An emerging growth company is a company with limited operating history, typically defined as a company that has been in business for less than five years. These companies are often characterized by high growth potential, but also high risk. Many emerging growth companies are start-ups, or companies that have recently gone public.
Emerging growth companies are subject to different reporting requirements than other public companies. For example, they are not required to provide as much financial information to the Securities and Exchange Commission (SEC). This is intended to make it easier for these companies to raise capital.
However, emerging growth companies are not exempt from all SEC requirements. They still must comply with rules on disclosure, insider trading, and other areas.
How long does EGC status last?
Under the Equality Act 2010, an employer must not discriminate against, harass or victimise an employee because they have a "protected characteristic". These characteristics are: age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation.
If an employee raises a complaint of discrimination, harassment or victimisation, they will be protected from detriment by their employer as a result of making that complaint. This protection is known as "egregious conduct" (EGC) status.
EGC status lasts for the duration of the employee's employment, and continues even if the employee leaves the job. It is a personal right which cannot be transferred to another person.
Can a private company be an emerging growth company?
Yes, a private company can be an emerging growth company. The JOBS Act created a new category of public company, called an emerging growth company, that has reduced reporting and other requirements. To qualify as an emerging growth company, a company must have:
• Gross revenues of less than $1.07 billion during its most recent fiscal year
• A public float of less than $700 million as of the last day of its most recent fiscal year, or, if it does not have a public float, it must have less than $50 million in annual revenues
If a company meets these criteria, it can choose to remain private for a longer period of time before going public.
Is an EGC a smaller reporting company?
An EGC is a smaller reporting company if it meets the definition of a "smaller reporting company" under the Securities Exchange Act of 1934. A "smaller reporting company" is a company that is not required to file reports with the Securities and Exchange Commission (SEC) under the Exchange Act. Generally, a smaller reporting company is a company with a public float of less than $75 million, or a company that has less than $50 million in annual revenues and less than $700 million in market capitalization.
If an EGC is a smaller reporting company, it will be subject to different disclosure requirements than a larger company. For example, a smaller reporting company is not required to provide as much information in its financial statements. Additionally, a smaller reporting company is not required to have its financial statements audited by an independent public accountant.
Who qualifies as an EGC?
An EGC is an entity that has elected to be subject to the reduced disclosure requirements of Regulation S-K Item 101(a)(23). To qualify as an EGC, an entity must:
1. Be organized in the United States or have its principal place of business in the United States;
2. Have less than $1.07 billion in total annual revenues as of its most recently completed fiscal year; and
3. Be either:
- an emerging growth company as defined in the JOBS Act;
- a public shell company (as defined in Rule 12b-2 of the Exchange Act); or
- a company that was previously an emerging growth company but ceased to be an emerging growth company before the end of its fiscal year following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement.