What the JOBS Act Means for SOX Compliance

Posted by Bill Bockwoldton April 5, 2012
The jobs act created a new category of issuer, called an "Emerging Growth" (ECG) company, in the interest of stimulating equity investment in companies by modifying the regulations surrounding registration, capital-raising activities, and compliance requirements. To qualify for this category, a company must have produced less than 1 billion of revenue in it's prior fiscal year (and must not have sold common equity in a registered offering prior to December 8, 2011). A qualifying company would lose ECG status when one of the following occurs:
  • Five years elapse from the IPO date
  • Company produces more than 1 billion in gross revenue
  • Company issues more than 1 billion in non-convertible debt within a 3-year period
  • Company reaches accelerated-filer status (>$700MM public market float)
As an ECG, a company would be exempt from an external audit of their internal controls over financial reporting (SOX 404(b)) as long as they maintain ECG status. This would be a maximum of 5 years from the IPO date if no other conditions specified above are met before that time.
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Tags: Internal Controls, Pre-IPO, 404, SOX, internal control