Smaller Reporting Company
A Smaller Reporting Company (SRC) is an SEC-defined issuer classification for publicly traded U.S. companies that fall below specified revenue and public float thresholds, entitling them to scaled disclosure requirements across periodic reports, registration statements, and proxy filings.
The Smaller Reporting Company classification was established by the SEC to create a tiered disclosure regime that calibrates compliance costs to issuer size. The SRC framework recognizes that a one-size-fits-all disclosure regime imposes disproportionate burdens on smaller public companies relative to the investor protection benefits delivered.
To qualify as an SRC, a company must have either a public float of less than $250 million, or if public float cannot be calculated, annual revenues below $100 million in the most recently completed fiscal year. The SEC expanded these thresholds in 2018 to extend SRC benefits to a broader universe of smaller issuers, increasing the public float threshold from $75 million.
SRC status carries a range of scaled disclosure accommodations across the SEC's periodic reporting forms. On Form 10-K, SRCs may provide two years of audited financial statements rather than three. They are not required to include selected financial data for five years, a requirement that applies to larger accelerated filers. Executive compensation disclosures under SRC rules are significantly reduced: SRCs need only disclose compensation for two named executive officers rather than the five required of larger issuers, and they may use a simplified Summary Compensation Table format without certain supplemental tables.
Like EGCs, SRCs are exempt from the auditor attestation requirement on internal controls under Section 404(b) of Sarbanes-Oxley. This exemption is among the most financially significant because the cost of a separate auditor attestation engagement can be substantial relative to the resources of a small public company.
A company can hold both EGC and SRC status simultaneously in certain circumstances. The two classifications overlap in several areas but are not identical: EGC status is time-limited to five years post-IPO, while SRC status persists as long as the revenue and public float criteria are met, regardless of how long the company has been public.
Critics of the SRC framework argue that the scaled disclosures can leave investors in smaller public companies with materially less information than they would receive for large-cap issuers. Supporters counter that without the accommodations, many smaller companies would remain private, eliminating the opportunity for public market participation entirely. The SRC classification is periodically reviewed by the SEC in connection with broader assessments of the U.S. public market ecosystem.