More Relief From Accelerated Filing Deadlines
Business Law Alert
January 3, 2006
The Securities and Exchange Commission has granted further relief from the accelerated Form 10-K and Form 10-Q filing deadlines. All “accelerated filers” should take note as they plan their 2006 periodic reporting schedules.
New and Revised “Accelerated Filer” Definitions
Accelerated filers now are defined as companies with an aggregate worldwide market value of voting and nonvoting common equity (or public float) of at least $75 million, but less than $700 million.
The SEC also created a new category of “large accelerated filers,” which are companies with a public float of more than $700 million. This corresponds to the definition of “well known seasoned issuers” recently created by the Securities Offering Reform rules, which went into effect on December 1, 2005.
Under the new rules, a large accelerated filer may exit out of this filing status once its public float falls below $500 million. An accelerated filer may become a non-accelerated filer once its public float drops below $50 million.
As before, calculations of public float are determined as of the last business day of the company’s most recently completed second fiscal quarter. However, the new rules allow the company to exit out of its filing status at the end of the same fiscal year. The deadline for its annual report would be determined by its new filer status.
Revised Filing Deadlines
Prior to these changes and beginning with Form 10-Ks for fiscal years ending on or after December 15, 2005, an accelerated filer’s Form 10-K was scheduled to be filed within 60 days of the fiscal year end. Its Form 10-Qs would be filed within 35 days of each fiscal quarter end.
In its ongoing effort to provide relief from the burden of Sarbanes-Oxley Act compliance, the SEC has eased these deadlines as follows:
Large accelerated filers.
- For fiscal years ending prior to December 15, 2006, file Form 10-K within 75 days of the fiscal year end;
- For fiscal years ending on or after December 15, 2006, file Form 10-K within 60 days of the fiscal year end; and
- Continue to file Form 10-Q within 40 days of the fiscal quarter end. The 35-day deadline has been eliminated.
Redefined accelerated filers. Last year’s deadlines remain in effect, with no further scheduled reductions.
- File Form 10-K within 75 days of the fiscal year end; and
- File Form 10-Q within 40 days of the fiscal quarter end.
Non-accelerated filers. Likewise, there were no changes for non-accelerated filers.
- File Form 10-K (or Form 10-KSB) within 90 days of the fiscal year end; and
- File Form 10-Q (or Form 10-QSB) within 45 days of the fiscal quarter end.
What should you do now?
At this time of year, companies typically update their annual reporting and compliance schedules, including setting dates for Board and Board Committee meetings and various internal reporting responsibilities. You should determine immediately whether your company is a large accelerated filer, accelerated filer or non-accelerated filer and prepare your compliance schedule accordingly.
Be sure to inform all internal personnel of the new deadlines and coordinate with outside auditors and other service providers.
For additional information, please contact
Doug Harmon 704-335-9020 firstname.lastname@example.org
Ward Wellman 704-335-9048 email@example.com
John Jaye 704-335-9872 firstname.lastname@example.org
Scott Thomas 704-335-9026 email@example.com
A-J Secrist* 704-335-9090 firstname.lastname@example.org
This Client Alert is intended to inform readers of recent developments in the field of securities and corporate finance law. It should not be considered as providing conclusive answers to specific legal problems.
* Ms. Secrist is admitted to practice in New York. She is not admitted to practice in North Carolina.