On June 3, 2026, Sullivan & Worcester submitted a rebuttal comment letter to the U.S. Securities and Exchange Commission (SEC) in response to comment letters supporting Nasdaq’s proposed continued listing requirement mandating that companies maintain a minimum Market Value of Listed Securities of $5 million. The letter was authored by partners David Danovitch, Angela Gomes, and Brendan O’Brien, and associate Phillip Carnevale. Building on the firm’s prior submissions, Sullivan argued that the comment letters that were in support of the Nasdaq proposal failed to provide empirical evidence linking the proposed $5 million threshold to fraud, manipulation or enhanced investor protection. Sullivan's letter also buttressed its earlier letters by highlighting additional market data demonstrating that many companies that temporarily fell below the proposed threshold subsequently recovered above a $5 million market capitalization threshold, resulting in the creation of significant shareholder value. For these reasons, Sullivan urged the SEC to disapprove the proposal. Through its interdisciplinary Small-Firm Task Force, Sullivan continues to advocate for practical, evidence-based regulatory approaches affecting small-cap, micro-cap and mid-market public companies and their investors.  To stay informed on developments affecting small-cap and micro-cap market participants, visit Sullivan’s Small-Firm Task Force resource center, which provides ongoing insights, commentary and updates on the evolving regulatory landscape.

On May 19, 2026, the Securities and Exchange Commission proposed amendments to public company reporting under the Securities Exchange Act of 1934 that would significantly reshape how public companies are classified and regulated. The proposal would replace the existing multi-tier filer structure with two primary categories: (i) large accelerated filers and (ii) non-accelerated filers, the latter of which would include a new subcategory of small non-accelerated filers. These proposals effectively remove the accelerated filer and smaller reporting company classifications and extend many current disclosure and compliance accommodations to an expanded group of non-accelerated filers. If adopted, these amendments would mark a substantial modernization of the SEC’s filer status framework. The changes are intended to streamline reporting obligations, lower compliance expenses and ease regulatory burdens for most public companies, while maintaining more intensive disclosure standards for large accelerated filers. Simplified Filer Status Categories Currently, there are five unique SEC filer statuses: (i) large accelerated filer, (ii) accelerated filer, (iii) non-accelerated filer, (iv) smaller reporting company and (v) emerging growth company. As constructed, some of these statuses often overlap with one another based on the make-up of a company. The proposed changes would simplify the SEC’s filer classification system by reducing it to two main categories: large accelerated filers and non-accelerated filers, while continuing to recognize emerging growth companies as a separate statutory designation. Consequently, under the proposed framework, the accelerated filer and smaller reporting company classifications would be removed. Large Accelerated Filers and Non-Accelerated Filers The proposal would increase the public float (i.e., equity held by non-affiliates) threshold for large accelerated filer status from $700 million to $2 billion and the public float calculation would be determined using the company’s average stock price during the final 10 trading days of its second fiscal quarter, instead of the current test using the float on the last business day of the second fiscal quarter. The proposed 10-day average is intended to prevent filer status from being based on a one-day price movement on the testing date. To qualify as a large accelerated filer, a company would need to satisfy the threshold for two consecutive years and remain subject to the Exchange Act reporting requirements for at least 60 continuous calendar months (five years). Under current requirements, a company need only have been subject to such reporting requirements for at least 12 months and a filer’s status can fluctuate from year to year if its public float hovers above and below the current $700 million threshold. Extending the seasoning period of newly public companies from the current 12 months to 60 consecutive calendar months is intended to create an “on-ramp” for newly public companies to allow them to stabilize and grow while being subject to more limited disclosure requirements and other reporting accommodations for this extended period. This would provide companies with more time to become accustomed to public company reporting and reduce compliance burdens in the early years of being public. Similarly, raising the public float threshold to capture only the largest of public companies and requiring that the $2 billion public float requirement be met for two consecutive years would significantly decrease the number of companies that would be subject to large accelerated filer status (thereby increasing the number of companies subject to the more scaled requirements of non-accelerated filers) and increase predictability of which reporting requirements would apply to a company. If the proposal is adopted by the SEC, we anticipate that these proposed changes would be welcomed both from the public company and investment communities, as there would be more consistency as to the disclosure requirements imposed on companies. The filing deadlines for periodic reports under the Exchange Act for large accelerated filers would remain 60 days from fiscal year end for annual reports on Form 10-K and 40 days from quarter ends for quarterly reports on Form 10-Q. Under the proposal, any company that does not qualify as a large accelerated filer, as described above, would be classified as a non-accelerated filer. As a result, all companies would be treated as such from the time of their initial public offering or SEC registration and continuing for at least five years thereafter due to the proposed seasoning requirement described above. Companies classified as non-accelerated filers will enjoy the more limited disclosure requirements currently available to smaller reporting companies and emerging growth companies (as described below). Filing deadlines for non-accelerated filers would remain unchanged at 90 days from fiscal year end for annual reports on Form 10-K and 45 days from quarter ends for quarterly reports on Form 10-Q. However, as noted above, more companies will qualify for these deadlines as opposed to how the system is currently constructed by virtue of proposed elimination of accelerated filer status, which currently requires annual reports on Form 10-K to be filed 75 days after the filer’s fiscal year end for companies that are accelerated filers but not large accelerated filers. Small Non-Accelerated Filers Beyond the consolidation of the filer statuses noted above, the proposal would also establish a new subcategory of non-accelerated filers for the smallest reporting companies. A company would qualify as a small non-accelerated filer if it meets the definition of a non-accelerated filer and has reported total assets of $35 million or less at the end of its two most recent second fiscal quarters. Companies that qualify as small non-accelerated filers would benefit from extended filing deadlines, allowing up to 120 days after fiscal year-end to file Form 10-Ks (rather than the current 90-day deadline for non-accelerated filers) and up to 50 days after fiscal quarter-end to file Form 10-Qs (rather than 45 days). The additional time to complete these periodic filings would provide substantial reporting relief to the smallest public companies, which often have limited accounting and financial reporting personnel resources and for whom compliance costs can constitute a significant portion of their overall costs. It is important to note that the SEC has not proposed changes to the existing filing deadlines for Form 8-Ks, thus small non-accelerated filers would still be expected to keep the market updated as promptly as current regulations require. Non-Accelerated Filer Enhanced Accommodations Under the proposal, all non-accelerated filers would become eligible for substantially the same scaled disclosure accommodations currently available only to smaller reporting companies and emerging growth companies, subject to limited exceptions applicable to asset-backed issuers, most foreign private issuers and certain investment-company-related issuers. These accommodations would include: reduced executive compensation disclosure obligations, including exemption from pay-versus-performance disclosure requirements; exemption from certain requirements to hold shareholder advisory votes to approve executive compensation (“say-on-pay”), frequency of say-on-pay voting, and “golden parachute” compensation; the ability to provide only two years of audited financial statements, rather than three years; and relief from the auditor attestation requirement for internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act. Initial Transition Framework Under the proposed rules, companies that are already public when the final rules become effective would be required to determine whether they qualify as large accelerated filers or non-accelerated filers, and small non-accelerated filers within that classification, based on their status as of the end of the fiscal year preceding the rules’ effective date. This determination would rely on the company’s public float and, where relevant, total assets for both that fiscal year and the immediately preceding fiscal year. Existing public companies could perform this initial status determination at any point after the final rules become effective, provided that the assessment is completed no later than the day before the final day of the fiscal year in which the rules take effect. If a company fails to complete the assessment within that period, default treatment would apply until the next assessment date. Specifically, a company that was previously classified as a large accelerated filer would continue to be treated as such, while all other companies would be treated as non-accelerated filers not considered small non-accelerated filers. Once a company completes the initial assessment and qualifies as a non-accelerated filer, the company may immediately begin relying on the accommodations available in its next Securities Act or Exchange Act filing. Similarly, a company that qualifies as a small non-accelerated filer could begin using the extended filing deadlines for its next Form 10-Q or Form 10-K filed after completion of the assessment. Foreign Private Issuers The proposal would not apply the new large accelerated filer and non-accelerated filer classifications to certain categories of issuers. In particular, foreign private issuers (FPIs) that choose to report using the FPI-specific forms and regulatory framework would remain outside the scope of the new filer-status regime. As a result, FPIs that file annual reports on Form 20-F would continue to be subject to the existing internal control over financial reporting auditor attestation requirement under Section 404(b), if they maintain a public float of at least $75 million as of the end of their most recently completed second fiscal quarter, unless they otherwise qualify as emerging growth companies, and the public float calculation for filer status would be based on the last day of the most recently completed second fiscal quarter. The SEC has indicated that it is preserving the current approach for FPIs while it continues its broader evaluation of the FPI reporting framework which was announced in June 2025. * * * * * * * * If you would like further information regarding the proposed amendments to filer status and reporting requirements under the Exchange Act, or any other rule changes or guidance described above, please contact the lawyer at Sullivan & Worcester LLP with whom you regularly consult, or any of the lawyers listed above.