On January 28, 2016, the House Committee on Financial Services reported favorably on the Small Company Disclosure Simplification Act. The bill has been scheduled for consideration by the full U.S. House of Representatives. Some commentators estimate this bill would affect roughly sixty percent of all reporting companies.
The bill proposes to exempt emerging growth companies (as defined in Section 3 of the Securities Exchange Act of 1934) and other issuers with total annual gross revenues of less than $250 million from the requirement to use eXtensible Business Reporting Language (“XBRL”) for financial statements and other periodic reports filed with the SEC. The exemption for issuers with less than $250 million in annual revenue, however, does include a three-to-five year sunset provision. Under this provision, the exemption for such issuers will expire upon the earlier of: (i) five years after enactment or (ii) two years after a determination by the SEC (as required by the bill) that the benefits of requiring XBRL-formatted disclosures outweigh its costs to issuers, but in no event less than three years after enactment.
Data formatted in XBRL presents selected information included in periodic reports in an interactive fashion, allowing readers to jump to specific sections with the click of a button. Filing financial and other data in XBRL usually requires issuers to contract with third-party services providers to ensure technical compliance with the SEC mandate. Financial statements are the most typical type of information required to be presented in XBRL.
You can read the full text of the bill here.
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