SEC Proposes Changes To Smaller Reporting Company Definition

On June 27, 2016, the SEC Staff proposed changes to the definition of "smaller reporting company" to expand the number of registrants that would qualify as smaller reporting companies (SRC). The term "smaller reporting company" is defined in Securities Act Rule 405, Exchange Act Rule 12b-2 and Item 10(f) of Regulation S-K, and all three definitions are substantively the same. Under the current definition, a registrant qualifies as an SRC if (1) it has less than $75 million in public float as of the last business day of its most recently completed second fiscal quarter (the Public Float Test) or (2) it has zero public float and annual revenues of less than $50 million during the most recently completed fiscal year for which audited financial statements are available (the Revenue Test).