SEC Reporting Requirements for Emerging Growth Companies: What You Need to Know
Florida’s business ecosystem is booming, especially in sectors like technology, healthcare, fintech, and renewable energy. Many of these high-growth companies eventually consider going public to access capital markets.
Thanks to the Jumpstart Our Business Startups (JOBS) Act of 2012, companies that qualify as Emerging Growth Companies (EGCs) enjoy a streamlined path to IPO, accompanied by reduced reporting burdens.
However, while the federal guidelines under the Securities and Exchange Commission (SEC) apply nationally, Florida-based EGCs must also work through state-level considerations that can influence their compliance obligations and strategic choices.
Understanding the federal guidelines under the SEC is crucial for those with an emerging growth company. At Frederick M. Lehrer in Clermont, Florida, I provide professional representation for clients with growing companies. Here, we’ll discuss the SEC reporting requirements with emerging growth companies.
What Is an Emerging Growth Company?
An Emerging Growth Company (EGC) is defined under Section 2(a)(19) of the Securities Act of 1933. The qualifications for EGC status are:
Annual gross revenue: Total annual gross revenues of less than $1.235 billion during its most recently completed fiscal year.
Common equities: The company hasn’t sold common equity securities under a registration statement before December 8, 2011.
Maintain status: Retains EGC status for up to five years post-IPO, unless it crosses one of the following thresholds:
Annual revenue exceeds $1.235 billion.
Public float exceeds $700 million.
Issued more than $1 billion in non-convertible debt over the previous three years
Most Florida-based startups will initially qualify as EGCs. Knowing when you lose that status is crucial to avoid compliance violations or regulatory surprises.
Benefits of EGC Status for Florida Companies
The EGC designation grants a suite of regulatory reliefs that can significantly reduce compliance costs and facilitate a smoother transition to public markets.
Confidential IPO Filing
Florida-based EGCs can file Form S-1 (IPO registration) confidentially, meaning:
Early drafts are only visible to the SEC and the company.
The company can test investor interest and adjust its strategy without market pressure.
This is particularly helpful for Florida startups in competitive sectors like Miami fintech or Orlando-based tech startups, which may not want to publicly disclose sensitive growth or IP strategies too early.
Scaled Financial Disclosures
EGCs only need to provide:
Two years of audited financial statements instead of three.
Limited Management Discussion & Analysis (MD&A) sections.
Fewer compensation-related disclosures.
This makes IPO preparation less resource-intensive for smaller Florida firms that may not have robust accounting departments.
Exemption from Internal Controls Audit (SOX 404(b))
Section 404(b) of the Sarbanes-Oxley Act requires a company’s auditor to attest to the company’s internal controls. EGCs are exempt from this, which can save upwards of $500,000 annually in audit fees.
Delayed Adoption of Accounting Standards
Florida-based EGCs can adopt new or revised accounting standards at the same time as private companies, giving them extra time to adjust. This is especially useful for startups without large finance teams.
Reduced Executive Compensation Disclosure
EGCs can:
Provide limited executive pay tables.
Avoid the requirement to conduct "say-on-pay" votes for the first few years post-IPO.
This is beneficial for privately held Florida startups transitioning into public markets while still scaling leadership.
SEC Reporting Obligations for EGCs
Upon going public, a Florida-based Emerging Growth Company (EGC) becomes subject to continuous reporting obligations as mandated by the Securities Exchange Act of 1934. These regular filings are essential for upholding transparency and confirming adherence to regulatory standards.
One key report is Form 10-K, the annual report, which is due between 60 and 90 days following the end of the fiscal year. This document includes audited financial statements, Management’s Discussion and Analysis (MD&A), an assessment of risks, and details regarding compensation. Notably, EGCs are only required to present two years of audited financial data in this report.
Quarterly financial updates are provided through Form 10-Q, which must be submitted within 40 to 45 days after the conclusion of each fiscal quarter. These reports contain unaudited financial information, an MD&A section, and an analysis of potential market risks.
Form 8-K, a current report, is triggered by significant company events and must be filed within four business days of their occurrence. Examples of such events include the resignation of an officer, involvement in mergers or acquisitions, or the occurrence of bankruptcy or material agreements.
Finally, Section 16 of the Act necessitates filings by company insiders, such as officers, directors, and major shareholders. These filings, which include Forms 3, 4, and 5, are used to disclose any transactions involving the company’s securities.
Florida-Specific Compliance and Considerations
Florida doesn’t impose additional state-level reporting for companies already registered under the SEC. However, these factors are relevant:
Florida Securities and Investor Protection Act: Administered by the Florida Office of Financial Regulation (OFR). Florida has a "notice filing" requirement for certain SEC-registered offerings. Companies must submit a Form D notice and pay a state filing fee when selling securities to investors in Florida.
Blue Sky Laws: Florida has a relatively issuer-friendly environment, but companies should still consult legal counsel to confirm compliance when engaging in intrastate offerings or private placements.
Local Tax and employment regulations: Public companies often attract scrutiny and must align with state labor, employment, and environmental disclosures, particularly if listed on major exchanges.
Therefore, while Florida aligns with federal SEC regulations for public companies, businesses must be mindful of state-specific requirements concerning securities offerings, Blue Sky laws, and local regulations, particularly as they gain public visibility.
Compliance Pitfalls for EGCs
Working through SEC reporting as an Emerging Growth Company (EGC) comes with its own set of potential pitfalls.
Premature Loss of EGC Status
Companies that rapidly grow may unintentionally trigger the loss of benefits. Management must monitor revenue growth, public float changes, and debt issuance.
Incomplete Disclosure Preparation
Florida-based startups may lack the internal controls or personnel to manage SEC compliance. Outsourcing to CFO services or law firms can mitigate this.
Misuse of Confidential Filings
Some companies misuse confidential filings to test the waters without real IPO intentions, risking reputational damage or SEC scrutiny.
Awareness of these common challenges is crucial for Florida-based EGCs to confirm a smooth transition to and sustained success in the public markets.
Trends Impacting Florida-Based EGCs
Several recent trends are significantly influencing Emerging Growth Companies (EGCs) based in Florida as they move through the path to and life as public companies.
Rise of SPACs
Special Purpose Acquisition Companies (SPACs) have opened alternative public paths for Florida companies. EGCs using SPACs may still be eligible for scaled disclosures post-merger.
Miami Tech Boom
Miami’s surge in tech investment is expected to produce a wave of IPO-ready startups. Emerging growth company status will be a key lever for these firms.
ESG Reporting Pressures
Even though EGCs are exempt from some disclosures, investors are pushing for voluntary Environmental, Social, and Governance (ESG) reporting.
By understanding and strategically utilizing the benefits of emerging growth company status, while remaining mindful of Florida-specific regulations, these companies can work through the intricacies of SEC reporting and position themselves for sustained growth and success in the public market.
For Florida-based companies, emerging growth company status provides a powerful structure for accessing capital markets while minimizing compliance burdens. However, success requires more than legal eligibility — it demands strategic planning, awareness of state and federal regulations, and a commitment to investor transparency.
Contact Me Today
By leveraging Florida's entrepreneurial climate alongside the federal emerging growth company benefits, companies can’t only go public — they can thrive. I, Frederick M. Lehrer, serve clients in Orange County, Florida, and internationally. I am dedicated to providing support with emerging growth companies. Contact me today for a consultation.
