 15 U.S.C. 77b(a)(19) and 15 U.S.C. 78c(a)(80).

106

Smaller Reporting Company Definition, Release No. 33-10513 (June 28, 2018) [83 FR 31992 (July 10, 2018)]

(“2018 SRC Adopting Release”). Additionally, qualification via the revenue test was extended to registrants

with a public float of less than $700 million, rather than only applying in the case of no public float.

107

Id. The adopting release noted that the Chairman had directed the staff to consider, among other things, the

historical and current relationship between the SRC and AF definitions as part of its consideration of possible

changes to the AF definition.

108

Accelerated Filer and Large Accelerated Filer Definitions, Release No. 34-88365 (Mar. 12, 2020) [85 FR

17178 (Mar. 26, 2020)].

definitions of AF and LAF, increasing the number of registrants that qualify as NAFs. 109 As

NAFs, these registrants, among other things, are not required to obtain an ICFR auditor

attestation. The amendments were intended to thereby reduce compliance costs for these

registrants while maintaining investor protections by more appropriately tailoring the types of

registrants that are included in the categories of AF and LAF. 110

While the amendments increased the number of SRCs that qualify as NAFs, the

Commission determined not to fully align the statuses. 111 The Commission acknowledged that

such alignment would promote greater regulatory simplicity and reduce friction or confusion

associated with registrants’ determination of their filer status or reporting regime. 112 It expressed

concerns, however, that such alignment could result in adverse effects on the reliability of the

financial statements and the ability of investors to make informed investment decisions about

those issuers. 113 Thus, the amendments reduced the overlap between AF status and SRC status

by including low-revenue SRCs as NAFs (i.e., those with a public float of $75 million or more

but less than $250 million, regardless of annual revenues, and those with public float of less than

109

Id. The Commission also set the transition thresholds for exiting LAF and AF status at $560 million and $60

million, respectively (80% of the initial public float thresholds matching the 80% exit threshold for SRC status),

and added the SRC revenue test to the LAF and AF transition thresholds.

110

Id. at 17193. In making its determination the Commission noted that imposition of the ICFR auditor attestation

requirement has been associated with benefits to issuers and investors, such as reduced rates of ineffective ICFR

and more reliable financial statements, but also acknowledged that the affected registrants may find the costs of

these requirements to be particularly burdensome given certain fixed costs and limited access to internallygenerated capital. Although exempting low-revenue registrants may result in an increased prevalence of

ineffective ICFR and restatements, in mitigation of these concerns the Commission noted the relatively low

rates of restatements for low-revenue registrants and provided evidence that the market value of low-revenue

registrants was not as associated with contemporary financial statements as for higher-revenue registrants

(potentially implying that low-revenue registrants’ valuations are driven to a greater degree by future

prospects). Id. at 17193-94.

111

Id.

112

Id.

113

Id. at 17189.

$700 million and annual revenues of less than $100 million), but added an additional

determination for SRC status.

We are proposing to revise the current rules to streamline and further scale disclosure and

reporting requirements. Among our objectives is to reduce compliance costs and create a more

attractive on-ramp for newly public companies, thereby reducing regulatory impediments that

may be deterring companies from participating in the public market and encouraging more

companies to go and stay public, while ensuring that investors have the information necessary to

inform their investment and voting decisions.

II.

DISCUSSION OF PROPOSED RULES

As detailed above, the Commission’s rules currently set forth five filer statuses that

correspond to varying levels of disclosure and other requirements, which are sometimes

overlapping and often complex for issuers to determine. 114 LAFs are subject to the most stringent

requirements, and NAFs that are also both SRCs and EGCs are afforded the most

accommodations. LAFs in 2024 accounted for 35.4 percent of registrants and 98.8 percent of

total market public float. 115 In contrast, in 2024, while NAFs, including NAFs that are also SRCs

or EGCs (or both), accounted for 51.9 percent of registrants, they accounted for only 1.2 percent

of total market public float. 116

We are proposing amendments with the goal of streamlining the overlapping Exchange

Act filer statuses and further scaling disclosures and other accommodations while ensuring that

114

Supra Table 2.

115

See infra note 339 on calculating total market public float.

116

See section IV.A.2.

investors continue to receive timely and material information. To do so, the proposed

amendments seek to align disclosure and other reporting requirements and reporting deadlines

with registrants’ public float. As a result of the proposed amendments, companies that

collectively make up the majority of the U.S. equity market capitalization would be subject to the

most comprehensive requirements and earliest filing deadlines, while all other issuers would be

afforded the proposed scaled disclosure and other accommodations. The proposed amendments

would provide for simplified compliance and reduced costs for a majority of registrants.

Additionally, we are proposing to extend the filing deadlines for the smallest companies in order

to reduce the burden on these companies and further accommodate their ability to efficiently

comply with Exchange Act reporting. As described in more detail below, the proposed

amendments would:

•

Revise the LAF filer status to:

o Raise the threshold for becoming an LAF from the current $700

million to $2 billion in public float, which would represent 93.5

percent of the current total market public float; 117

o Establish a new, more stable, public float calculation window that

provides for the determination of public float based on the average

price of the registrant’s voting and non-voting common equity held

117

See discussion in section II.A.1 below

by non-affiliates over the last 10 trading days of the second quarter

of a registrant’s fiscal year; 118

o Establish that a registrant will only transition into or out of a status

after the registrant has been above or below the public float

threshold for two consecutive years; 119 and

o Increase the seasoning threshold for becoming an LAF to 60

consecutive calendar months. 120

•

Establish the NAF filer status and consolidate and extend to NAFs currently available

scaled disclosure and other accommodations by:

o Establishing an NAF definition that encompasses all registrants

that are not LAFs; 121 and

o Applying to NAFs the current disclosure requirements applicable

to SRCs and EGCs, including not requiring an ICFR auditor

attestation. 122

•

Extend to NAFs the requirement currently applicable to LAFs and AFs to disclose on

Form 10-K or Form 20-F the substance of material unresolved staff comments

118

As noted above, the Commission has recently proposed to allow registrants to report semiannually rather than

quarterly on Form 10-Q. See Semiannual Proposing Release. If that rule is adopted, semiannual filers would

determine public float over the last 10 trading days of the first semiannual period. See also infra note 296 and

accompanying text.

119

See section II.A.1.

120

See section II.A.2.

121

See section II.B.1.

122

See sections II.B.2, 3 and 4. As discussed below, these requirements would generally extend to all NAFs, with

some exceptions.

regarding the registrant’s periodic or current reports received at least 180 days before

a registrant’s fiscal year end. 123

•

Eliminate AF and SRC filer statuses as unnecessary in light of the amendments

described above. 124

•

Create a sub-category consisting of the smallest NAFs (“SNFs”), comprising NAFs

reporting total assets of $35 million or less as of the end of an issuer’s two most

recent second fiscal quarters, that would be eligible for extended deadlines for filing

their Form 10-K and Form 10-Q periodic reports. 125

Consistent with the Commission’s history of considering how its regulatory regime can

serve investors while avoiding unnecessary regulatory burdens to registrants, we believe the time

is ripe to again rebalance the disclosure and other requirements applicable to issuers of given

sizes. Evidence shows that regulatory changes over the last two decades, which increased the

costs of public company reporting, have contributed to a decline in the number of public

companies in the United States. 126 We believe the proposed amendments are a meaningful step

in making the public markets more attractive, which would encourage more companies to go and

stay public while ensuring that investors remain equipped to make informed investment and

123

See section II.B.3.a.i.

124

EGC filer status was created by the JOBS Act. As this is a statutory status, the Commission is not proposing to

eliminate the EGC filer status. We are proposing to permit NAFs to apply the disclosure requirements that

currently apply to EGCs, which we believe would practically make reliance on EGC status unnecessary in most

circumstances. We note, and discuss below, that we are not proposing to extend to NAFs the accommodation

available to EGCs to exclude a nonpublic draft registration statements from being produced in response to a

Freedom of Information Act (“FOIA”) request. See section II.B.3.b.

125

See section II.C.

126

See section IV.B.1.

voting decisions, which would in turn improve investment opportunities and the information

available to investors in such companies.

In this regard, the proposed scaling and accommodations would in many cases apply to

disclosures, such as in the area of executive compensation and corporate governance matters,

where the associated potential benefits may not be commensurate with their costs to registrants.

Further, we believe any loss of information and assurance or increased costs to investors in

registrants that would newly receive certain accommodations would be justified by the expected

reduction in costs to those registrants, as well as by effects that may encourage more companies

to go and stay public, which ultimately would benefit investors in those companies. 127 Finally, to

the extent that these accommodations contribute to a company choosing to go or stay public, we

also believe that is ultimately a benefit to investors, including through the resulting greater

diversification and more efficient capital allocation within investor portfolios. 128

Large Accelerated Filer Status Amendments

We are proposing to revise the definition of LAF to mean an issuer that as of the end of

each of the issuer’s two most recent second fiscal quarters, had an aggregate worldwide market

value of the voting and non-voting common equity held by non-affiliates of $2 billion or more.

In addition, we are proposing to extend the seasoning requirement for LAF status such that an

issuer would be an NAF until it has been subject to the requirements of section 13(a) or 15(d) of

127

See sections IV.B.2.a.1 and B.3.

128

See section IV.C.

the Exchange Act for a period of at least the preceding 60 consecutive calendar months. 129

Consistent with our current rules, an issuer would be required to assess its filer status annually,

as of the last day of its fiscal year. 130

These proposed amendments would apply the LAF requirements to only the largest

registrants, which comprise the vast majority of the equity market capitalization in the U.S.

public markets, with those companies currently representing approximately 93.5 percent of total

market public float. 131 We believe that registrants with the largest U.S. equity market

capitalization have a heightened investor demand for more comprehensive information sooner,

and these registrants are likewise the most capable of bearing the costs and burdens of

compliance with shorter disclosure deadlines and non-scaled disclosure and other requirements.

We estimate these proposed conditions would result in 19.2 percent of existing Exchange Act

reporting companies being LAFs, as compared to 35.4 percent today. 132

Public Float Threshold

We are proposing to raise the public float threshold for purposes of determination of LAF

status from $700 million to $2 billion. The Commission has historically looked to public float as

129

As part of these revisions, we are proposing to eliminate the SRC filer status (see section II.B.1) and as a result

are also proposing to eliminate the provision in 17 CFR 240.12b-2 that provides an exclusion from LAF status

for a registrant that is eligible to be an SRC under the SRC revenue test.

130

As proposed, a registrant’s filer status would only change on the date of assessment (i.e., the last day of its fiscal

year), regardless of when the registrant chooses to calculate its public float. As discussed below, under the

proposed rules, once a registrant enters a status, it would remain in that status for at least two years as meeting

or not meeting the conditions of LAF. See section II.A.2.

131

See section IV.B.2.

132

See section IV.B.2. As proposed, registrants who no longer meet the conditions for LAF status would be

permitted to continue to voluntarily comply with the reporting rules as they apply to LAFs.

a proxy for demonstrated market following 133 and used public float in determining filer status

and appropriate disclosure requirements and accommodations. When the Commission created

the LAF filer status in 2005, it emphasized that “companies with a public float of $700 million or

more represent nearly 95 percent of the U.S. equity market capitalization and are more closely

followed by the markets and by securities analysts than other issuers,” and that “larger issuers

generally have sufficient financial reporting resources and sufficiently robust infrastructures to

comply with the [accelerated filing deadlines].” 134 We continue to believe that public float is a

reasonable indicator of which companies the markets follow most closely. 135 We further believe

that it is most appropriate to subject registrants with the higher public float to non-scaled

disclosure requirements. In addition, we believe that companies with a public float of $2 billion

or more should be sufficiently resourced to be able to comply with the highest level of burden

associated with registration and the obligations of being a public company.

133

See, e.g., Offering Reform Adopting Release at 44727 (“[T]he ‘public float[]’ of a reporting issuer can be used

as a proxy for whether the issuer has a demonstrated market following”). See also Small Business Initiatives,

Release No. 33-6949 (July 30, 1992) [57 FR 36442 (Aug. 13, 1992)]; and SRC Adopting Release.

134

See Accelerated Filer Revisions Adopting Release at 76629-30. See also Acceleration of Periodic Report Filing

Dates and Disclosure Concerning Web Site Access to Reports, Release No. 33-8128 (Sept. 5, 2002) [67 FR

58480, 58482 (Sept. 16, 2002)] (“[A] public float test serves as a reasonable measure of size and market

interest.”).

135

As noted in the Registered Offering Reform Proposal, our proposed elimination in that release of the minimum

public float requirement in Form S-3 and with respect to eligibility for the Enhanced Registration and

Communication Benefits (as defined in that release) is consistent with our proposed retention of public float in

this proposal. See supra note 40. Our proposed elimination of a minimum public float requirement in the

Registered Offering Reform Proposal is based on our belief that that eligibility to use Form S-3 and the

Enhanced Registration and Communication Benefits should not depend on the extent of an issuer’s market

following, including analyst coverage (e.g., by reference to its public float or initial Exchange Act seasoning).

That proposal is not intended to suggest that public float is an inappropriate indicator of an issuer’s market

following. See id. at n. 230 (“We continue to believe that public float is relevant for determining an issuer’s filer

status and deadlines for filing Exchange Act reports. As we have previously stated, public float can serve as a

reasonable measure of a company’s size and market interest and, in turn, where investor interest in accelerated

filing is likely to be highest” (citation omitted)).

At the time the Commission adopted LAF filer status in 2005, it was estimated that

“companies with a public float of over $700 million represent approximately 18 percent of the

total number of companies on these markets and nearly 95 percent of the total public float on

these markets.” 136 We note that since the adoption of the LAF filer status, the $700 million

threshold has not been updated. Today, we estimate that the current threshold captures 98.8

percent of total market public float and 35.4 percent of registrants. 137 We are proposing to raise

the threshold to continue to cover the largest registrants and reestablish the relationship to the

number of companies covered and total market public float that existed when the filer status was

adopted. 138 We therefore propose to reestablish a public float requirement that would capture

nearly 95 percent of total market public float and estimate that setting the threshold at $2 billion

would capture approximately 93.5 percent of total market public float, and cover approximately

20 percent of the total number of existing registrants.

Other than the proposed single public float threshold, we are not proposing additional or

alternative LAF status determination thresholds, as we believe doing so could complicate the

regulatory framework without commensurate benefits.

136

See Accelerated Filer Revisions Adopting Release at 76636 (using data for companies listed on NYSE, Amex,

NASDAQ, the Over-the-Counter Bulletin Board, and Pink Sheets LLC).

137

See section IV.C.2. Over the period from the open of trading on Jan. 3, 2006 to the close of trading on Jan. 2,

2026, the S&P 500 Index increased from 1,248 to 6,858, an approximately 450% increase. A proportionate

increase to the $700 million threshold would result in a $3.85 billion threshold. Alternatively, adjusting for

inflation would result in a $1.15 billion threshold. See CPI Inflation Calculator,

https://www.bls.gov/data/inflation_calculator.htm (measuring from Jan. 2006 to Jan. 2026, retrieved Apr. 15,

2026).

138

When adopting the LAF filer status, the Commission indicated that “companies with a public float of $700

million or more . . . are more closely followed by the markets and by securities analysts than other issuers” and

that, “[b]ased on our experience with the accelerated filing deadlines, we continue to believe that larger issuers

generally have sufficient financial reporting resources and sufficiently robust infrastructures to comply with the

60-day deadlines . . . .” See Accelerated Filer Revisions Adopting Release at 76629-30.

Public Float Determination

We are proposing amendments to the way a registrant determines its public float for

purposes of the LAF definition. Under the current rules, a registrant assesses whether it meets

LAF status as of the end of each fiscal year based on its public float as of the last business day of

an issuer’s most recently completed second fiscal quarter, using either the closing price or the

average of the bid and ask prices on that day. As a result, a registrant may become an LAF at the

end of its fiscal year based on a single day of volatility, even if the registrant’s overall public

float may quickly stabilize below the threshold. While we recognize that the circumstances in

which such swings can cause a shift in filer status may be limited or relatively rare, to the extent

they do occur, the consequences can be significant in terms of regulatory burden on affected

registrants. To minimize the impact of swings in share price in a limited period or on a single

day, the proposed amendments would require that, before a registrant would transition either into

or out of LAF status as of the end of its fiscal year, the registrant’s public float, calculated based

on the average of the registrant’s stock price over the last 10 trading days of each of the second

quarter of such fiscal year and the immediately prior fiscal year, multiplied respectively by the

aggregate worldwide number of shares of the issuer’s voting and non-voting common equity

held by non-affiliates as of the last day of the issuer’s second fiscal quarter of such fiscal year,

remain either at or above, or below, the public float threshold.

By requiring that the public float threshold be met (or not met) for two consecutive years,

a registrant would change filer status as of the end of its fiscal year only if its public float has

been relatively stable consistently either above or below the threshold. This would mean that a

registrant, and investors, would always have at least one year of visibility regarding the

possibility of a status transition before any transition could occur. The proposed rules also clarify

that meeting or not meeting the conditions of LAF status for a single year would not suffice to

change filer status from NAF to LAF or vice versa. Thus, once a registrant enters a status, it

would remain in that status for at least two years.

The proposed rules also base the calculation each year on the average of the closing

prices over the last 10 trading days of the second quarter of the registrant’s fiscal year (or, if

there is no closing price on a day, the average of the bid and ask prices that day), using the

number of shares on the last day of the second quarter of the registrant’s fiscal year, in order to

address the risk that a single day’s market volatility could result in unexpected changes to filer

status. An average over 10 trading days would provide at least two calendar weeks of data, which

we believe would mitigate the impact of short-term volatility, including spikes and drops in stock

price that may be temporary, such as those based on short-term news and events. We are

proposing that the number of shares be based on a single date in an effort to simplify the

calculation.

Additionally, we believe the proposed transition criteria, by accounting for the potential

for volatility, would eliminate the need for distinct criteria for transitioning out of a particular

filer status as provided for in the current rules. As the Commission stated when adopting separate

transition thresholds for exiting AF or LAF status, the purpose of the transition thresholds “is to

avoid situations in which an issuer frequently enters and exits accelerated and large accelerated

filer status due to small fluctuations in public float” which could cause confusion for issuers and

investors as to the issuer’s status. 139 While we agree that addressing volatility in setting a market

139

See Accelerated Filer and Large Accelerated Filer Definitions, Release No. 34-88365 (Mar. 12, 2020) [85 FR

17178, 17191 (Mar. 26, 2020)]. The Commission set the threshold for AFs and LAFs becoming NAFs at $60

million, and the threshold for exiting LAF status at $560 million. Id.

price-based threshold should remain an important consideration, the Commission’s existing

separate thresholds for exiting a filer status have contributed to the complexity of the current

rules. Accordingly, we are also proposing to eliminate the separate, lower threshold for exiting

LAF status in favor of a definition with a single public float criterion and a two-year lookback

determination (i.e., public float of $2 billion or more for two consecutive fiscal years). While the

lower exit threshold was intended to maintain stability in status so that registrants with public

floats near the entry threshold do not frequently move in and out of a filer status, we believe

requiring the threshold be met in two consecutive years based in each year on a longer

calculation window would more meaningfully address these concerns while being easier for

registrants to implement and providing earlier notice of a possible change in filer status.

A potential drawback of the two-year lookback is that some registrants that would

become LAFs would have to provide non-scaled disclosure even if their public float falls below

the LAF threshold for a year. Conversely, a potential drawback for investors is that they would

not receive the benefits of non-scaled disclosure following an NAF’s single-year increase in

public float, as they would with a one-year lookback. However, a registrant remaining “in status”

for at least two years before potentially changing to a new filer status could provide more

consistency to the disclosure regime and more comparable period-to-period information, to the

benefit of both registrants and investors.

To demonstrate how these proposed changes would work in practice, consider a

hypothetical NAF that is assessing its annual filer status as of the last day of its fiscal year, or

December 31, 2026, for a calendar-year end registrant. Assuming the proposed rules were in

effect, if an NAF’s public float, as determined by the average stock price over the last 10 trading

days of the second quarter of each fiscal year being measured (i.e., the 10 trading days ending on

or before June 30), for fiscal year 2025 was $1.9 billion and for fiscal year 2026 is $2.3 billion,

the registrant would remain an NAF for purposes of its December 31, 2026 Form 10-K (filed in

2027) because it crossed the LAF threshold in only one year of the two-year lookback period.

That is, when performing the test as of the last day of its fiscal year, the registrant looks back to

the last 10 trading days of the second quarter of the fiscal year for each of fiscal year 2026 and

2025, and in the example, it only exceeded the threshold in fiscal 2026. If the registrant then

determines that its public float as of the measurement period of the second quarter for fiscal year

2027 is $1.9 billion (dropping back below the LAF threshold), the registrant would remain an

NAF as of the end of fiscal 2027. The earliest it could become an LAF would be at the end of its

fiscal year 2029 (assuming its public float crosses the LAF threshold for the relevant

measurement period of the second quarter for both fiscal years 2028 and 2029), and if so it

would be required to comply with the requirements of LAF status beginning with its Form 10-K

for fiscal year 2029 filed in 2030.

On the other hand, if that registrant determines its public float for fiscal year 2027 is $2.5

billion (while the fiscal year 2026 public float remains at $2.3 billion as in the example above), it

would become an LAF as of the last day of its fiscal year 2027, and would be required to comply

with the requirements of LAF status beginning with its Form 10-K for fiscal year 2027 (filed in

2028). If the registrant’s public float falls to $1.9 billion as of the relevant measurement period in

the second quarter of fiscal year 2028, the registrant would remain an LAF for purposes of its

Form 10-K for fiscal year 2028 because its public float will have been below the LAF threshold

for only one fiscal year. The earliest it could become an NAF would be as of the end of its fiscal

year 2029 (assuming its public float is below the LAF threshold in the relevant measurement

period in the second quarters of both fiscal years 2028 and 2029), and if so would be able to

transition to NAF status beginning with its Form 10-K for fiscal year 2029, filed in 2030.

As proposed, once a registrant qualifies for a change in filer status, the requirements and

any applicable accommodations of the new filer status would apply beginning with the filing of

its annual report on Form 10-K for the fiscal year in which the filer status was determined. As a

result, the possibility of both entering LAF status and transitioning to NAF status are foreseeable

further in advance than is the case currently, allowing companies to more predictably plan their

disclosure controls and procedures and associated costs. Similarly, the first time an LAF’s public

float falls below the LAF threshold (or an NAF’s public float rises above the threshold) as of one

of its second fiscal quarter ends, investors would know that, even if that trend were to continue,

the registrant would be required to file at least one more Form 10-K subject to the LAF

disclosure requirements and deadlines (or subject to the NAF disclosure requirements and

deadlines, as the case may be).

Seasoning

We are proposing to expand the seasoning period for LAFs—i.e., the requisite period

after which registrants could potentially qualify as LAFs—to 60 consecutive calendar months

from when the registrant became subject to the Exchange Act reporting requirements, with the

assessment made as of the last day of its fiscal year. 140 Under current rules, a registrant must be

an Exchange Act reporting company for at least 12 calendar months before it can be classified as

140

The proposed 60-calendar month seasoning period means 60 full, consecutive calendar months and any portion

of a month immediately preceding the relevant measurement date. For example, a registrant that became subject

to the Exchange Act’s reporting requirements on July 19, 2025 would satisfy the seasoning requirement for

purposes of assessing whether it is an LAF on Aug. 1, 2030.

an LAF. 141 In adopting the current 12-calendar month seasoning period, the Commission noted

that, along with the public float requirement, the seasoning period was “designed to include the

companies that are least likely to find [accelerated deadlines] overly burdensome and where

investor interest in accelerated filing is likely to be highest.” 142 When the Commission adopted

the 12-calendar month seasoning period, it was focused on existing registrants that would

become subject to accelerated filing deadlines and recognized that there would be an increased

burden for these issuers. Since the adoption of the acceleration of periodic reporting in 2002,

Congress and the Commission have expanded the disclosure requirements for registrants,

especially for LAFs. Given the additional requirements that apply to LAFs, we believe that a

longer seasoning period would be appropriate before a registrant should be required to comply

with non-scaled ongoing disclosure and timing requirements.

This change would effectively create a minimum five-year on-ramp for every new

registrant, regardless of public float. While we recognize that this five-year on-ramp would, for a

small subset of registrants, 143 delay compliance with respect to non-scaled disclosure

requirements, accelerated reporting deadlines, and ICFR auditor attestation as compared to the

current rules, we believe allowing all newer registrants ample time to adjust to the disclosure and

filing requirements of a public company may encourage more companies to go public and stay

141

17 CFR 240.12b-2. In connection with these proposed changes, we are also proposing to eliminate paragraph

(iii) of the “large accelerated filer” definition, which requires that the issuer have filed at least one annual report

pursuant to section 13(a) or 15(d) of the Exchange Act, as unnecessary because a registrant would have filed

several annual reports before becoming an LAF under the proposed 60 consecutive month seasoning

requirement.

142

Acceleration of Periodic Report Filing Dates and Disclosure Concerning Web Site Access to Reports, Release

No. 33-8128 (Sept. 5, 2002) [67 FR 58480, 58487 (Sept. 16, 2002)].

143

As noted in section IV below, absent the proposed five-year on-ramp, the percentage of current registrants

continuing on as LAFs under the proposal would increase from 19.2 % to 20.7 %.

public, which may ultimately improve overall market transparency and provide investors with

more investment opportunities with the greater transparency afforded by Exchange Act

reporting. In addition, even if a particular requirement does not apply to a registrant, that

registrant may elect to voluntarily comply, such as by obtaining an ICFR auditor attestation, if

the registrant believes it would benefit the registrant to do so, such as if doing so were viewed

favorably by investors.

When Congress enacted the JOBS Act, in order to encourage more companies to go and

stay public, it created an on-ramp of up to five years in EGC status, reducing registrants’

compliance burdens in their early years as public companies. In our experience, this on-ramp has

been a meaningful accommodation to newer public companies and generally has not resulted in

investor protection concerns. 144 A similar on-ramp before a registrant would potentially enter

LAF status would be consistent with and effectively expand the benefits of EGC status, and

would provide all newer registrants ample time to, among other things, prepare for the increased

costs and reporting burdens on company staff and enlist third party advisors or service providers

needed to satisfy the non-scaled disclosure requirements and accelerated reporting timelines.

Finally, providing a sixty calendar month on-ramp complements Congress’ intent with its

establishment of EGC status and would help to simplify filer status determinations by ensuring

that all registrants that meet the statutory definition of EGCs will necessarily qualify as NAFs

when making their filer status determinations. 145

144

For evidence of the favorable effects of EGC accommodations on IPOs, see, e.g., Michael Dambra, Laura

Casares Field & Matthew T. Gustafson, The JOBS Act and IPO Volume: Evidence that Disclosure Costs Affect

the IPO Decision, 116 J. FIN. ECON. 121 (2015) (“Dambra et al. (2015)”).

145

Under the proposed rules, an EGC that has lost its EGC status in less than five years would continue to be

considered an NAF until the proposed LAF 60 consecutive calendar month on-ramp ends for that registrant.

Request for Comment

1) Does public float continue to be a reasonable indicator of which companies the markets

follow most closely? Does public float continue to be a good indicator of the most

significant need for more extensive public disclosure? Why or why not? As an alternative, in

view of the increasing prevalence of dual class share structures, should non-publicly traded

common equity securities held by non-affiliates through dual class share or other multi-class

share structures be included in determining whether the threshold is met? If so, how should

registrants determine the value of those securities for purposes of the determination?

2) Does public float provide a reasonable indicator of a registrant’s ability to sustain the

burdens associated with LAF status under the proposed rules, including non-scaled

disclosure requirements, accelerated reporting timelines, and compliance with the ICFR

auditor attestation requirement in section 404(b)? If not, are alternative thresholds or other

measures more appropriate to evaluate a registrant’s ability to sustain the burdens of being

an LAF?

3) Is the proposed LAF threshold of $2 billion in public float, which would capture

approximately 93.5 percent of the total market public float and would result in

approximately 20 percent of existing public companies being classified as LAFs,

appropriate? If not, what other threshold should the Commission consider and why? For

example, should the Commission update the threshold to $3.85 billion to mirror the increase

in the S&P 500 Index? Do the proposed changes to the LAF status public float threshold and

calculation methodology appropriately balance the goals of capital formation and investor

protection? Should the Commission instead adopt a different threshold, and if so, what?

Would the proposed approach result in any impacts to investors and the public market,

including benefits or burdens that might result from the proposed scaling of disclosure

associated with the revisions to the filer status categories? Would the proposed approach

impact investors’ ability to make informed investment and voting decisions?

4) We have proposed to adjust the public float threshold not based on inflation, but rather to

cover the registrants that comprise the vast majority of the total market public float and that

are most able to comply with the highest level of burden associated with registration. Should

the Commission instead update the current threshold for inflation? Alternatively, should the

Commission establish a mechanism to update the proposed $2 billion public float threshold

for inflation? For example, the JOBS Act requires that the revenue threshold in definition of

EGC be indexed to inflation at five-year intervals. Should the proposed public float

threshold be similarly indexed to inflation? Are there alternative methodologies for updating

the threshold that would be preferable?

5) Would the proposed average public float calculation period (consisting of the registrant’s

stock price over the last 10 trading days of the second quarter of each relevant fiscal year)

and the proposed use of the number of shares held by non-affiliates as of the last day of the

second fiscal quarter achieve the intended goal of avoiding a result where a company’s

public float determination is anomalous due to short-term volatility? Why or why not?

Should it be more or fewer than 10 trading days? Should the number of shares be based on

the average number of shares during the same 10 trading day period instead of at the last day

of the second fiscal quarter or should the number of shares be based on the number of shares

as of a date selected by the registrant within a given period (such as any date within the last

10 trading days of the second fiscal quarter)? Why or why not? Are there costs or benefits

associated with extending the public float calculation methodology to 10 trading days?

6) We considered multiple calculation windows for the public float calculation, including:

retaining the existing calculation date of the last trading day of the second fiscal quarter;

allowing a registrant to choose a date within a given period (such as any date within the last

10 trading days of the second fiscal quarter); or reducing the number of days comprising the

average to, for example, the last five trading days of the second fiscal quarter. Are any of

these or other alternatives preferable to the proposed 10-day average methodology, and if so,

why?

7) Is the proposed LAF threshold effective for all types of issuers, or should the threshold

differ for certain types of issuers? For example, should LAF status for investment

companies (i.e., BDCs and face-amount certificate companies) use a different public float

threshold, a different seasoning period, or a different approach altogether (e.g., a threshold

based on assets or annual investment income)? If so, what threshold would be appropriate

for investment companies?

8) Is a 60-calendar month on-ramp (seasoning period) before LAF status can attach to a

registrant appropriate? Would this create a beneficial on-ramp for newer public companies

before they could be subject to LAF status? Would a shorter period, such as 24 calendar

months, or no seasoning period at all, be more appropriate considering that public

companies that meet the proposed public float threshold to be an LAF likely have the

resources to comply with the more extensive requirements? Do the very largest new

registrants need a 60-calendar month seasoning period, or should certain registrants be

required to comply with LAF requirements sooner? If a seasoning period is adopted, should

the largest new registrants nevertheless be required to comply sooner with certain of the

LAF requirements, such as auditor attestation on ICFR? If so, what would be an appropriate

time period for such registrants? Are the proposed mechanics around assessment of the

seasoning period sufficiently clear, or would any modification to the proposed amendments

or any clarifying guidance be needed?

9) In order to minimize variation in disclosure obligations and ensure a level of predictability,

the proposal contemplates a two-year period after transitioning into or out of LAF status

during which a registrant’s filer status cannot change. Should we adopt this two-year

minimum period, as proposed? Would this have the intended effect of providing registrants

and investors with some consistency and predictability as to the disclosure and other

requirements a registrant is subject to? Is comparability with respect to a registrant’s

disclosure over a two-year (or longer) period an important consideration for investors?

Would another period be more appropriate? Alternatively, should we consider other ways of

addressing these concerns? For example, under the current rules a registrant must fall below

a separate, lower threshold to exit AF status than to enter that status; should we retain this

approach? If so, why and what lower threshold would be appropriate for exiting LAF status?

10) Are there any other issues relating to filer status transitioning that the Commission should

clarify or address in any final rules? For example, if a registrant deregisters its securities and

later re-enters the reporting system, should that registrant be considered a new registrant for

purposes of the 60-calendar month seasoning period?

11) When an issuer qualifies for a new filer status, which under the proposal would only happen

at the end of a fiscal year, should the requirements and/or accommodations of that new

status apply to the issuer beginning with the annual report for the fiscal year in which the

change in filer status occurred, as proposed? Should issuers have the option to apply a

change in filer status earlier than as proposed?

Non-Accelerated Filer Amendments

We are proposing to define “non-accelerated filer” to mean an issuer 146 that is not an

LAF. As proposed, every registrant would be an NAF beginning at the time of its initial public

offering or registration and for at least five years following, as a result of the proposed 60

consecutive calendar months on-ramp requirement before a registrant could become an LAF. An

issuer would then remain an NAF unless and until it had an aggregate worldwide market value of

the voting and non-voting common equity held by its non-affiliates, or public float, of at least $2

billion for two consecutive years. After an NAF qualifies as an LAF and thereby loses its NAF

status, it could regain its NAF status if its public float is less than $2 billion for two consecutive

years.

We also propose to extend to NAFs the disclosure requirements and other

accommodations currently applicable to SRCs and EGCs. 147 While we estimate that the

proposed NAF filer status would account for approximately 81 percent of reporting companies

currently, they would account for only 6.5 percent of total market public float. We therefore

believe it is appropriate and in the public interest to leverage the accommodations and

requirements that have been effective for registrants that are currently SRCs and/or EGCs, which

compose over 52 percent of current registrants, in resetting our disclosure framework to be better

tailored to market following. We anticipate that this change will help rebalance the costs and

146

As proposed, asset-backed issuers would be excluded from the filer status definitions. See section II.B.4 for

further discussion of the applicability of the proposal to asset-backed issuers.

147

But see section II.B.3.b. In addition, we note that the current rules applicable to SRCs and EGCs are not

applicable to asset-backed issuers. Further, as discussed below, we are proposing to extend a limited set of these

accommodations to NAFs that are BDCs or face-amount certificate companies, to recognize differences in the

activities and characteristics of these investment companies relative to other NAF issuers.

benefits associated with public company status with the intention of facilitating more companies

going and staying public, which will ultimately increase transparency in the market to the benefit

of investors, while still maintaining investor protections. We further anticipate that reducing the

burdens of periodic disclosure may enable management teams to better focus on business

operations. 148

We recognize that this approach will result in the loss of some information, loss of

auditor attestation of ICFR, and longer reporting deadlines for certain registrants that currently

qualify as LAFs or AFs but would qualify as NAFs under the proposed rules. However, we

believe that the material information necessary for investors to make sound investment and

voting decisions will continue to be required from and provided by NAFs under the proposed

rules. NAFs would also continue to be subject to annual, other periodic and current reporting

requirements, including required disclosure of audited financial statements as well as MD&A of

the registrant’s financial condition and results of operations, and management’s assessment of

and report on the effectiveness of the registrant’s ICFR, which would continue to provide

transparency to investors and assist them in making informed investment and voting decisions.

Non-Accelerated Filer Definition

Under the current rules, the term “non-accelerated filer” is not defined. The term is used

informally and widely to refer to a registrant that is neither an LAF nor an AF, which typically

means a registrant with under $75 million in public float. 149 Currently, an NAF can also be an

148

See section IV.B.5.

149

Under the current rules, an NAF can have more than $75 million in public float if it qualifies as an SRC with

annual revenues less than $100 million and public float less than $700 million. See 17 CFR 240.12b-2.

SRC, an EGC, or both. We are proposing to define a new regulatory category termed “nonaccelerated filer,” which we propose to define in Securities Act Rule 405 and Exchange Act Rule

12b-2 as “an issuer that is not a large accelerated filer.” As a result, the default status for any

Exchange Act reporting company (other than asset-backed issuers, pursuant to an exception we

are proposing in Rule 405 and Rule 12b-2) would be an NAF; until a company meets the

proposed new conditions for becoming an LAF, it would remain an NAF. 150 In addition, under

the proposed rules, NAFs would be subject to essentially the same requirements and

accommodations that are applicable to SRCs and EGCs under the current rules. 151 By expanding

NAF filer status under the proposed amendments, more registrants would qualify as NAFs and

therefore would not be required to comply with the ICFR auditor attestation requirement. 152

With these amendments, we further propose to eliminate the “accelerated filer” 153 and

“smaller reporting company” 154 categories, and the corresponding definitions in Item 10 of

150

The proposed amendments would not include any changes to the filing deadlines for NAFs, which under the

current rules require such registrants to file their quarterly reports 45 days after fiscal quarter end, and their

annual reports 90 days after fiscal year end. But see section II.C regarding small NAFs.

151

But see section II.B.3.b and supra note 147. To ensure that the NAF accommodations apply to Securities Act

registration statements, we are proposing to define “large accelerated filer,” “non-accelerated filer,” and “small

non-accelerated filer” in Securities Act Rule 405.

152

15 U.S.C. 7262(c).

153

In proposing to eliminate the use of the term “accelerated filer”, we are proposing to revise the definitions in

Exchange Act Rule 12b-2 to remove “accelerated filer” and to revise Forms S-1, S-3, S-4, S-8, S-11, 10, 10-K,

10-Q, and 20-F to refer to NAF instead. We are also proposing to similarly revise 17 CFR 210.2-02, 17 CFR

210.3-01, 17 CFR 210.3-09, 17 CFR 210.3-12, 17 CFR 229.101, 17 CFR 229.308, 17 CFR 232.405, and 17

CFR 240.13a-10 to refer to NAF instead of “accelerated filer”.

154

In proposing to eliminate the use of the term “smaller reporting company,” we are proposing to revise the

definitions in Exchange Act Rule 12b-2 and Securities Act Rule 405 to remove “smaller reporting company.”

We are similarly proposing to revise Forms S-1, S-3, S-4, S-8, S-11, 10, 10-K, 10-Q, 8-K, 20-F, and Form 1-A

to refer to NAF instead of SRC. We are also proposing to similarly revise Articles 8 and 15 of Regulation S-X,

Regulation S-K, Exchange Act Rules 10C-1 13a-13, 13q-1, 14a-3, 14a-21, and 15d-13 to refer to NAF instead

of “smaller reporting company.” We are also proposing a technical amendment to remove 17 CFR 240.15d-

Regulation S-K, 155 Rule 405, 156 and Rule 12b-2, 157 since they will no longer be necessary given

the expansion of NAF status. 158 Because the proposed amendments would extend to NAFs the

disclosure accommodations currently available to EGCs, the proposed amendments would

generally make separate reliance on those JOBS Act provisions 159 for EGCs unnecessary. 160

The proposed changes would establish a clearly demarcated on-ramp for registrants to

grow and gain experience as reporting companies before becoming subject to the more detailed

13(e) because paragraph (e) of Rule 15d-13 essentially repeats the language in current Rule 15d-13(d) for

purposes of alternative financial reports for public utilities in a historical provision of Rule 15d-13. See

Adoption of Amendments of Certain Forms and Related Rules, Release No. 34-13156 (Jan. 13, 1977) [42 FR

4424, 4429 (Jan. 25, 1977)].

155

17 CFR 229.10(f) currently provides a definition of “smaller reporting company” and describes the

requirements of Regulation S-K that apply to SRCs. Because we are proposing to eliminate the SRC category,

we are proposing to remove Item 10(f) in its entirety. In addition, we are proposing to make a technical

correction to Item 10(b). When the Commission adopted rule revisions to Item 10(b)(2) in 2024, Item 10(b)(3)

was inadvertently deleted. See Special Purpose Acquisition Companies, Shell Companies, and Projections,

Release No. 33-11265 (Jan. 24, 2024) [89 FR 14158 (Feb. 26, 2024)]. We are proposing to add back the

inadvertently deleted Item 10(b)(3).

156

17 CFR 230.405 currently provides a definition of “smaller reporting company.” Because we are proposing to

eliminate the “smaller reporting company” category, we are proposing to remove the definition in Rule 405.

157

17 CFR 240.12b-2 currently provides definitions of “accelerated filer” and “smaller reporting company.”

Because we are proposing to eliminate these, we are proposing to remove the definitions in Rule 12b-2.

158

In order to apply the NAF accommodations under the Securities Act rules we are proposing to add the

definitions of “large accelerated filer,” “non-accelerated filer,” and “small non-accelerated filer” to Rule 405. In

conjunction with these changes, we are proposing amendments to Forms S-1, S-3, S-4, S-8, S-11, on the cover

page, and elsewhere as appropriate, to refer to the proposed categories of issuers. We are also proposing to

update check box disclosures on the cover page of certain registration statements and periodic reports under

which, currently, a registrant is required to identify itself as an LAF, AF, NAF, SRC, and/or EGC by replacing

this with language under which a registrant would be required to identify itself as an LAF, NAF, SNF, and/or

EGC. As is currently the case, a registrant would check each box that applies. For example, a registrant that is

an EGC, NAF, and SNF would check all three boxes.

159

See supra Section I.D.2. for a discussion of the JOBS Act accommodations for EGCs.

160

We are proposing to remove references to EGCs and refer instead to NAFs in Rules 2-02 and 3-02 of

Regulation S-X; Items 303, 308, 402, 407, and 1011 of Regulation S-K. In their place, we propose to replace

Item 10(f) Smaller reporting companies with a revised Item 10(f) Emerging growth companies that enumerates

the statutory exemptions and accommodations provided to EGCs. Additionally we propose to retain the

definition of “emerging growth company” in Exchange Act Rule 12b-2 and Securities Act Rule 405 and to

continue to require the check boxes for EGC status in certain periodic reports and registration statements

because that information may continue to be useful to investors as registrants would statutorily remain EGCs.

and expansive disclosure obligations applicable to LAFs. As noted above, the Commission has

long considered how best to apply a disclosure regulation framework to companies that vary

widely in size and resources to comply with complex securities laws and rules. During its

history, the Commission has established various categories, such as “small business issuers,”

“smaller reporting companies,” and “accelerated filers,” in tailoring disclosure and reporting

requirements based on the needs of investors with an awareness of the potential burdens

associated with registrants’ ability to comply with those requirements. In the JOBS Act,

Congress similarly sought to address some of these concerns for newly public companies by

establishing the EGC filer status and reaffirmed the need for the Commission to consider ways to

further streamline the requirements for the benefit of new and smaller companies in the FAST

Act. 161 Accordingly, we believe that the consolidation of SRC and EGC accommodations into a

single regulatory filer status and the elimination of the AF status as a standalone status is in the

public interest and consistent with the protection of investors.

The proposed amendments would transform what is currently a layered and complex set

of filer statuses into a more streamlined structure, with the intent of simplifying the regulatory

scheme. Registrants would no longer need to assess each year multiple filer status entry and exit

thresholds, many of which are overlapping and often have inconsistent lines distinguishing one

set of requirements from the next.

In addition, the expanded category of NAFs would be subject to fewer of the costly

requirements that currently apply to LAFs and AFs. As discussed in more detail in the sections

that follow, for example, NAFs would be permitted to rely on Article 8 of Regulation S-X for

161

See section I.D.2.

scaled financial disclosure and provide only two (instead of three) years of audited financial

statements in their annual reports and registration statements, would be permitted to comply with

scaled executive compensation disclosure requirements, and would not be subject to the ICFR

auditor attestation requirement. 162 As a result, we expect that NAFs would have reduced costs of

compliance compared to LAFs and would have ample notice to prepare for accelerated filing,

additional disclosure, and required auditor attestation of ICFR should they transition to LAF

status.

We recognize that the proposed expansion of NAF status and application of EGC and

SRC disclosure requirements would result in reduced disclosure for many registrants and their

investors. While that reduction in disclosure may result in costs to investors, both investors and

registrants may also benefit from more companies choosing to register their securities or to

continue as public companies. This would provide more public market investment opportunities

that would be subject to robust disclosure requirements, which provide greater transparency as

compared to private markets. In addition, and as discussed in more detail in sections IV and V

below, we believe investors and registrants would benefit from a more easily understandable filer

status framework that imposes fewer compliance costs, the ultimate burdens of which are borne

by a registrant’s shareholders. Moreover, as discussed in more detail in section IV below, we

estimate that the proposed changes would apply to registrants representing approximately 6.5

percent of total market public float, while registrants representing approximately 93.5 percent of

total market public float would remain subject to LAF reporting requirements. We believe this

162

As discussed below, BDCs and face-amount certificate companies that are NAFs would not be permitted to rely

on Article 8 of Regulation S-X, but we propose to provide certain of the accommodations in Article 8 to these

entities by separate rule.

focus on ensuring that the registrants that represent the vast majority of the market continue to

comply with the most extensive requirements mitigates investor protection concerns with the

proposed amendments.

ICFR and the Auditor Attestation Requirement

One significant effect of the proposed amendments would be a decrease in the number of

registrants required to obtain an auditor attestation of management’s assessment of the

effectiveness of the company’s ICFR. Sarbanes-Oxley Act section 404(b) requires the auditor

that prepares or issues the issuer’s audit report (other than for EGCs) to attest and report on

management’s assessment of the effectiveness of ICFR; however section 404(c) exempts

registrants that are not LAFs or AFs from the ICFR auditor attestation requirement. By

increasing the upper bound of NAF status from less than $75 million (or less than $700 million if

revenues are less than $100 million) to less than $2 billion, the proposed amendments would

expand by 26.7 percent the number of current registrants that would qualify as NAFs and would

therefore not be subject to an ICFR auditor attestation requirement. 163 Additionally, with respect

to newly public companies, the proposed minimum five-year on-ramp (60 calendar months)

before entering LAF status would allow these companies additional time to adjust to being a

public company before potentially being exposed to ICFR auditor attestation costs. This in turn

may incentivize some companies to go public sooner, which could open to investors additional

opportunities for investments that might otherwise have stayed in the private market or which

some investors may not have otherwise been able to access.

163

See section IV.B.1.

As noted, under the proposal, NAFs would remain subject to the Commission’s rules

under section 404(a), which require management to establish, state its responsibility to establish

and maintain, and provide its assessment of, the registrant’s ICFR. 164 NAFs would also continue

to be required to obtain a financial statement audit by a registered public accounting firm 165 in

which the auditor is required to obtain an understanding of ICFR as part of its risk assessment

procedures. 166 Obtaining an understanding of ICFR includes evaluating the design of controls

that are relevant to the financial statement audit and determining whether the controls have been

implemented. 167 Additionally, the auditor may test the operating effectiveness of certain internal

controls in connection with the financial statement audit. 168 These procedures to obtain an

understanding of ICFR and test the operating effectiveness of controls in connection with the

financial statement audit may identify deficiencies in the registrant’s ICFR. Moreover, the

auditor may identify such deficiencies when performing substantive procedures in a financial

statement audit. The auditor is required to communicate in writing to management and the audit

164

See 17 CFR 229.308. A registrant is not required to provide a report of management on the registrant’s ICFR

until it has either been required to file an annual report pursuant to section 13(a) or 15(d) of the Exchange Act

for the prior fiscal year or has filed an annual report with the Commission for the prior fiscal year.

165

See Rule 2-02.

166

See PCAOB AS 2110, Identifying and Assessing Risks of Material Misstatement, paragraph 18,

https://pcaobus.org/oversight/standards/auditing-standards/details/AS2110. Pursuant to AS 2110, the auditor is

required to obtain a sufficient understanding of each component of internal control over financial reporting to

(a) identify the types of potential misstatements, (b) assess the factors that affect the risk of material

misstatement, and (c) design further audit procedures.

167

See id., paragraph 20. This evaluation is not for the purpose of expressing an opinion on the effectiveness of the

company’s ICFR.

168

See PCAOB AS 2301, The Auditor’s Responses to the Risks of Material Misstatement, paragraph 16,

https://pcaobus.org/oversight/standards/auditing-standards/details/AS2301. Also, tests of controls must be

performed in the audit of financial statements for each relevant assertion for which substantive procedures alone

cannot provide sufficient appropriate audit evidence and when necessary to support the auditor’s reliance on the

accuracy and completeness of financial information used in performing other audit procedures. See id.,

paragraph 17.

committee all significant deficiencies and material weaknesses identified during the financial

statement audit, 169 which may in turn require consideration by management in connection with

management’s assessment of ICFR under section 404(a).

The Commission has recognized the benefits of ICFR auditor attestation in enhancing the

reliability of management’s assessment of ICFR and the registrant’s financial statements. 170 The

auditor’s attestation can help registrants identify and disclose, on a timely basis, material

weaknesses in ICFR, maintain their focus on effective internal controls, and, ultimately, mitigate

the need for subsequent restatements of financial statements due to misstatements that were not

prevented or detected, on a timely basis, by the registrant’s internal controls. 171 Any resulting

increase in the effectiveness of ICFR enhances the quality of the registrant’s financial statements

which investors rely upon to make informed investment and voting decisions. The Commission

has also remained cognizant of the significant costs and burdens that are associated with section

404(b) compliance. 172 Some commenters on the 2019 Accelerated Filer Release stated to the

Commission that the ICFR auditor attestation is the most costly aspect of being an AF. 173

169

See PCAOB AS 1305, Communications About Control Deficiencies in an Audit of Financial Statements,

paragraph 4, https://pcaobus.org/oversight/standards/auditing-standards/details/AS1305.

170

See, e.g., Study of the Sarbanes-Oxley Act of 2002 Section 404 Internal Control over Financial Reporting

Requirements, Office of Economic Analysis, U.S. Securities and Exchange Commission (Sept. 2009), at 56-67

(detailing a survey of financial executives of publicly traded companies finding benefits to section 404

compliance, but also finding that net benefits were negative); Staff Study at 112 (“There is strong evidence that

the auditor’s role in auditing the effectiveness of ICFR improves the reliability of internal control disclosures

and financial reporting overall and is useful to investors.”).

171

See Staff Study at 85-87 (identifying benefits to the auditor’s attestation including the disclosure of internal

control deficiencies that were not previously disclosed by management and citing studies indicating that issuers

that are required to comply with section 404(a) and (b) are less likely to issue materially misstated financial

statements than issuers not subject to these requirements).

172

See supra notes 64, 67, and 69.

173

See supra note 35.

Supporting these assertions, in a June 2025 report to Congress the GAO found that section 404

compliance costs are more burdensome in relative terms for smaller companies. 174

In proposing to increase the LAF public float threshold, we recognize that many issuers

would no longer be subject to the ICFR auditor attestation requirement of section 404(b) and that

this would likely result in a loss of the benefits of auditor attestation in enhancing the reliability

of management’s assessment of ICFR and improving the reliability of financial statements. For

example, a number of commenters to the 2019 Accelerated Filer Release indicated that ICFR

auditor attestation requirement promotes effective ICFR and more accurate disclosures related to

ICFR. 175 Additionally, investors may factor in whether a company voluntarily obtains ICFR

auditor attestation in weighing their investment and voting decisions with respect to individual

companies.

On balance, we believe increasing the LAF threshold and the resulting change in the

number of companies subject to the ICFR auditor attestation requirement are appropriate given

the significant relative cost burden of this requirement, particularly to smaller registrants. The

expected reduction in costs to those registrants, as well as related effects of the proposal that may

encourage more companies to go and stay public, ultimately would benefit investors in those

companies. However, the proposed amendments would also allow registrants flexibility to decide

to obtain and disclose the results of such auditor attestation, even if not required, for example if

174

U.S. GOV’T ACCOUNTABILITY OFF., Sarbanes-Oxley Act: Compliance Costs Are Higher for Larger Companies

but More Burdensome for Smaller Ones (June 2025), https://www.gao.gov/assets/gao-25-107500.pdf.

175

See Accelerated Filer and Large Accelerated Filer Definitions, Release No. 34-88365 (Mar. 12, 2020) [85 FR

17178, n. 88 (Mar. 26, 2020)]. Commenters also indicated that effective ICFR, generally, and the ICFR auditor

attestation requirement, more specifically, enhances transparency; increases the quality and reliability of

issuers’ financial statements, corporate governance, audits, and analyst forecasts; and reduces the number of

issuers’ restatements, misstatements, the instances of fraud, and occurrences of insider trading. Id. at notes 90

through 97 and accompanying text.

the registrant believes the benefits it would derive from such auditor attestation would justify its

costs. We believe that the ICFR auditor attestation requirement change, along with the other

changes we are proposing, would incentivize companies to access the public markets, register

their securities offerings, and continue as public companies, which in turn would expand

investment opportunities benefiting investors and the public markets. 176 Accordingly, we believe

these factors weigh in favor of the proposed amendments, which we find to be in the public

interest and consistent with the protection of investors.

Extension of SRC and EGC Accommodations and Disclosure

Requirements

Application of SRC Accommodations

The Commission has long been cognizant of the burdens of registration and reporting

under the securities laws, particularly as those burdens apply to smaller registrants. In the 1990s,

the Commission developed an integrated disclosure system tailored specifically to smaller

issuers, 177 and in the 2000s, the Commission replaced that system with a series of

accommodations for SRCs. 178 As part of our effort to simplify and further rationalize disclosure

responsibilities for registrants, we are proposing to permit registrants that meet the proposed

NAF status to comply with the disclosure requirements and accommodations currently

176

See section IV.B.

177

See the discussion relating to “small business issuers” in section I.A.

178

See the discussion relating to “SRC” in section I.D. The SRC filer status was initially linked to NAF status, but

subsequently the public float threshold was increased to $250 million.

applicable to SRCs. 179 The current SRC-level disclosures would become the default disclosure

requirements for most registrants.

While we are proposing to increase the number of registrants permitted to provide SRC

scaled disclosure from approximately 44 percent of registrants to approximately 81 percent, 180

the proportion of total market public float represented by this population of registrants would

remain relatively small (approximately 6.5 percent). The proposal would reduce the compliance

burdens of regulation for all of these small- to mid-capitalization registrants. This would benefit

those registrants and their investors by lowering expenses and thereby freeing up capital that

could be used to invest in the registrant’s business. Further, the lower expenses associated with

registration may further encourage such registrants to seek access to the public markets and

remain public, which also benefits investors by providing more investment opportunities with the

greater transparency afforded by Exchange Act reporting.

i. Scaled Disclosures under Regulation S-K and Other

Accommodations

Under the proposal, registrants that qualify as NAFs would be permitted to follow the

current SRC disclosure requirements, which is scaled disclosure compared to that required of

LAFs, to include: 181

179

For NAFs that are BDCs or face-amount certificate companies, we are proposing to extend most of the

disclosure requirements and accommodations currently applicable to SRCs, with the exception of some

financial statement provisions and performance graph disclosure.

180

As proposed NAF status would include registrants currently designated as SRCs and EGCs and all registrants

that meet the new, higher threshold for NAF status, which would include many registrants that are currently are

AFs or LAFs.

181

This list does not include accommodations discussed in section II.B.3.b.

•

More limited description of business; 182

•

Two (instead of three) years of MD&A pursuant to 17 CFR 229.303 (“Item 303 of

Regulation S-K”); 183

•

Two (instead of three) years of summary compensation table information pursuant to

17 CFR 229.402 (“Item 402 of Regulation S-K”); and

•

Executive compensation disclosure regarding three (instead of five) named executive

officers pursuant to Item 402 of Regulation S-K. 184

Registrants that qualify as NAFs would also be permitted to forgo the following

disclosures that are not currently applicable to SRCs:

•

Risk factor disclosure in Forms 10-K and 10-Q pursuant to Item 1A of Form 10-K

and Item 1A of Form 10-Q;

182

As proposed, Item 101 would be revised and renumbered. Proposed Item 101(a) would include all of the

requirements generally applicable to registrants, reflecting all of the requirements of current 17 CFR 229.101(h)

(“Item 101(h) of Regulation S-K”) that currently apply to SRCs, and proposed Item 101(b) would provide the

further requirements specific to LAFs. The proposed changes would remove any references to “smaller

reporting companies” and move other disclosure requirements and renumber paragraphs in Item 101 as

appropriate.

183

Specifically, we are proposing to revise Instruction 1 of the Instructions to paragraph (b) of Item 303 of

Regulation S-K to remove references to SRCs and EGCs and simply instruct registrants to include a discussion

that covers the period covered by the financial statements included in the filing. We are additionally proposing

to add a reference to Article 8 of Regulation S-X in paragraph (c) of Item 303 of Regulation S-K.

184

SRCs and EGCs are permitted to provide disclosure related to the grant of certain equity awards close in time to

the release of material nonpublic information for three, instead of five, NEOs pursuant to 17 CFR 229.402(x).

With respect to pay versus performance disclosure required by 17 CFR 229.402(v), among other

accommodations, an SRC is permitted to provide three (instead of five) years of pay versus performance

disclosure. As described below, an EGC is exempt from pay versus performance disclosure and we are

proposing to exempt NAFs from pay versus performance disclosure.

•

Performance graph disclosure pursuant to 17 CFR 229.201(e) (“Item 201(e) of

Regulation S-K”), except in the case of NAFs that are investment companies; 185

•

Supplementary financial information pursuant to 17 CFR 229.302(a) (“Item 302(a) of

Regulation S-K”); 186

•

Quantitative and qualitative disclosures about market risk pursuant to

17 CFR 229.305 (“Item 305 of Regulation S-K”); 187

•

Compensation discussion and analysis, compensation policies and practices related to

risk management, 188 pay ratio disclosure, 189 and specified executive compensation

disclosure tables, including grants of plan-based awards table, pension benefits table,

option exercises and stock vested table, and nonqualified deferred compensation table

pursuant to Item 402 of Regulation S-K; 190

185

Specifically, we are proposing to revise Item 201(e) of Regulation S-K by explicitly applying the rule only to

LAFs and investment companies and removing Instruction 6 of Instructions to Item 201(e) that exempts SRCs.

We are not proposing to permit investment companies that are NAFs to forgo the performance graph disclosure

pursuant to Item 201(e) of Regulation S-K to maintain parity with other RICs, which are subject to similar

performance graph requirements. See Instruction 4.g to Item 24 of Form N-2; Item 27A(d)(2) of Form N-1A.

Because BDCs and RICs share similar characteristics, we believe it is beneficial to investors to maintain the

existing parity in performance graph disclosure requirements. In addition, we are proposing to add a reference

in Item 201(a)(1)(iii) of Regulation S-K to Article 8 of Regulation S-X because as proposed Article 3 would not

necessarily apply to NAFs.

186

Specifically, we are proposing to simplify Item 302 of Regulation S-K by revising Item 302(a) to refer only to

LAFs, while retaining the requirements relating to FPIs. We are also proposing to remove Item 302(b). See

section II.E below.

187

We are proposing to amend Item 305 of Regulation S-K to only apply to LAFs by adding a reference to LAFs

in proposed revised Item 305(a) and 305(b) introductory text.

188

17 CFR 229.402(s).

189

17 CFR 229.402(u), 17 CFR 229.402(l), and Instruction 8 to 17 CFR 229.402(u).

190

We are proposing to amend Item 402 of Regulation S-K to replace the references to SRC with references to

NAF, to remove references to EGCs, and to add a new Item 402(a)(7) in place of Item 402(l) to provide

guidance relating to NAFs.

•

Policies and procedures for the review, approval, or ratification of related party

transactions pursuant to 17 CFR 229.404(b) (“Item 404(b) of Regulation S-K”); 191

•

Compensation Committee Interlocks and Insider Participation disclosure, and

Compensation Committee Report disclosure pursuant to 17 CFR 229.407(e)(4) and

(e)(5); 192

•

Audit committee financial expert disclosure in a registrant’s first annual report; 193 and

•

Certain payments made by resource extraction issuers pursuant to 17 CFR 240.13q-1.

By contrast, while current Item 404 includes an accommodation permitting SRCs to

exclude disclosure relating to the review, approval, or ratification of related party transactions in

accordance with Item 404(b) as noted above, it also includes several requirements that are more

rigorous for SRCs. Among other things, Item 404(d) provides a different, more rigorous

threshold for disclosure by SRCs of the lesser of $120,000 or one percent of the average total

assets at year-end for the last two fiscal years when determining reportable transactions with

related persons under Item 404(a). Non-SRC registrants are only required to look to whether the

amount of the transaction exceeds $120,000. In addition, SRCs are required to disclose a list of

all parent companies showing the basis of control and as to each parent, the percentage of voting

securities owned or other basis of control by its immediate parent pursuant to Item 404(d)(3).

191

17 CFR 229.404(d) currently provides that SRCs are not required to provide Item 404(b) disclosure. We are

proposing to limit Item 404(b) disclosure to LAFs. We are additionally proposing to make non-substantive

changes to Item 404 to renumber and incorporate the Instructions to Item 404(a) into Item 404(a) and to revise

Item 404 to remove use of the term “shall”.

192

SRCs and EGCs are currently permitted to forgo these disclosures pursuant to 17 CFR 229.407(g)(1)(ii) and

(g)(2). Consistent with this, we are proposing to revise these rules to limit their application solely to LAFs.

193

17 CFR 229.407(d)(5) and 17 CFR 229.407(g)(1)(i).

Rather than apply such requirements to NAFs, we are proposing to remove Item 404(d) and

would not apply the additional requirements that currently apply to SRCs to all NAFs.

We are proposing to require disclosure of material unresolved staff comments by all

issuers. Currently, if a registrant that is an AF, LAF, or well-known seasoned issuer has received

written comments from the Commission staff regarding its periodic or current reports and these

comments remain unresolved, the registrant is required to disclose the substance of any material

unresolved comments on Form 10-K or Form 20-F. 194 Staff review and comment could serve an

important investor protection function. As a result, we believe it is appropriate to require NAFs

to also provide this disclosure to investors.

Additionally, as noted above, in conjunction with this release, the Commission is

proposing reforms to the securities offering process to make Form S-3 and the ability to conduct

shelf offerings, including automatic shelf offerings, available to significantly more issuers. 195

Because these offerings, which often incorporate by reference information from a registrant’s

current and periodic reports, would be available to more issuers, including NAFs, we believe that

investors in those issuers should be made aware of the substance of any material unresolved

comments. Accordingly, we are proposing to amend Item 1B. of Form 10-K and Item 4A of

Form 20-F 196 to require all registrants to disclose material unresolved comments received at least

194

See Item 1B of Form 10-K and Item 4A of Form 20-F.

195

See Registered Offering Reform Proposal.

196

We are proposing that all registrants be required to disclose material unresolved comments. We are not

proposing to provide an accommodation to FPIs that would differ from what is available to registrants that file

on domestic forms. While we recognize that FPIs are not eligible for the accommodations relating to shelf

offerings, we believe that disclosure of material unresolved matters is important information for investors.

180 days before a registrant’s fiscal year end. 197 Under the proposal, in any Form 10-K or 20-F

filing, if a registrant has received written comments from the Commission staff regarding its

periodic or current reports under the Exchange Act (e.g., Form 10-K, 10-Q, or 8-K for domestic

filers, or Form 20-F or 6-K for FPIs) not less than 180 days before the end of its fiscal year to

which the Form 10-K or 20-F relates, and the comments remain unresolved, the registrant would

be required to disclose the substance of any unresolved comments that the registrant believes are

material and may provide other information including the position of the registrant with respect

to any unresolved comment.

ii.

Scaled Financial Statement Requirements under

Regulation S-X

Under the current rules, Article 8 provides the form and content requirements of financial

statements of SRCs. We propose to provide that NAFs may prepare their financial statements in

accordance with Article 8 of Regulation S-X, 198 except for NAFs that are BDCs or face-amount

certificate companies, which would receive certain of the same accommodations under proposed

Rule 3-19 of Regulation S-X. NAFs that are not investment companies would be permitted to:

•

Apply the form and content requirements of Article 8, with a few limited exceptions

as specified in Rule 8-01, 199 permitting registrants to not comply with certain form

197

We are not proposing comparable changes to Item 4A of Form 20-F at this time in light of the Commission’s

ongoing evaluation of the definition of FPI. See further discussion of this issue in section II.B.4.

198

Specifically, we propose to revise 17 CFR 240.14a-3(b)(1) to permit NAFs to prepare their financial statements

in accordance with Article 8 and to amend Article 8 to specify that the Article may be applied to financial

statements of NAFs.

199

Rule 8-01(b) allows SRCs to comply with the form and content required by Article 8 and not the other form and

content requirements in Regulation S-X, with the exception of the following: (1) the report and qualifications of

and presentation requirements related to the financial statements, 200 and to not

disclose certain financial statement schedules and certain general notes to the

financial statements, and to not provide separate financial statements of majorityowned subsidiaries not consolidated and 50 percent or less owned persons accounted

for by the equity method of accounting otherwise required by Regulation S-X; 201

•

Provide two rather than three years of audited statements of comprehensive income,

cash flows, and changes in stockholders’ equity pursuant to Rule 8-02;

the independent accountant requirements in 17 CFR 210.2-01 through 210.2-07; (2) the description of

accounting policies in 17 CFR 210.4-08(n); and (3) the financial accounting and reporting standards specified in

17 CFR 210.4-10 with respect to oil and gas producing activities. Additionally, there are other rules in Article 8

that direct SRCs to other requirements in Regulation S-X that must be complied with, including: Rule 8-01(c)

(the requirements of 17 CFR 210.3-10, for periods required by Rule 8-02, are applicable to financial statements

for a subsidiary of an SRC that issues securities guaranteed by the SRC or guarantees securities issued by the

SRC, and disclosures about guarantors and issuers of guaranteed securities registered or being registered must

be presented as required by 17 CFR 210.13-01); Rule 8-01(d) (the requirements of 17 CFR.210.3-16, for

periods required by Rule 8-02, or 17 CFR 210.13-02 are applicable if an SRC’s securities registered or being

registered are collateralized by the securities of the SRC’s affiliates, relying on 17 CFR 210.13-02 unless

17 CFR 210.3-16 applies.); Rule 8-01(f) (specifying that 17 CFR 210.3-06 applies to the preparation of

financial statements of SRCs); Rule 8-03(b)(5) (requires the information required by 17 CFR 210.3-04 related

to changes in stockholders’ equity and noncontrolling interests to be presented for the current and comparative

year-to-date periods, with subtotals for each interim period); Rule 8-04 (requires SRCs to apply 17 CFR 210.305 related to financial statements of businesses acquired or to be acquired, substituting Rule 8-02 and Rule 8-03

for Rule 3-01 and Rule 3-02); Rule 8-05 (requires SRCs to provide pro forma financial information complying

with 17 CFR 210.11-01 through 17 CFR 210.11-03 when any conditions in 17 CFR 210.11-01 exist, except it

may be condensed pursuant to Rule 8-03(a)); Rule 8-06 (requires SRCs to apply 17 CFR 210.3-14 related to

real estate operations acquired or to be acquired, substituting Rule 8-02 and Rule 8-03, for Rule 3-01 and Rule

3-02).

200

NAFs would not be required to comply with: (1) 17 CFR 210.5-01 through 210.5-07 (Article 6) applicable to

financial statements of commercial and industrial companies; (2) 17 CFR 210.7-01 through 210.7-05 (Article 7)

applicable to financial statements of insurance companies; and (3) 17 CFR 9-01 through 210.9-07 (Article 9)

applicable to financial statements of bank holding companies, savings and loan holding companies, and banks

and savings and loan associations.

201

There is no equivalent to Rule 3-09 in Article 8 requiring separate financial statements of significant majorityowned subsidiaries not consolidated and 50% or less owned persons accounted for by the equity method of

accounting. Such separate financial statements, however, should be provided if they are material to investors.

•

Provide a slightly more condensed format for interim financial statements, financial

statements for businesses and real estate operations acqu

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