On August 27, 2025, the staff of the Securities and Exchange Commission (the “SEC”) published new Exchange Act Rules Compliance and Disclosure Interpretation 130.05, governing the treatment of certain former smaller reporting companies (“SRCs”) under the federal securities laws in the fiscal year after such a former SRC ceases to qualify as an SRC.
By way of background, Rule 12b-2 under the Securities Exchange Act of 1934 (the “Exchange Act”) defines the terms “smaller reporting company,” “accelerated filer” and “large accelerated filer,” based on, among other criteria, an issuer’s public float. An issuer determines its status as an SRC on the last business day of its second fiscal quarter, and its accelerated filer status at the end of its fiscal year.
Pursuant to Rule 12b-2, an issuer can qualify as an SRC in two ways: a public float test or a revenue test. The new CDI clarifies the filer status transition for issuers that cease to qualify as SRCs, but applies only to SRCs that qualify under the revenue test, meaning that an issuer must have (i) annual revenues of less than $100 million and (ii) either no public float, or a public float of less than $700 million, as of the determination date. If an issuer ceases to qualify as an SRC, it can continue reporting as an SRC, including relying on all SRC-based accommodations, until the beginning of its next fiscal year.[1] According to the new CDI, this means the issuer is “eligible to use the requirements for smaller reporting companies under the revenue test” at the end of the current fiscal year, and as such, does not meet the conditions to be an accelerated filer or large accelerated filer, regardless of public float, for the next fiscal year.[2] Therefore, all issuers failing to qualify as SRCs on the revenue test will begin their next fiscal year as non-accelerated filers. Although the issuers will lose SRC accommodations, they may still take advantage of the longer timeframe accorded to non-accelerated filers for annual and quarterly Exchange Act reports.
Importantly, the CDI does not apply to SRCs that qualify as such under the public float test. The definitions of accelerated filer and large accelerated filer in Rule 12b-2 refer only to SRCs who qualify as such under the revenue test, not the public float test. Further, it is possible to be an SRC under the public float test and simultaneously be an accelerated filer, if an issuer has (i) a public float of between $75 million and $250 million and (ii) annual revenues of $100 million or more, such that the new guidance clearly reflects the interaction between the relevant definitions.[3]
Read the new CDI here.
[1] SRCs are eligible to rely on a number of reporting accommodations, including, for example, less extensive Regulation S-K and Regulation S-X reporting obligations.
[2] Specifically, paragraph (1)(iv) of the definition of “accelerated filer” or paragraph (2)(iv) of the definition of “large accelerated filer” in Rule 12b-2 require that “[t]he issuer is not eligible to use the requirements for smaller reporting companies under the revenue test in paragraph (2) or (3)(iii)(B) of the “smaller reporting company” definition in this section, as applicable, as of the end of fiscal year 2025.”
[3] Issuers that are accelerated filers and SRCs must comply with filing deadlines applicable to accelerated filers and provide auditor attestations pursuant to Section 404(b) of the Sarbanes-Oxley Act.
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