SEC Compliance: Raising the Dollar Threshold for Non-Accelerated Filers (H.R. 2629)

What is H.R. 2629?

(Updated July 13, 2017)

This bill deals with Securities and Exchange Commission (SEC) compliance procedures for smaller companies, and what companies would be considered small, were this bill to pass. 

According to The Wall Street Journal,

Under current U.S. Securities and Exchange Commission (SEC) rules, public companies are grouped by size to determine compliance requirements. The smallest group, called non-accelerated filers, is capped at companies with a public float of no more than $75 million; these small businesses are subjected to a reduced regulatory burden. [This bill] will amend the filing status classifications in SEC Rule 12b-2 to allow companies with public floats below $250 million or revenues below $100 million to qualify as non-accelerated filers.

The $100 million mark refers to domestic revenues; the total, worldwide market value to be considered a non-accelerated filer would be between $250 million and $700 million. 

“Public float” is the portion of shares of a corporation that are in the hands of public investors as opposed to locked-in stock held by promoters, company officers, controlling-interest investors, or government.

Argument in favor

Current filing status definitions at the SEC are outdated and do not reflect the reality of many small public companies. SEC regulations are hurting American innovation.

Argument opposed

Turns medium-sized companies into little companies for the sole purpose of escaping SEC regulation. Most greatly benefits companies that keep their profits offshore.

Impact

This bill impacts companies with a public float not currently exceeding $75 million.

Cost of H.R. 2629

A CBO cost is currently unavailable.

Additional Info

Of Note:

-This was a highly contentious bill that barely made it out of the House Financial Services Committee, passing by a vote of 31-28. 

(Photo Credit: 100 F Street)