ICI Backs SEC Filer-Status Overhaul but Wants to Preserve Key Disclosures

The Investment Company Institute generally supported the SEC's proposal to simplify the filer-status framework under the Securities Exchange Act, while urging the SEC to preserve certain issuer disclosures that ICI members regard as particularly important.

The SEC's proposal would raise the large accelerated filer public-float threshold to $2 billion, extend scaled disclosure to a wider non-accelerated filer group, add a five-year seasoning period before new registrants become large accelerated filers, and give business development companies accounting accommodations (see previous coverage).

The ICI largely supported the proposal reasoning that it would cut the regulatory burden that discourage companies from going public. However, the ICI urged the SEC to shorten the five-year seasoning period for large accelerated filers arguing that a newly public mega-cap firm with a float above $2 billion on its first day should not receive a five-year delay from full disclosure.

The ICI also urged the SEC to preserve two disclosure categories as to non-accelerated filers: the compensation discussion and analysis under Item 402(b) of Regulation S-K (Executive compensation), and specific executive compensation tables covering plan-based awards, option exercises, pension benefits, and nonqualified deferred compensation. ICI also recommended retaining ICFR auditor attestation for a broader set of companies than just large accelerated filers.

As to business development companies (BDCs), ICI recommended that all BDCs be categorically exempt from executive compensation disclosures and the ICFR attestation requirement regardless of filer status, given their external management structures. ICI supported proposed Rule 3-19 of Regulation S-X (Special provisions as to business development companies and face-amount certificate companies that are non-accelerated filers) but asked the SEC to specify the deferral period for adopting new accounting standards and require disclosure when a BDC elects that option.

The ICI urged the SEC to coordinate this proposal with its pending offering reform and semiannual reporting proposals.