No, it’s not April 1 anymore so this is serious… but actually, it’s no big deal. Last Friday, the SEC adopted some rules mandated by the Jumpstart Our Business Startups (JOBS) Act of 2012. Among them: implementing the use of the term “emerging growth company” (EGC) throughout its registration and periodic reporting forms. The JOBS Act created the new status and gave a bunch of goodies to them in terms of lower disclosure and compliance obligations as part of the JOBS Act “IPO On-Ramp” concept.
What does this mean? Anyone doing an SEC filing better check this release first. Essentially, the cover page of most forms the SEC uses now adds a “check the box” line to say if you are an EGC. The last time I remember a change like this was in 2005, when every public company had to add a check the box item declaring whether or not they are a shell company. This allowed the SEC to track more specific data in the reverse merger space.
One assumes we will now begin to see reports from the SEC indicating how many companies actually take advantage of EGC status. It appears that many are, without question. Just another, just about final I think, piece of the JOBS Act puzzle getting completed as issuers and financiers begin to really benefit from the new panoply of financing options and easing of the regulatory burden brought about back in 2012.