Emerging Growth Companies

If your company qualifies as an “emerging growth company,” as defined in Section 2(a)(19) of the Securities Act, it may choose to follow disclosure requirements that are scaled for newly public companies.

A company qualifies as an emerging growth company if it has total annual gross revenues of less than $1.235 billion during its most recently completed fiscal year and, as of December 8, 2011, had not sold common equity securities under a registration statement. A company continues to be an emerging growth company for the first five fiscal years after it completes an IPO, unless one of the following occurs:

• its total annual gross revenues are $1.235 billion or more
• it has issued more than $1 billion in non-convertible debt in the past three years or
• it becomes a “large accelerated filer,” as defined in Exchange Act Rule 12b-2

Emerging growth companies are permitted:

• to include less extensive narrative disclosure than required of other reporting companies, particularly in the description of executive compensation
• to provide audited financial statements for two fiscal years, in contrast to other reporting companies, which must provide audited financial statements for three fiscal years
• not to provide an auditor attestation of internal control over financial reporting under Sarbanes-Oxley Act Section 404(b)
• to defer complying with certain changes in accounting standards and
• to use test-the-waters communications with qualified institutional buyers and institutional accredited investors