Other

Accelerated Filer and Large Accelerated Filer Definitions

April 23, 2020

A Small Entity Compliance Guide[1]

Introduction

On March 12, 2020, the U.S. Securities and Exchange Commission (“Commission”) voted to adopt amendments to the “accelerated filer” and “large accelerated filer” definitions in Rule 12b-2 under the Securities Exchange Act of 1934 (“Exchange Act”). The amendments more appropriately tailor the types of issuers that are included in the categories of accelerated and large accelerated filers and promote capital formation, preserve capital, and reduce unnecessary burdens and compliance costs for certain smaller issuers while maintaining investor protections. The amendments are consistent with the Commission’s and Congress’s historical practice of providing scaled disclosure and other accommodations to reduce unnecessary burdens for new and smaller issuers.

Who is affected by the amendments?

The amendments affect domestic and foreign issuers with classes of securities registered under the Exchange Act that file on domestic forms and present their financial statements pursuant to U.S. GAAP. The amendments include a specific provision applicable to business development companies (“BDCs”), because BDCs are not eligible to be smaller reporting companies, and to provide a definition of “revenue” for BDCs to use for this purpose.

What is the result of the amendments?

As a result of the amendments, certain low-revenue issuers will not be required to have their management’s assessment of the effectiveness of internal control over financial report (“ICFR”) attested to, and reported on, by an independent auditor, as required by Section 404(b) of the Sarbanes-Oxley Act (“SOX”). However, those issuers will remain obligated, among other things, to establish and maintain ICFR and, as required by SOX Section 404(a), have management assess the effectiveness of ICFR. Additionally, the amendments revise certain transition thresholds for accelerated and large accelerated filers and add an ICFR auditor attestation check box to the cover pages of Forms 10-K, 20-F, and 40-F.

What changes were made by the amendments?

1. Add a revenue / investment income condition to the accelerated and large accelerated filer definitions.

The amendments add a new condition to the accelerated and large accelerated filer definitions in Rule 12b-2 that:

Excludes from the accelerated and large accelerated filer definitions an issuer that is eligible to be a smaller reporting company and that had annual revenues of less than $100 million in the most recent fiscal year for which audited financial statements are available; and
Excludes from the accelerated and large accelerated filer definitions a BDC that had investment income of less than $100 million in the most recent fiscal year for which audited financial statements are available and a public float of $75 million or more, but less than $700 million.

The table below summarizes the conditions required to be considered an accelerated and large accelerated filer under the amendments to Rule 12b-2.

Accelerated Filer Conditions	Large Accelerated Filer Conditions
The issuer has a public float of $75 million or more, but less than $700 million, as of the last business day of the issuer’s most recently completed second fiscal quarter.	The issuer has a public float of $700 million or more, as of the last business day of the issuer’s most recently completed second fiscal quarter.
The issuer has been subject to the requirements of Exchange Act Section 13(a) or 15(d) for a period of at least twelve calendar months.	Same.
The issuer has filed at least one annual report pursuant to Exchange Act Section 13(a) or 15(d).	Same.
The issuer is not eligible to use the requirements for smaller reporting companies under the revenue test in paragraph (2) or (3)(iii)(B), as applicable, of the “smaller reporting company” definition in Rule 12b-2 or, in the case of a BDC, does not meet the requirements of the revenue test in those paragraphs using annual investment income as the measure of its annual revenues.	Same.

2. Increase the public float transition thresholds for accelerated and large accelerated filers.

The amendments 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.

The table below summarizes how an issuer’s filer status will change based on its subsequent public float determination.

Amendments to the Public Float Thresholds
Initial Public Float Determination	Resulting Filer Status	Subsequent Public Float Determination	Resulting Filer Status
$700 million or more	Large Accelerated Filer	$560 million or more	Large Accelerated Filer
		Less than $560 million but $60 million or more	Accelerated Filer
		Less than $60 million	Non-Accelerated Filer
Less than $700 million but $75 million or more	Accelerated Filer	Less than $700 million but $60 million or more	Accelerated Filer
Less than $700 million but $75 million or more	Accelerated Filer	Less than $60 million	Non-Accelerated Filer

3. Add a revenue test to the transition thresholds for accelerated and large accelerated filers.

For consistency with the amendments to the accelerated and large accelerated filer definitions, the amendments also add the revenue test and investment income test to the transition thresholds for exiting from both accelerated and large accelerated filer status.

4. Add a check box to indicate whether an ICFR auditor attestation is in a filing.

The amendments add a check box to the cover pages of annual reports on Forms 10-K, 20-F, and 40-F to indicate whether an ICFR auditor attestation is included in the filing.

What are the relationships between smaller reporting companies and non-accelerated, accelerated, and large accelerated filers under the amendments?

Under the amendments, some, but not all, smaller reporting companies become non-accelerated filers. The table below summarizes the relationships between smaller reporting companies and non-accelerated, accelerated, and large accelerated filers under the amendments.

Relationships between Smaller Reporting Companies and Non-Accelerated, Accelerated, and Large Accelerated Filers under the Amendments
Status	Public Float	Annual Revenues
Smaller Reporting Company and Non-Accelerated Filer	Less than $75 million	N/A
Smaller Reporting Company and Non-Accelerated Filer	$75 million to less than $700 million	Less than $100 million
Smaller Reporting Company and Accelerated Filer	$75 million to less than $250 million	$100 million or more
Accelerated Filer (not a Smaller Reporting Company)	$250 million to less than $700 million	$100 million or more
Large Accelerated Filer (not a Smaller Reporting Company)	$700 million or more	N/A

What are the compliance dates of the amendments?

The amendments are effective April 27, 2020 and apply to an annual report filing due on or after the effective date. Even if that annual report is for a fiscal year ending before the effective date, the issuer may apply the amendments to determine its status as a non-accelerated, accelerated, or large accelerated filer.

For example, an issuer that has a March 31, 2020 fiscal year end and that is due to file its annual report on or after April 27, 2020 may apply the amendments to determine its filing status even though its fiscal year end date precedes the effective date. An issuer that determines it is eligible to be a non-accelerated filer under the amendments is not subject to the ICFR auditor attestation requirement for its annual report due and submitted on or after April 27 and may comply with the filing deadlines that apply, and other accommodations available, to non-accelerated filers.

Other Resources

The adopting release for these amendments can be found on the Commission’s website at https://www.sec.gov/rules/final/2020/34-88365.pdf.

The Commission’s disclosure forms can be accessed on the agency’s website at https://www.sec.gov/forms.

Contacting the SEC

The Commission’s Division of Corporation Finance is happy to assist small companies and others with questions regarding the amendments. You may contact the Division for this purpose at (202) 551-3400 or https://www.sec.gov/forms/corp_fin_interpretive.

Questions on other Commission regulatory matters concerning small companies may be directed to the Division’s Office of Small Business Policy at (202) 551-3460 or smallbusiness@sec.gov.

The Commission’s Division of Investment Management’s Chief Counsel’s Office is also available to assist small entities and others with questions regarding the rule amendments applicable to BDCs. You may contact the Office for this purpose at 202-551-6825 or IMOCC@sec.gov.

[1] This guide was prepared by the staff of the U.S. Securities and Exchange Commission as a “small entity compliance guide” under Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996, as amended. The guide summarizes and explains the rules adopted by the Commission, but is not a substitute for any rule itself. Only the rule itself can provide complete and definitive information regarding its requirements.