Define: Smaller Reporting Company

A Smaller Reporting Company (SRC) is a publicly traded company that has a public float of less than $250 million or annual revenues of less than $100 million and either no public float or a public float of less than $700 million.

SRCs enjoy certain regulatory exemptions and reduced reporting requirements compared to larger reporting companies. These exemptions include reduced disclosure obligations in their financial statements and less stringent executive compensation disclosure requirements.

A company can determine if it qualifies as an SRC by calculating its public float or annual revenues. If it meets the specified thresholds, it can classify itself as an SRC.

Yes, a company can voluntarily choose to be classified as an SRC if it meets the eligibility criteria. However, it is important to note that once a company chooses to be classified as an SRC, it must comply with the reduced reporting requirements applicable to SRCs.

Yes, a company can lose its SRC status if it no longer meets the eligibility criteria. For example, if its public float exceeds $250 million or its annual revenues exceed $100 million, it will no longer qualify as an SRC.

No, there are no specific limitations on the types of companies that can be classified as SRCs. Any publicly traded company that meets the eligibility criteria can be classified as an SRC.

SRCs have reduced disclosure requirements compared to larger reporting companies. For example, they are not required to provide as much detailed financial information in their financial statements and are subject to less stringent executive compensation disclosure requirements.

While there are certain benefits to being classified as an SRC, such as reduced reporting requirements, some investors may perceive SRCs as riskier investments due to the reduced level of disclosure. Additionally, some institutional investors may have specific investment criteria that exclude SRCs.

Yes, an SRC can choose to comply with the reporting requirements applicable to larger reporting companies if it believes it is in its best interest to provide more detailed information to investors. However, once it chooses to comply with the larger reporting requirements, it must continue to do so for at least one year.

Yes, an SRC can transition to a larger reporting company if it no longer meets the eligibility criteria for SRC status. This transition would require the company to comply with the reporting requirements applicable to larger reporting companies.