What is a smaller reporting company?

A smaller reporting company (SRC) is the smallest category of a business that must report to the Securities and Exchange Commission (SEC) annually under the Securities Exchange Act of 1934.

It’s standard practice for reporting companies in the US to be divided by size, with the smaller companies having less obligations to meet than their larger counterparts. A smaller reporting company is required to provide less historical information and also has more time to file it with the Securities and Exchange Commission.

Where have you heard about smaller reporting companies?

In 2016, the Securities and Exchange Commission proposed changes to its definition, increasing the number of companies that could qualify as a smaller reporting company. Its aim is to maintain investor protection and reduce compliance costs for America’s smallest businesses.

What you need to know about smaller reporting companies.

To be considered as a smaller reporting company you must not:

• be an investment company

• issue asset-backed securities

• be a majority-owned subsidiary of a parent that is not a smaller reporting company

And the business must:

• have a public equity float of less than $75 million on the last business day of its second fiscal quarter

• have annual revenues of less than $50 million if not publicly traded, and the public equity float is zero

The proposed changes would mean that companies with less than $250 million in public equity float would qualify, as well as businesses with no public equity float and annual revenues of less than $100 million.