On June 28, 2018, the Securities and Exchange Commission adopted amendments expanding the definition of a smaller reporting company (“SRC”) and requiring the use of Inline eXtensible Business Reporting Language (“XBRL”) for reporting companies. The SEC issued separate press releases discussing the SRC and XBRL amendments.
The cover pages of SEC reports and registration statements will be revised to reflect the amendments, including the fact that qualifying as a SRC no longer automatically makes a company a non-accelerated filer.
Smaller Reporting Company Amendments
The SEC estimates just under 1000 additional companies will now qualify for existing scaled disclosure accommodations under the newly adopted definition of SRC. The amendments will become effective 60 days after their publication in the Federal Register. Companies that did not qualify under the previous definition will be eligible to freshly assess their status under the new qualification thresholds.
A summary of the amendments to the SRC definition is below:
| Criteria | Current SRC Definition | Newly Adopted SRC Definition |
| Public Float | Less than $75 million | Less than $250 million |
| Revenues | Less than $50 million in annual revenue and no public float | Less than $100 million in annual revenue and either: (1) no public float; or (2) public float less than $700 million |
A company that qualifies under the public float test is a SRC regardless of its revenues.
If a company determines (after effectiveness of the amendments) that it does not qualify as a SRC, the amendment specifies more stringent standards under which the company may later become a SRC. These standards are set at 80% of the initial qualification thresholds described above.
The amendments also make a corresponding increase (from $50 million to $100 million) in the net revenue threshold of business acquisitions entitled to relief from certain financial statement requirements under Rule 3-05(b)(2)(iv) of Regulation S-X.
As a result of the amendments, companies with between $75 million and $250 million of public float will now be considered SRCs. However, they will still be required to comply with requirements for accelerated filers, such as the accelerated reporting deadlines for periodic reports and auditor’s attestation of management’s assessment of internal control over financial reporting under the Sarbanes-Oxley Act of 2002. The SEC plans to consider further changes to these existing requirements.
The amendments do not alter the scaled disclosure accommodations available to SRCs. While newly qualified SRCs may elect whether or not to take advantage of the scaled disclosure accommodations, they are required to comply with the potentially more stringent disclosure requirement relating to related person transactions.
Adoption of Inline XBRL for Tagged Data
The SEC adopted the mandatory use of Inline XBRL for financial statement information of reporting companies. Inline XBRL involves embedding XBRL data tags directly into the underlying filing, rather than the current system of tagging the information in a separate exhibit. Filings made under Inline XBRL will generally continue to have a portion that is filed as an exhibit. The amendments also eliminate the current requirement for reporting companies to post XBRL data on their websites.
The Inline XBRL requirement will go into effect in phases as detailed in the chart below, but a company’s phase-in will not start until its first quarterly report after the applicable effective date:
| Filer Type | Effective Date |
| Large Accelerated filers that use U.S. GAAP | Fiscal period ending on or after June 15, 2019 |
| Accelerated filers that use U.S. GAAP | Fiscal period ending on or after June 15, 2020 |
| All other filers | Fiscal period ending on or after June 15, 2021 |
