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On May 19, 2026, the Securities and Exchange Commission (SEC) proposed rule amendments to revise the current five overlapping filer categories – large accelerated filer (LAF), accelerated filer (AF), non-accelerated filer (NAF), smaller reporting company (SRC), and emerging growth company (EGC) – and replace them with two primary reporting categories: LAF and NAF. The new NAF category, which would encompass approximately 80% of all current public companies, would be permitted to utilize the scaled disclosure and other accommodations currently available to SRCs and EGCs, including eliminating the requirement to obtain an auditor’s attestation on internal control over financial reporting (ICFR). At the same time, the proposal would materially raise the eligibility threshold for the increased disclosure obligations applicable to LAFs. Taken together, the proposals are expected to result in significant compliance cost savings for companies that would be newly classified as NAFs through reduced disclosure preparation, lower auditing expenses, and the elimination of costly requirements such as the ICFR auditor attestation.

The stated goal of the proposal is to simplify the public company reporting framework and “better calibrate” disclosure obligations with a company’s size and maturity. The proposal, together with the SEC’s recently proposed optional semi-annual interim reporting and reforms to the securities offering process and other forthcoming initiatives, is framed as a foundational step toward recalibrating the regulatory landscape for public companies.

Key Aspects of the Proposed Amendments

• The public float threshold for becoming a LAF would increase from $700 million to $2 billion, nearly tripling an unchanged threshold since it was first implemented in 2005. A company would not transition into or out of LAF status unless the $2 billion threshold was met, or not met, for two consecutive years, which is intended to prevent companies from oscillating between categories due to temporary market fluctuations. The public float would be calculated using the average stock price over the last 10 trading days of the second quarter, rather than on a single measurement date as currently required, providing a more stable assessment during periods of market volatility. Companies currently classified as AFs or LAFs with public floats below $2 billion should begin assessing how the proposal would affect their filer status and compliance obligations, as the transition could occur relatively quickly once final rules take effect.
• No company would be categorized as an LAF for at least 60 months following its IPO, regardless of its public float. This “IPO on-ramp” is intended to avoid a rapid escalation of reporting and internal control obligations for newly public companies with quickly appreciating valuations. Under current rules, a company can become a LAF after only 12 months of reporting, so this expanded seasoning period would provide all newly public companies meaningful breathing room to develop their compliance infrastructure before becoming subject to the most comprehensive disclosure requirements.
• All issuers not qualifying as LAFs under the revised standard would be classified as NAFs. NAFs would benefit from nearly all of the scaled disclosure and other accommodations currently afforded to SRCs and EGCs. Some practical differences between NAF and LAF reporting obligations are outlined below:
  • Financial Statements and MD&A. NAFs would be required to provide only two years of audited financial statements (rather than three for LAFs) and two years of Management’s Discussion and Analysis (rather than three for LAFs), with the ability to prepare their financial statements in accordance with Article 8 of Regulation S-X, which provides reduced presentation and note disclosure requirements. This scaled financial reporting framework is expected to lower both auditing and preparation costs for newly eligible filers.
  • Executive Compensation Disclosure. NAFs would benefit from significantly scaled executive compensation disclosure. NAFs would not be required to provide  Compensation Discussion and Analysis (CD&A), a compensation committee report, pay ratio disclosure, or pay-versus-performance disclosure. NAFs would be required to disclose compensation for only three named executive officers (compared to five for LAFs) and would need to provide only two years of summary compensation table information (compared to three for LAFs). LAFs, by contrast, would continue to be subject to the full executive compensation disclosure regime. This reduction is designed to decrease both direct compliance costs and the indirect costs associated with sharing potentially competitively sensitive information about executive retention and compensation strategies.
  • Shareholder Advisory Votes. NAFs would be exempt from the requirements to hold say-on-pay and say-when-on-pay (frequency of say-on-pay) advisory votes, as well as the requirement to conduct golden parachute compensation advisory votes, and provide related disclosure in connection with mergers and acquisitions. These exemptions, which are currently available only to EGCs, would be extended to all NAFs.
  • Risk Factors and Market Risk. NAFs would not be required to include risk factor disclosure in their Forms 10-K and 10-Q or provide quantitative and qualitative disclosures about market risk under Item 305 of Regulation S-K. LAFs would continue to be subject to these disclosure requirements.
  • Compensation Committee and Related Governance. NAFs would not be required to provide compensation committee interlocks and insider participation disclosure, or a compensation committee report, and would be permitted to forgo first-year audit committee financial expert disclosure. These exemptions are expected to reduce both the direct costs of preparing the associated disclosures and the indirect compliance burden of maintaining the governance processes and outside adviser assessments that support them.
• NAFs would be exempt from the requirement to obtain an auditor’s attestation on ICFR under Section 404(b) of the Sarbanes-Oxley Act. The SEC estimates that approximately 1,596 registrants (26.7% of all registrants), representing roughly 60% of all registrants currently subject to this requirement, would be newly exempt. The SEC noted that academic studies and industry data suggest that the costs of Section 404(b) compliance can be substantial, particularly for smaller filers, with estimates of annual compliance costs ranging from approximately $100,000 to $759,000 or more depending on registrant size. Management’s own ICFR assessment obligations and related disclosures would remain in place.
• The proposal would also create a subcategory of “small non-accelerated filers” (SNFs) with total assets of $35 million or less (measured as of the end of their two most recent second fiscal quarters). These issuers would be afforded additional time to file their periodic reports: the deadline for SNFs to file Form 10-K would be extended by 30 days, for a total of 120 days after fiscal year-end, and the deadline to file Form 10-Q would be extended by five days, for a total of 50 days after fiscal quarter-end. Filing deadlines for LAFs and other NAFs would remain unchanged. This accommodation is targeted at the registrants most likely to face resource constraints, as SEC data indicates that 39.7% of registrants at or below the $35 million total asset threshold, failed to meet the initial Form 10-K deadline in 2024, compared to only 11% of larger NAFs. The SEC has stated that the creation of the SNF category is intended to ease the burdens of public company reporting for the smallest issuers and thereby encourage these companies to go and stay public.

Comment Period and Next Steps 

The public comment period on the proposing release will remain open until July 20, 2026. Interested parties may submit comments through the SEC’s public comment portal.

These proposals should be understood as part of a broader regulatory package being proposed by the SEC, alongside the contemporaneously proposed reforms to the registered offering framework and the recently proposed semiannual reporting option, that collectively seek to reduce the cost of being a public company. Companies should not evaluate any one of these proposals in isolation, rather, the aggregate effect of expanded shelf access, reduced reporting frequency, and simplified filer categories could meaningfully alter the IPO calculus for companies currently weighing the decision to go public. Conversely, the combined reduction in disclosure frequency and expansion of offering flexibility may prompt investor advocacy groups and institutional investors to push back during the comment period on investor protection grounds.

We will continue to monitor developments related to this rulemaking and will provide updates as appropriate.