SEC Proposes Changes to Increase Number of Issuers Exempt from Section 404(b) Auditor Attestation Requirement
The US Securities and Exchange Commission (the “SEC”) recently voted to propose amendments to the definitions of "accelerated filer" and "large accelerated filer" to exclude certain smaller reporting companies (“SRCs”). If adopted, the changes would mean that companies with less than $100 million in revenues would generally be exempt from the auditor attestation requirement of the Sarbanes-Oxley Act of 2002.
Among other things, the proposed amendments would:
- Exclude from the accelerated and large accelerated filer definitions an issuer that is eligible to be a SRC and had no revenues or annual revenues of less than $100 million in the most recent fiscal year for which audited financial statements are available;
- Increase the transition thresholds for accelerated and large accelerated filers becoming non-accelerated filers from $50 million to $60 million and for exiting large accelerated filer status from $500 million to $560 million; and
- Add a revenue test to the transition thresholds for exiting both accelerated and large accelerated filer status. The proposed amendments, which are subject to a 60-day public comment period, represent yet another example of the SEC’s efforts to attract companies to the US public markets.