Staying busy this summer, the SEC on June 28, 2018 they voted to approve five final rules and proposals that represent significant progress on many of its priorities.
First, the SEC adopted amendments to modernize the definition of “smaller reporting company (SRC).” Some of the key changes are that companies with a public float of less than $250 million will qualify as SRCs (previously, the public float had to be less than $75 million), while a company with no public float or with a public float of less than $700 million will qualify as a SRC if it had annual revenues of less than $100 million during its most recently completed fiscal year (previously, annual revenues had to be less than $50 million).
Second, the SEC adopted amendments to require the use of Inline XBRL format in certain filings, which have been under study for many years. This amendment is intended to improve the data’s usefulness, timeliness and quality to benefit investors, other market participants and other data users. Operating companies currently required to submit information in XBRL will be required, on a phased in basis, to transition to XBRL. The deadlines for adoption are: large accelerated filers with fiscal periods ending on or after June 15, 2019, accelerated filers with fiscal periods ending on or after June 15, 2020 and other filers with fiscal periods ending on or after June 15, 2021.
Third, the SEC proposed permitting certain exchange-traded funds (ETF) to operate without first obtaining a fund-specific exemptive order from the Commission. This proposal would modernize the regulatory framework for ETFs and come directly to market without the cost and delay of obtaining an exemptive order. The Committee believes this will facilitate greater competition and innovation in the ETF marketplace by lowering barriers to entry. This proposal would also replace hundreds of individualized exemptive orders with a single rule.
Fourth, the SEC adopted amendments related to disclosures of liquidity risk management for open-ended funds. These amendments are intended to improve the liquidity disclosures and enhance the N-PORT (the form that funds will file each month with portfolio holdings information) classification reporting.
Lastly, the SEC proposed an amendment to the rules that govern its whistleblower program. The proposal would allow for additional tools in award determination, provide a uniform definition of the term whistleblower, increase the efficiency in the claims review process and clarify and enhance certain policies and procedures.
Schneider Downs will continue to monitor current developments concerning new proposals and amendments released by the SEC. Please contact your Schneider Downs representative with any questions.