NAM to SEC: Filer Status Simplification a Win for Small Manufacturers

The Securities and Exchange Commission’s recently proposed rule to lessen disclosure burdens for small and mid-cap companies would bring relief to many manufacturers and should be finalized, the NAM told the agency this week.

What’s going on: The draft regulation,“Enhancement of Emerging Growth Company Accommodations and Simplification of Filer Status for Reporting Companies,” would condense the SEC’s five classifications of corporate issuers into two categories: large accelerated filers and nonaccelerated filers.

• The SEC is also proposing to expand disclosure exemptions for the latter group and to extend filing deadlines for the smallest companies in the nonaccelerated-filer category.

Why it’s important: “The commission’s proposed expansion of the nonaccelerated filer category would result in material reductions in annual compliance costs for many publicly traded manufacturers,” the NAM told the SEC, adding that an overhaul of the agency’s filer categories is long overdue.

• “These manufacturers will be able to use these savings to invest in research and development, new equipment, job creation and worker benefits, which would help grow their companies and increase investor returns.”
• The draft changes would spare small and mid-sized firms from costly compliance requirements, including “say on pay” votes, pay versus performance disclosure and the auditor attestation mandate of Section 404(b) of the Sarbanes-Oxley Act.

What else should be done: The draft rulemaking would benefit smaller manufacturers even further with several refinements, the NAM continued. These include:

• Raising the minimum public float threshold for large accelerated filers to $10 billion;
• Extending the proposed on-ramp period for large accelerated filer status from 60 months to 120 months;
• Making periodic adjustments to filer categories to keep pace with inflation and market valuation growth; and
• Extending the filing deadline for smaller nonaccelerated filers by 15 days for Form 10-Q filings and proposed semiannual 10-S filings.

The final say: The proposed rule “would reduce compliance burdens for publicly traded manufacturers, while still providing decision-useful information to investors,” said NAM Senior Director of Corporate Finance Policy Ted Allen and NAM Vice President of Domestic Policy Jake Kuhns.