Laura Anthony

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    • Member Type(s): Expert
    • Title:Founding Partner
    • Organization:Legal & Compliance, LLC
    • Area of Expertise:Securities Law
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A comparison of Smaller Reporting Companies and Emerging Growth Companies – Part 4
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Uploaded By: Attorney Laura Anthony
Date Added: December 13, 2016
Description: A comparison of Smaller Reporting Companies and Emerging Growth Companies – Part 4- Today is the continuation in a LawCast series talking about the differences between a smaller reporting company and an emerging growth company. In the last Lawcast in this series I was running through several Regulation S-K line item differences between a smaller reporting company and an emerging growth company (EGC) Whereas a smaller reporting company must comply with new or revised accounting standards when enacted, an EGC may elect to defer compliance until non-public companies would be required to comply with such changes. Neither smaller reporting companies nor EGC’s are required to comply with Section 404(b) of the Sarbanes Oxley Act which requires an auditor attestation as to internal control over financial reporting. Both are required to provide a management attestation over internal controls but not the separate auditor review. The separate auditor attestation has proved to be very cumbersome and expensive for public companies. An EGC must provide standard disclosures for Item 404 on related party transactions, whereas a smaller reporting company has a lower disclosure threshold. A smaller reporting company is not required to disclose the procedures for reviewing related party transactions nor whether they have been approved or ratified. An EGC must provide standard disclosures for Item 407 corporate governance matters whereas a smaller reporting company is not required to disclose whether it has an audit committee financial expert until its second annual report following its IPO. A smaller reporting company also does not have to provide a compensation committee report. An EGC must provide standard risk factor disclosures whereas a smaller reporting company need not provide risk factors at all. Finally, an EGC must provide a disclosure on the ratio of earnings to fixed charges for the years in which it provides selected financial data disclosures whereas a smaller reporting company is not required to make this disclosure at all. As related to the executive compensation disclosures required by Item 402, neither a smaller reporting company nor EGC is required to provide a compensation discussion and analysis or CD&I; grants of plan based awards tables; option exercises and stock vested tables; a disclosure on change in present value of pension benefits; the CEO pay ratio disclosure; a pension benefit table or compensation policies as related to risk management.
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