Title I of the JOBS Act of 2012
In Advaion’s “IPOs are back” publication, we noted that Initial Public Offering (IPO) activity has spiked in 2013 with 62 IPOs in Q2 2013, and another 111 in the pipeline. One of the factors that appears to be contributing to this increased activity is the newly created issuer category under the Jumpstart Our Business Startups “JOBS” Act of 2012. The following provides a brief overview of the relief afforded under the JOBS Act of 2012 with respect to Title I.
On April 5, 2012, the JOBS Act was signed into law with the intention of revitalizing the economy by encouraging funding of U.S. businesses. The JOBS Act introduced a new issuer category for public companies, called emerging growth company (EGC). The SEC defines an EGC as an issuer with total annual gross revenues of less than $1B during the most recently completed fiscal year. The relief afforded to EGCs comes in the form of scaled disclosures and requirements during their IPO ramp-on period.
IPO ramp-on relief for EGCs.
Timeline for Internal Control over Financial Reporting (ICOFR).
Below is a timeline of relief afforded to EGCs from the time of IPO through expiration of EGC relief.
In our experience, some companies are deciding to early adopt the provisions of ICOFR based upon encouragement from their audit committees, advisors and investment bankers. Advantages of early adoption include: strengthening a company’s people, processes and systems in an effort to lay a foundation for continued growth and compliance.
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