Emerging growth company (EGC) is a category of issuer for which the disclosure and gun-jumping regulations are relaxed.
The Jumpstart Our Business Startups (JOBS) Act of 2012 created the category emerging growth companies to increase smaller companies’ access to public markets. The JOBS Act defines an emerging growth company in Section 2(a)(19) of the Securities Act. It requires that the company have annual gross revenues less than $1.07 billion during its most recent fiscal year and has not sold common stock under a registration statement. A company will be classified as an emerging growth company for its first five fiscal years, unless: its gross revenues exceed $1.07 billion, it has issued over $1 billion in non-convertible debt over three years, or it becomes a large accelerated filer.
Emerging growth companies have relaxed disclosure and gun-jumping regulations. In their registration statements, they may include less extensive disclosures, for example in the description of executive compensation. Additionally, they only need to provide two years of audited financial statements, as opposed to three years for non-emerging growth companies, and do not need to provide an auditor attestation of internal controls.
[Last updated in February of 2022 by the Wex Definitions Team]