The SEC wants to make being public less expensive. Here's how the filer status proposal would work.
On May 19, 2026, the SEC moved to simplify all of it. The Commission proposed amendments that would collapse the framework into two principal categories, raise the threshold for the most demanding tier of requirements, and extend scaled disclosure accommodations to roughly 81% of public companies. A new sub-category would give the smallest registrants extended filing deadlines on top of that.
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The proposal is currently in a public comment period, so nothing is final yet. But this is one of the most consequential rulemakings to land on finance and accounting leaders' desks in years. It was released alongside a companion proposal on registered offering reform, and it follows the SEC's earlier proposed rule on optional semiannual reporting on new Form 10-S. |
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The case for simplification has been building for a long time, and the most telling data point comes from the SEC's own history. When the Commission first established the $700 million large accelerated filer threshold in 2005, it explained that companies above that line represented roughly 95% of total U.S. equity market capitalization but only 18% of registrants. That was the intended calibration: the most demanding requirements would apply to the issuers representing the bulk of investor capital at risk, but to a relatively narrow slice of the registrant population.
The threshold has not been updated since. Today, that same $700 million line captures 98.8% of total market public float and 35.4% of registrants. The framework hasn't kept pace with two decades of market capitalization growth, and the most demanding requirements now sweep in a substantially broader population of companies than the SEC originally intended. The proposal is, in significant part, a recalibration back toward the original 2005 policy balance.
At the same time, the number of U.S. public companies has declined meaningfully over that same period. Policymakers across the political spectrum have pointed to public company compliance costs as one factor pushing companies to stay private longer or sell to strategic and financial buyers rather than pursue IPOs. Chairman Atkins framed the broader regulatory package as a response to that trend, with the explicit goal of making the public markets more attractive relative to the private alternatives that have absorbed an outsized share of capital formation.
What the SEC is actually proposing
The proposal, released under Release No. 33-11419, restructures the filer status framework around two principal categories: large accelerated filers and non-accelerated filers. The accelerated filer and smaller reporting company categories would be eliminated as standalone statuses. Emerging growth company status, which exists by statute, would remain on the books but would be rendered largely unnecessary in practice.
HOW THE FRAMEWORK CHANGES
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TODAY: 5 CATEGORIES
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PROPOSED: 2 CATEGORIES + SUB
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Large accelerated filer
Float >= $700M |
Large accelerated filer
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Accelerated filer
Float $75M-$700M |
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Non-accelerated filer
Float < $75M |
Non-accelerated filer
Everyone else (~81%)
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Smaller reporting company
Overlay status |
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Emerging growth company Up to 5 years post-IPO |
Sub-category: Small NAF
Assets <= $35M (two most recent second fiscal quarters)
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A higher, more stable bar for LAF status |
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The public float threshold rises from $700M to $2B. For purposes of the two-year lookback, public float is measured at the end of each of the two most recent second fiscal quarters, with each quarter's float calculated using the average closing price over the last 10 trading days of that quarter. A registrant must meet or miss the $2B threshold in both of two consecutive second-quarter measurements before transitioning status, and once in either status stays there for at least two fiscal years, giving companies at least one year of advance visibility before any potential change. |
A mandatory five-year on-ramp |
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The current 12-month seasoning requirement to qualify as a large accelerated filer extends to 60 consecutive calendar months. Every newly public company is a non-accelerated filer for at least five years regardless of public float, extending the policy logic of the EGC on-ramp to all new registrants. |
Non-accelerated filer as the default |
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Every registrant that is not a large accelerated filer is a non-accelerated filer. Form 10-K and 10-Q deadlines stay at 90 days and 45 days. Non-accelerated filers receive the full suite of SRC and EGC scaled accommodations: two years of audited income statements, cash flows, and equity statements (the two-year audited balance sheet requirement stays), two years of MD&A;, scaled executive compensation disclosure, and exemption from say-on-pay, say-when-on-pay, and golden parachute advisory votes. Risk factor disclosure in periodic reports, the stock performance graph, supplementary financial information, quantitative and qualitative market risk disclosures, and the compensation committee report all become optional. Item 404(d) related-party transaction disclosure is eliminated. |
Relief from the ICFR auditor attestation |
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Non-accelerated filers are not required to obtain an auditor attestation on ICFR under Section 404(b). Management's Section 404(a) assessment and CEO/CFO certifications under Sections 302 and 906 all remain in place. The external audit of ICFR is what goes away; management accountability for the control environment does not. The SEC estimates approximately 1,600 registrants, representing roughly 27% of all registrants or 60% of those currently required to have an ICFR auditor attestation, would become newly exempt. |
Deferred accounting standard adoption |
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For the first five years after initial SEC registration, non-accelerated filers may elect to defer adoption of new or revised accounting standards until the effective date that applies to private companies, but only to the extent the standard provides for a delayed private company compliance date. The election is irrevocable. |
A new sub-category for the smallest registrants |
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Small non-accelerated filers, defined as NAFs with $35M or less in total assets at the end of each of their two most recent second fiscal quarters, receive 120 days to file Form 10-K (30 additional days) and 50 days to file Form 10-Q (5 additional days). The SEC notes that approximately 39.7% of registrants at or below the $35M threshold missed the initial 10-K deadline in 2024, compared to 11% of larger NAFs. |
Voluntary compliance preserved |
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Accommodations are explicitly optional. Any non-accelerated filer may voluntarily comply with any or all large accelerated filer requirements. A company can drop the 404(b) attestation but keep three years of audited financials, or keep say-on-pay but skip pay versus performance. Electing more rigorous disclosures in any given year does not lock the company out of using accommodations later. |
One new obligation |
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Non-accelerated filers must disclose material unresolved SEC staff comments received more than 180 days before fiscal year-end in their Form 10-K or 20-F. This disclosure is currently required only of large accelerated and accelerated filers, and is tied to the companion offering reform proposal that would expand Form S-3 eligibility to a broader population of issuers. |
Implications for current SEC registrants
This is where the proposal gets tangible for finance and accounting leaders. The impact varies considerably depending on where your company sits today.
IMPACT BY REGISTRANT POPULATION
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CURRENT LAFs WITH FLOAT ABOVE $2B
Status unchanged
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CURRENT LAFs BELOW $2B AND ALL ACCELERATED FILERS
Transition to non-accelerated filer status
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CURRENT NAFs, SRCs, AND EGCs
Existing accommodations formalized and expanded
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NEWLY PUBLIC COMPANIES AND IPO CANDIDATES
Five-year on-ramp guaranteed regardless of float
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The opt-up option matters
One of the most practitioner-friendly aspects of the proposal is that the accommodations are explicitly optional. The proposal preserves the ability of any non-accelerated filer to voluntarily comply with any or all of the requirements applicable to large accelerated filers. A company might decide to drop the ICFR auditor attestation while keeping three years of audited financials and the full executive compensation disclosure framework, because the cost-benefit on each accommodation is different. Electing more rigorous disclosures in any given year doesn't lock the company out of using the accommodations later.
The 404(b) question deserves its own conversation
Of all the accommodations in the proposal, the elimination of the ICFR auditor attestation has the largest direct cost impact and is the one most likely to prompt strategic conversations between finance leaders, audit committees, and external auditors.
SECTION 404 UNDER THE PROPOSAL
| GOES AWAY FOR NEW NAFs | STAYS IN PLACE |
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Section 404(b)
External auditor attestation on internal control over financial reporting under the Sarbanes-Oxley Act.
The SEC estimates approximately 1,600 registrants, representing roughly 27% of all registrants or 60% of those currently required to have an ICFR auditor attestation, would become newly exempt.
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Section 404(a)
Annual management assessment and report on ICFR effectiveness
Section 302 certifications
CEO and CFO certifications on disclosure controls in each periodic report
Section 906 certifications
CEO and CFO certifications accompanying each annual and quarterly report
Control environment
Documentation, testing, and remediation remain management's responsibility
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A few questions worth getting on the table early: What is the right scope of management's Section 404(a) work in the absence of an external attestation? Does internal audit's role need to change? How will investors, lenders, and rating agencies react? And what happens if you cross back over the $2B threshold later? The two-year status lock provides at least one year of advance visibility, but re-establishing 404(b) readiness from a standing start is not a trivial exercise.
Compensation disclosure and governance interplay
The scaled compensation accommodations are some of the most consequential governance-facing changes in the proposal. Three named executive officers instead of five, two years of summary compensation table data instead of three, no Compensation Discussion and Analysis, no pay ratio disclosure, no pay versus performance disclosure, and exemption from say-on-pay, say-when-on-pay, and golden parachute advisory votes. Companies that would gain these accommodations should have early conversations with their compensation committees, IR teams, and proxy advisors before exercising them.
Operational and change management considerations
Finance and accounting teams have spent two decades building their close calendars, audit timelines, disclosure controls, and headcount around the existing framework. A change to non-accelerated filer status is an opportunity to rationalize some of that infrastructure, but it is not automatic. Teams should mcapitalap out which specific accommodations they would use, what that means for the close calendar and the audit committee cadence, and where headcount or external spend can be redeployed versus where it should be preserved for control discipline.
What it means for companies exploring the public markets
If your company is considering an IPO, a SPAC transaction, or another path to becoming an SEC reporting company, this proposal would change the calculus in some material ways.
The mandatory five-year on-ramp is the headline. Every newly public company would automatically be a non-accelerated filer for at least 60 months from its first day as an Exchange Act reporting company, regardless of public float. That means the full suite of scaled accommodations applies from day one, including no ICFR auditor attestation, two years of audited financials, scaled compensation disclosure, and the EGC-style ability to defer adopting new accounting standards. The proposal would also extend a specific IPO accommodation currently limited to EGCs: companies qualifying as NAFs upon registration would be permitted to include two years rather than three years of audited financial statements in their initial registration statement.
That doesn't make going public easy. The Form 8-K obligations, exchange listing requirements, investor expectations, and the infrastructure demands of SEC-grade financial reporting all remain in place. But the up-front and ongoing compliance cost of being public would meaningfully decline for newly public companies under the proposal, which could shift the trade-off between staying private and pursuing a listing for companies that have been on the fence.
For companies actively in registration today, the timing matters. The proposal is not yet final, and companies completing IPOs in the near term would do so under the current rules. But companies planning 2027 or 2028 listings should factor the proposal into their post-IPO compliance roadmaps and finance function build-out.
Companies pulled into public reporting through a SPAC or de-SPAC transaction would benefit from the same five-year on-ramp. The seasoning rules are based on Exchange Act reporting history, which means the timing depends on the structure of the transaction and which entity's reporting clock applies.
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The most durable advice for any pre-IPO or pre-SPAC company remains the same regardless of the proposal's outcome: invest in the underlying systems, controls, and close processes that support rigorous reporting at whatever cadence and depth is required. Whether your first year as a public company brings 404(b) or not, your data quality and control environment need to be SEC-ready. |
Where things stand: Comment period and next steps
The proposed rule is in the public comment period that opened following the May 19, 2026 Commission vote. Comments are due 60 days after publication in the Federal Register. After the close of the comment period, the SEC will review submissions and decide whether to move forward with a final rule, with or without modifications.
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$2 billion threshold calibration |
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60-month seasoning period |
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Investor and proxy advisor reaction |
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Interaction with companion proposals |
A thoughtful simplification worth monitoring
The proposal is one of the more significant restructurings of public company reporting requirements in a generation. It would meaningfully reduce the cost of being public for most registrants, accelerate the on-ramp for newly public companies, and clarify a framework that has grown complicated through years of incremental rulemaking. It would also leave the largest and most heavily-invested public companies largely where they are today, which is a reasonable place to land the policy balance.
For finance and accounting leaders, the action isn't operational yet. The rule isn't final, and the comment period is the right time for input rather than implementation. But it is the right time to understand the proposal accurately, work through how your company would be affected, and start scoping the conversations with auditors, audit committees, IR teams, and board members that will need to happen if and when the rule is adopted.
Questions about how this proposal affects your reporting strategy, SOX program, or IPO readiness? At Embark, we work closely with public companies and companies navigating the path to the public markets. Let's connect to talk through it.
