The

U.S. Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...

divides reporting companies, those that file periodic reports under the Securities Exchange Act of 1934, into different categories based on size, among other factors. Smaller companies have less stringent reporting obligations, provide less historical financial information, are exempt from some provisions of the

Sarbanes–Oxley Act The Sarbanes–Oxley Act of 2002 is a United States federal law that mandates certain practices in financial record keeping and reporting for corporations. The act, (), also known as the "Public Company Accounting Reform and Investor Protect ...

of 2002, and have more time to file their reports. The smallest category is Smaller Reporting Company. A Smaller Reporting Company will qualify as such if, as of the last business day of its second fiscal quarter, it has a

public float In the context of stock markets, the public float or free float represents the portion of shares of a corporation that are in the hands of public investors as opposed to locked-in shares held by promoters, company officers, controlling-interest inv ...

of less than $250 million. Public float is defined as the shares of the company's publicly traded common stock that is not held by management and certain large investors. Not all companies that file reports under the Securities Exchange Act of 1934 are publicly traded, and so if a company cannot calculate its public float, then an alternative way to be a Smaller Reporting Company is to have annual revenue of $100 million or less. Companies are required to do the analysis each year following their second fiscal quarter and, after a transition period, are then required to file accordingly.

References

Securities (finance) Corporate finance Stock market {{accounting-stub