FERF and Donnelley Financial Solutions Examine Best Practices for Companies Transitioning from Emerging Growth Company Status

New White Paper discusses the differences in disclosure requirements for EGCs and ways to overcome complications and challenges to maturing their approach to governance, disclosure, communications and regulatory compliance.

Financial Executives Research Foundation (FERF) and Donnelley Financial Solutions, Inc. (NYSE:DFIN) today released a white paper examining best practices for companies that are maturing out of Emerging Growth Company (EGC) status per the JOBS (Jumpstart Our Business Startups) Act of 2012.

The paper, entitled “Growing Past Emerging Growth: Five Years after the JOBS Act,” discusses the differences in disclosure requirements for these companies and ways to overcome complications and challenges to maturing their approach to governance, disclosure, communications, and regulatory compliance.

Since the peak of the IPO market in 1996 to 2016, the number of public companies being traded in the United States declined 50 percent, from 7,322 to just 3,671, even with the advent of the JOBS Act. With fewer public companies for investors and regulators to assess, all public companies—including EGCs—should be prepared for more rigorous scrutiny from a range of market participants: regulators, proxy advisors, rating agencies and shareholders– including large pension funds and other institutional investors.

With the five-year anniversary of the JOBS Act comes the deadline for the first companies that became public under the JOBS Act’s EGC status to transition to full public company status. This transition brings with it a corresponding increase in compliance and reporting obligations. The weight of these obligations falls most heavily on the Finance and Compliance functions.

“As we approach the five-year milestone of the JOBS Act, which encouraged younger companies to join the public markets, senior financial executives will have a pivotal role in guiding their organizations through a smooth transition from EGC status to full reporting and disclosure,” said Andrej Suskavcevic, CAE, President and CEO of Financial Executives International and Financial Executives Research Foundation. “This report will allow our members and other senior executives to think critically about how to use this transition as an…

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