two fiscal years of information), an Outstanding Equity Awards Table, and a Director Compensation Table, along with some narrative disclosures to augment those tables. EGCs are not required to provide a Compensation Discussion and Analysis, or disclosures about payments upon termination of employment or change in control.39


Disclosure, corporate governance, accounting and auditing relief Title I of the JOBS Act provides relief from a number of requirements for EGCs following an initial public offering. An EGC will not be subject to the Say-on-Pay, Say-on- Frequency or Say-on-Golden Parachute vote required by the Dodd-Frank Act and the SEC rules, for as long as the issuer qualifies as an EGC.40


An issuer that was an EGC,


but lost that status, will be required to comply with the Say-on-Pay vote requirement as follows: in the case of an issuer that was an EGC for less than two years, by the end of the three-year period following its IPO; and for any other issuer, within one year of having lost its EGC status.41 An EGC also is not subject to any requirement to disclose the relationship between executive compensation and the financial performance of the company, or any requirement to disclose the CEO’s pay relative to the median employee’s pay (should either such requirements ever be proposed and adopted by the SEC pursuant to the Dodd-Frank Act).42 Under section 107(b) of the JOBS Act, an EGC will not


be required to adopt any update to FASB’s Accounting Standards codification after April 5 2012 that has different effective dates for public companies and private companies that are not “issuers” under section 2(a) of Sarbanes-Oxley, until those standards apply to private companies. Under this provision, EGCs are able to take advantage of the extended transition period contemplated in those limited situations where there is a different effective date specified for private companies. If a new or revised accounting standard does not apply at all to private companies, then no transition would be permitted for EGCs, or if an accounting standard applies to both public and private companies, but provides for the same effective date for both types of companies, then no transition would be permitted for EGCs. Section 107(b)(1) of the JOBS Act provides that an EGC “must make such choice at the time the company is first required to file a registration statement, periodic report, or other report with the Commission” and to notify the SEC of such choice. The SEC has noted that EGCs should notify the SEC staff of the issuer’s choice at the time of the initial confidential submission, and if an EGC is already in registration or subject to Exchange Act reporting, then the statement must appear in its next amendment to the registration


20 JOBS Act Quick Start


statement or in its next periodic report.43


Section 107(b)(2)


provides that any decision to opt-out of the extended transition period for complying with new or revised accounting standards is irrevocable; however the SEC allows an EGC that opted into the extended transition period provision to subsequently opt out, as long as it complies with the applicable provisions of the JOBS Act and discloses its opting-out in the first periodic report or registration statement following the decision to do so. An EGC is not subject to any potential rules or


standards requiring mandatory audit firm rotation or a supplement to the auditor’s report that would provide additional information regarding the audit of the company’s financial statements (auditor discussion and analysis), should such requirements ever be proposed or adopted by the Public Company Accounting Oversight Board (PCAOB). Any other new auditing standards adopted by the PCAOB will not apply to EGC audits unless the SEC determines that such requirement is necessary and appropriate for investor protection.44 An EGC is not subject to the requirement for an auditor attestation of internal controls pursuant to section 404(b) of Sarbanes-Oxley. The EGC is subject to the requirement that management establish, maintain, and assess internal control over financial reporting, once that is phased-in for a issuer conducting an initial public offering after the first year.45 Other than the provisions for extended transition to new


or revised accounting standards discussed above, an EGC may decide to follow only some of the scaled disclosure provisions and corporate governance breaks available for EGCs.46 The SEC will not object if a foreign private issuer that qualifies as an EGC complies with the scaled disclosure provisions available to emerging growth companies to the extent relevant to the form requirements for foreign private issuers.47


Required studies The JOBS Act requires that the SEC conduct a number of studies. Under Title I, within 90 days of enactment of the Act, the SEC was required to present to Congress the findings of a study that examines the impact of decimalisation on initial public offerings and the impact of this change on liquidity for small- and mid-cap securities. If the SEC determined that securities of emerging growth companies should be quoted or traded using a minimum increment higher than $0.01, the SEC may, by rule, not later than 180 days following enactment of the Act, designate a higher minimum increment between $0.01 and $0.10.48


Also under Title I, within 180 days of


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