Chapter 17 - § 17.14 • SMALLER REPORTING COMPANIES IN BRIEF

• Jurisdiction: Colorado

§ 17.14 • SMALLER REPORTING COMPANIES IN BRIEF

As this book has set forth throughout several chapters, there are significant distinctions between the obligations of smaller reporting companies and those with market capitalization of greater than $75 million.²⁸⁷ There are some requirements in the securities laws that are scaled for smaller reporting companies as compared to accelerated filers and large accelerated filers.

Smaller Reporting Company Status. The SEC staff has focused on the manner in which a company calculated its public float, the timing of a company's assessment as to whether it qualified as a smaller reporting company, and the other transition rules that apply when a company either enters or exits the smaller reporting company regime.²⁸⁸

Sarbanes-Oxley § 404(b) — Auditor Attestation Requirement. The Dodd-Frank Act exempted smaller reporting companies from the auditor attestation requirements of § 404(b) of the Sarbanes-Oxley Act.

Use of Proceeds. Item 504 of Regulation S-K sets forth the requirements for companies to disclose the principal purposes for which the net proceeds of an offering will be used and the approximate amount intended to be used for each purpose. When a company makes an offering on a best efforts basis, it is not unusual for its intended use of proceeds to change depending on the volume sold. The Commission staff frequently requests companies to pick benchmarks for the amount of securities that it may sell, for example, 25 percent, 50 percent, 75 percent, and 100 percent, and indicate how it will allocate the proceeds at each benchmark.

Item 101 — Description of Business. Larger reporting companies are required to describe the key elements of their businesses during the past five years, including lengthy narrative descriptions of their industry segments. Pursuant to paragraph (h) of Item 101, smaller reporting companies are required to describe the developments of their business during the last three years, as opposed to the last five years. Additionally, smaller reporting companies are permitted to provide a less detailed description of their business and are not required to provide financial information about segments.

Item 201 — Market Price, Dividends, and Related Stockholder Matters. Pursuant to Instruction 6 to paragraph (e) of Item 201, smaller reporting companies are not required to provide a performance graph.

Item 301 — Selected Financial Data. Larger reporting companies are required to provide selected financial data for the past five years. Pursuant to paragraph (c) of Item 301...