October 17, 2005
Accelerated Filer and Periodic Reporting Deadline Proposals
On September 22, 2005 the SEC proposed amendments to the "accelerated filer" definition in Rule 12b-2 of the Securities Exchange Act of 1934 that would:
create a new category of companies called "large accelerated filers" that have a public float of $700 million or more and meet the other conditions that apply to accelerated filers;
require large accelerated filers to meet a 60-day Form 10-K annual report deadline and a 40-day Form 10-Q quarterly report deadline next year and in subsequent years;
maintain the current 75-day Form 10-K annual report deadline and 40-day Form 10-Q quarterly report deadline for accelerated filers (companies that have at least $75 million but less than $700 million in public float) next year and in subsequent years; and
ease restrictions on the process for exiting accelerated filer status to permit:
an accelerated filer whose public float drops below $25 million to file an annual report on a non-accelerated basis for the same fiscal year that the determination of public float is made; and
a large accelerated filer to exit large accelerated filer status once its public float has dropped below $75 million.
Comments on the proposed amendments should be received by the SEC within thirty days of their publication in the Federal Register.
Extension of SOX 404 Compliance Date for Non-Accelerated Filers
The SEC also extended for one year the SOX 404 compliance dates for non-accelerated filers. A public company that is not an accelerated filer must now provide the required disclosures on internal control over financial reporting for its first fiscal year ending on or after July 15, 2007. A foreign private issuer that is an accelerated filer must comply with Section 404 for the first time in the annual report for its first fiscal year ending on or after July 15, 2006.
The SEC cited "ongoing efforts by the Committee of Sponsoring Organizations of the Treadway Commission to develop an enhanced COSO Framework for smaller public companies, and the continuing evaluation of the impact of the internal control over financial reporting requirements on smaller public companies by the SEC Advisory Committee on Smaller Public Companies" in support of the deferral of the compliance dates for non-accelerated filers.
The Commission is also soliciting public comment on questions about the application of SOX 404 requirements, including questions regarding the amount of time and expense that non-accelerated filers have incurred to date to prepare for compliance with the internal control reporting requirements. Comments should be received by the Commission within thirty days of their publication in the Federal Register.
The full text of detailed releases concerning each of these items will be posted to the SEC website.
McGuireWoods LLP regularly assists companies in satisfying their public reporting obligations and represents issuers and underwriters in securities offerings. We also advise clients on corporate governance matters and are actively engaged in monitoring developments under the Sarbanes-Oxley Act and counseling public companies on compliance.