SEC Proposes Major Overhaul of Public Company Reporting
The proposed two-Tier Filer System Would Reduce Compliance Burdens for Most Public Companies
May 28, 2026
Overview
On May 19, 2026, the Securities and Exchange Commission (SEC) proposed sweeping amendments to its public company reporting framework in what would represent the most comprehensive simplification of filer status rules in over two decades. The proposal would collapse the current multi-tier system into just two categories—large accelerated filers (LAFs) and non-accelerated filers (NAFs)—and significantly expand the disclosure accommodations available to the large majority of public companies.
A companion proposal—Registered Offering Reform (Release No. 33-11418)—would separately overhaul shelf registration and the registered offering process. Both proposals are designed to work in tandem and companies should evaluate them together. Comments on both proposals are due 60 days after publication in the Federal Register.
Background: The Current Framework
The current SEC filer framework organizes public companies into overlapping categories based primarily on public float (the market value of shares held by non-affiliates):
• Large Accelerated Filers (LAFs): have a public float of $700 million or more, face 60-day Form 10-K and 40-day Form 10-Q deadlines, and must obtain an auditor attestation on internal controls under Sarbanes-Oxley Section 404(b).
• Accelerated Filers (AFs): have a public float between $75 million and $700 million, face 75-day 10-K and 40-day 10-Q deadlines, and are also subject to SOX 404(b) auditor attestation.
• Non-Accelerated Filers (NAFs): have a public float below $75 million (or below $700 million with revenues under $100 million), face 90-day 10-K and 45-day 10-Q deadlines, and are exempt from SOX 404(b).
• Smaller Reporting Companies (SRCs): have less than $250 million in public float (or less than $100 million in revenues in certain cases) and are entitled to scaled disclosure across financial statements, executive compensation, and business descriptions.
• Emerging Growth Companies (EGCs): are companies within five years of their IPO that have not exceeded certain revenue and debt thresholds, and receive an overlapping set of disclosure accommodations.
Key Proposed Changes
1. A Simplified Two-Tier System
The centerpiece of the proposal is the elimination of the accelerated filer and smaller reporting company categories and their consolidation into two tiers: LAFs and NAFs. The EGC category would be preserved because it is created by statute, but it would be rendered largely redundant in practice because NAFs would receive most of the same accommodations EGCs enjoy today.
Under the proposal, every issuer that is not an LAF would automatically be classified as an NAF—making NAF status the default for the vast majority of public companies.
2. Raised Large Accelerated Filer Threshold: $700M → $2 Billion
The SEC proposes to raise the public float threshold for LAF status from $700 million to $2 billion. Based on 2024 filing data, this would reduce the share of domestic registrants classified as LAFs from approximately 35% today to about 19%. Conversely, roughly 81% of domestic registrants (collectively representing approximately 6.5% of total market public float) would be NAFs entitled to scaled disclosure accommodations.
3. Revised Float Calculation: 10-Day Average
Currently, public float is determined using a single closing price on the last business day of the second fiscal quarter. The proposal would instead use the average closing price over the last ten trading days of the second fiscal quarter, multiplied by the number of shares held by non-affiliates as of the last day of that quarter. This change is designed to smooth out single-day price volatility that can cause unexpected status transitions.
4. Two-Year Lookback for Status Changes
A company would not transition between LAF and NAF status until its public float has been above or below the $2 billion threshold for two consecutive fiscal years. This replaces the current single-year test and is intended to provide greater predictability and reduce the administrative burden of frequent status changes.
5. Five-Year On-Ramp for Newly Public Companies
Currently, a company may become an LAF after only 12 months as a public reporting company. The proposal would extend this “seasoning” period to 60 consecutive calendar months (five years). Every newly public company—regardless of its float—would be treated as an NAF for at least five years, extending the policy rationale behind the EGC on-ramp to all new registrants.
6. Expanded Accommodations for All NAFs
Non-accelerated filers would receive a significantly expanded set of scaled disclosure accommodations, including:
• Only two years of audited financial statements (instead of three for larger filers) for most issuers.
• Only two years of MD&A discussion instead of three.
• Scaled executive compensation disclosure: only three named executive officers (instead of five), only two years of Summary Compensation Table data (instead of three), and exemptions from the Compensation Discussion & Analysis (CD&A), pay ratio disclosure, pay versus performance disclosure, and several compensation-related tables.
• Exemption from the SOX Section 404(b) requirement for an auditor attestation on internal control over financial reporting.
• Scaled business description and related party disclosure requirements.
7. New “Small NAF” Sub-Category
The proposal creates a new sub-category called “small non-accelerated filers” for companies with total assets of $35 million or less as of the end of each of their two most recent second fiscal quarters. Small NAFs would receive extended filing deadlines: 120 days after fiscal year-end for Form 10-K (vs. 90 days for other NAFs) and 50 days for Form 10-Q (vs. 45 days for other NAFs).
Companion Proposal: Registered Offering Reform
Concurrently with the filer status proposal, the SEC issued a separate Registered Offering Reform proposal (Release No. 33-11418) designed to work in tandem with the filer status changes. Key elements include:
• Dramatically expanded access to Form S-3 shelf registration, which has historically been available only to larger issuers.
• Extension of enhanced registration and communication benefits (including WKSI-style free writing prospectus flexibility) to a broader set of issuers.
• Modernization of Form S-1 to reduce redundancy and streamline initial registration.
• Preemption of state “blue sky” registration requirements for all registered offerings, reducing the compliance burden of multi-state offerings.
Practical Implications
Companies Currently Classified as Accelerated Filers
If adopted, this proposal would have the most significant practical impact on current accelerated filers. These companies—with public floats between $75 million and $2 billion—would transition to NAF status and become entitled to a broad range of disclosure accommodations they do not currently enjoy, including exemption from the costly SOX 404(b) auditor attestation, reduced executive compensation disclosure, and two-year (rather than three-year) financial statement and MD&A presentation.
Current Smaller Reporting Companies
Current SRCs that are also accelerated filers (those with float between $75 million and $250 million) would similarly benefit from NAF status. SRCs that are already NAFs would see their status effectively codified, with the existing SRC scaled-disclosure regime absorbed into the NAF framework.
Newly Public and Pre-IPO Companies
The mandatory five-year NAF on-ramp would provide significant relief to companies considering going public. Rather than facing the prospect of becoming an LAF within 12 months, all new registrants would have a guaranteed five-year period to build compliance infrastructure before full LAF requirements could apply—an important factor in IPO planning.
Large Accelerated Filers
Companies with public floats above $2 billion would remain subject to the full LAF disclosure regime, including SOX 404(b) auditor attestation, three-year financial statements and MD&A, full executive compensation disclosure, and accelerated filing deadlines. These companies should monitor whether they could move below the $2 billion threshold and what the two-year lookback would mean for planning purposes.
Transition Period
The SEC has proposed that existing registrants assess their filer status as of the end of the fiscal year prior to the effective date of any final rules. For example, if final rules became effective January 15, 2027, calendar-year-end registrants would assess filer status as of December 31, 2026, no later than December 30, 2027. Companies reclassified as NAFs could begin availing themselves of the new accommodations once they complete that assessment.
This client alert is provided for general informational purposes only and does not constitute legal advice. The SEC’s proposals are subject to the notice-and-comment rulemaking process and the final rules, if adopted, may differ materially from the proposals summarized above. This alert is based on information available as of May 28, 2026. Please contact us if you would like to discuss how these proposed rules may affect your company.
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