Right after celebrating its second birthday, proposal to change the definition of “smaller reporting company” is adopted (updated)
[This post has been updated to reflect the adopting release, which has now been posted here, as well as posted statements from the Commissioners.] The pressure has been coming from all directions—the Congress, the Treasury—indeed, there’s been nary an advisory committee that hasn’t weighed in on this topic: time for the SEC to change the definition of “smaller reporting company.” After all, the proposal has just celebrated its second birthday—has it aged like a fine wine or is it moldy and stinky like an old piece of cheese? The verdict: moldy cheese that made no one happy, but they all ate it anyway.
The pressure has been coming from all directions—the Congress, the Treasury—indeed, there’s been nary an advisory committee that hasn’t weighed in on this topic: time for the SEC to change the definition of “smaller reporting company.” After all, today is the second birthday for this proposal—has it aged like a fine wine or is it moldy and stinky like an old piece of cheese? The verdict: moldy cheese that made no one happy, but they all ate it anyway.
This morning, the SEC unanimously voted to amend the definition of “smaller reporting company” to allow more companies to take advantage of the scaled disclosures permitted for companies that meet the definition. (Here is the press release.) The amendments raise the SRC cap from “less than $75 million” in public float to “less than $250 million” and include as SRCs companies with less than $100 million in annual revenues if they also have either no public float or, in a change from the proposal, a public float that is less than $700 million. The change was intended to promote capital formation and to reduce compliance costs for small public companies. (The SEC also voted to mandate Inline XBRL and to propose a number of changes to the whistleblower program, but those will be covered in subsequent posts.)
Yesterday, the SEC released for public comment a draft of its proposed strategic plan, which outlines the SEC’s priorities through FY 2022. The plan identifies three strategic goals related to investors, innovation and SEC performance. According to the press release, the plan “highlights the SEC’s commitment to serving the long-term interests of Main Street investors; becoming more innovative, responsive, and resilient to market developments and trends; and leveraging staff expertise, data and analytics to bolster performance.” While not exactly long on detail, the plan does provide a general idea of SEC priorities.
You, like me, may have been the recipient of many, many, many calls from various persons claiming to be from the IRS and threatening you with imprisonment. We all know that the IRS doesn’t make those types of calls and we ignore them. Apparently, some of those folks have now shifted agencies claiming to represent the SEC. This could be a little trickier.
SEC approves amendments to NYSE Manual largely eliminating requirement to deliver to NYSE hard copies of proxy materials
On March 1, the SEC approved the NYSE’s proposal to largely eliminate the requirement to provide hard copies of proxy materials to the NYSE. Prior to approval of the amendment, listed companies were required to provide hard copies of proxy materials to the NYSE under Section 204.00(B) and Section 402.01 of the NYSE Manual. Notwithstanding the requirements of Rule 14a-6(b) to deliver hard copies to the applicable exchange (from which the NYSE has obtained no-action relief), the amendment to Section 402.01 provides that listed companies will not be required to provide hard copies of proxy materials to the NYSE, so long as they are included in their entirety in an SEC filing available on EDGAR.
Yesterday, the SEC announced that it had adopted—without the scheduled open meeting, which was abruptly cancelled with only a cryptic statement—long-awaited new guidance on cybersecurity disclosure. The guidance addresses disclosure obligations under existing laws and regulations, cybersecurity policies and procedures, disclosure controls and procedures, insider trading prohibitions and Reg FD and selective disclosure prohibitions in the context of cybersecurity. The new guidance builds on Corp Fin’s 2011 guidance on this topic (see this Cooley News Brief), adding in particular new discussions of policies and insider trading. While the guidance was adopted unanimously, some of the Commissioners were not exactly enthused about it, viewing it as largely repetitive of the 2011 guidance—and hardly more compelling. Anticlimactic? See if you agree.