I recently authored an article published by Bloomberg Law providing insights to emerging growth companies (EGC) that are maturing and will be imminently transitioning from the limited proxy disclosure requirements of an EGC to the expansive disclosure and governance requirements of a seasoned public company.
“EGCs have five years following IPO to take advantage of the scaled disclosure requirements under Items 402(n) and (m) of Regulation S-K,” I explained in the article. “The scaled disclosure requirements were a component of the Jumpstart Our Business Startup Act of 2012 (JOBS Act) to create inclusive access to markets for smaller companies by extending smaller and newer companies a longer runway transition to the disclosure obligations of a publicly-traded entity.”
I offered insight on the new data and disclosure requirements when they transition to smaller reporting companies, accelerated filers or large accelerated filers, including:
- Additional named executive officers and additional covered years.
- New tabular disclosures.
- Expanded compensation narratives.
In the article, I outlined the requisite parameters needed to retain EGC status for the full duration of the five-year transition period, what happens if that status is lost, and details on the key differences between the scaled disclosure requirements for EGCs —and in some instances smaller reporting companies- and accelerated filers and large accelerated filers. I also walked through practice points and best practices to assist companies in generating an internal checklist for this new step in their corporate life cycle.
The full article, “Tips for Registrants Transitioning From EGC Status,” is available to Bloomberg Law subscribers here, and a PDF can be accessed here.