01.12.2006
|
Updates
The SEC recently approved final rules that create a new category of large accelerated filers and maintain current periodic reporting deadlines for smaller public companies.
This Update summarizes the key highlights from the final rules and offers practical guidance.
SEC Modifies Filer Categories
The SEC has created a new category of "large accelerated filers" based on recommendations from the SEC Advisory Committee on Smaller Public Companies.
- Modified Accelerated Filer Definition. Under the new rules, accelerated filers are companies that:
- have a public equity float of at least $75 million but less than $700 million (based on the aggregate worldwide market value of outstanding shares held by non-affiliates on the last business day of the filer's most recently completed second fiscal quarter);
- have been subject to the Exchange Act's reporting requirements for at least 12 calendar months;
- previously have filed at least one annual report; and
- are not eligible to file their quarterly and annual reports on Forms 10-QSB and 10-KSB.
- New Large Accelerated Filer Category. Under the new rules, a "large accelerated filer" is a company that has a minimum public equity float of $700 million and otherwise meets the definition of an "accelerated filer."
- Non-Accelerated Filers. Under the new rules, "non-accelerated filers" are issuers that do not otherwise meet the definition of "accelerated filers" or "large accelerated filers."
Modified Public Float Definition. The new rules modify the definition of public float to mean "aggregate worldwide market value" rather than simply "aggregate market value" as it was previously defined.
|
Practical Tip Foreign Private Issuers Must Determine Accelerated Filer Status. Foreign private issuers must determine whether they are accelerated filers based on the new definition of public float for purposes of determining their compliance requirements that are tied to accelerated filer status. For example, foreign private issuers who are accelerated filers and file annual reports on Form 20-F must comply with Section 404 internal control requirements for fiscal years ending after July 15, 2006. In addition, foreign private issuers that voluntarily file annual and quarterly reports on domestic issuer Forms 10-K and 10-Q must also determine whether they are accelerated filers or large accelerated filers for purposes of complying with the requirements of those forms. |
Changes in Periodic Reporting Deadlines Final Acceleration of Annual Report Deadline Delayed Until 2006 for Large Accelerated Filers and Eliminated for Other Accelerated Filers. The new rules require large accelerated filers to file their annual reports on Form 10-K within 60 days after fiscal year end, beginning with fiscal years ending on or after December 15, 2006. All other accelerated filers must continue to file their annual reports on Form 10-K within 75 days after fiscal year end. (Prior to the adoption of the new rules, all accelerated filers would have been subject to the 60-day filing requirement for fiscal years ending on or after December 15, 2005.)
No Final Acceleration of Quarterly Report Deadline. The final rules continue the current requirement for accelerated filers (and large accelerated filers) that quarterly reports on Form 10-Q be filed within 40 days after quarter end, eliminating the additional acceleration to a 35-day filing requirement.
The table below summarizes the filing deadlines currently in place and those that will apply for fiscal years ending on or after December 15, 2006, under the new rules.
|
|
Current Deadlines
Deadlines for Reports Beginning With the Annual Report for Fiscal Years Ending on or After December 15, 2006
10-K
Deadline
10-Q
Deadline
10-K
Deadline
10-Q
Deadline
Large Accelerated Filer ($700+ MM)
75
40
60
40
Accelerated Filer (between $75 MM and $700 MM)
75
40
75
40
Non-accelerated Filer (less than $75 MM)
90
45
90
45
New Rules Facilitate Moving Between Categories. The new rules also ease current restrictions on moving between categories, so that an accelerated filer may more quickly become a non-accelerated filer if its public float drops, and a large accelerated filer may become an accelerated filer (or non-accelerated filer). The new rules allow an accelerated filer with a public float that drops below $50 million to file its annual report on Form 10-K (and subsequent quarterly reports on Form 10-Q) on a non-accelerated basis for the same fiscal year in which its public float drops to this level. A large accelerated filer with a public float that drops below $500 million would likewise become subject to the accelerated filer (or non-accelerated filer) filing deadlines that apply for that year based on its public float.
Additional Information
You can find the full text of the SEC final rules implementing these changes at http://www.sec.gov/rules/final/33-8644.pdf. You can find discussion of other recent laws, regulations and rule proposals of interest to public companies on our website.
