What Is the JOBS Act? IPO Convenience Measures for Emerging Growth Companies

The SEC’s Division of Corporation Finance has signalled a renewed focus on the availability of the “emerging growth company” (EGC) designation for non-US issuers in its 2025 review priorities, particularly scrutinising whether companies that have exceeded the $1.235 billion revenue threshold in their most recent fiscal year are still claiming EGC status in their filings. This regulatory tightening arrives as a record cohort of Hong Kong and PRC-based companies — 38 as of Q1 2025, per data from the US Listing Desk — are actively pursuing NYSE or Nasdaq listings under the Jumpstart Our Business Startups (JOBS) Act framework. For CFOs and company secretaries accustomed to the HKEX Main Board regime under the Listing Rules, the JOBS Act’s EGC provisions offer a distinct set of procedural shortcuts: confidential draft registration statement (DRS) submission, scaled executive compensation disclosure, and a five-year transition period for new accounting standards. Understanding which provisions remain available post-IPO and which expire upon the earlier of $1.235 billion in annual revenue or $1.0 billion in public float is critical for any issuer mapping a US listing timeline. This article dissects the JOBS Act’s EGC mechanics, their interaction with Hong Kong issuers’ existing compliance obligations under the SFC’s Code of Conduct, and the specific filing strategies that maximise the window of reduced disclosure.

The EGC Definition and Eligibility Mechanics

The JOBS Act, enacted on 5 April 2012, created the EGC classification under Section 101 of Title I. An issuer qualifies as an EGC if its total annual gross revenues were less than US$1.235 billion during its most recently completed fiscal year, as adjusted for inflation every five years by the SEC. The threshold was last adjusted in April 2022, increasing from the original US$1.0 billion. For a Hong Kong-headquartered company, the calculation includes the consolidated revenues of the entire group as reported under IFRS or US GAAP, not merely the Hong Kong operating entity.

An issuer ceases to be an EGC on the earliest of four triggering events: (i) the first day of the fiscal year after its annual gross revenues exceed US$1.235 billion; (ii) the date it becomes a “large accelerated filer” with a public float of at least US$700 million as of the last business day of its most recent second fiscal quarter; (iii) the fifth anniversary of its first registered sale of common equity securities under the Securities Act of 1933; or (iv) the issuance of more than US$1.0 billion in non-convertible debt over a rolling three-year period. For a PRC-based VIE structure issuer, the “first registered sale” date is the listing date on NYSE or Nasdaq, not the date of any prior HKEX listing.

The practical consequence for a Hong Kong company that previously listed on the Main Board under Chapter 8 of the HKEX Listing Rules is that the JOBS Act clock starts fresh upon its US IPO. A company that has been listed in Hong Kong for eight years can still qualify as an EGC for its US listing if its revenue remains below the threshold. This creates a window for dual-primary or secondary listings where the issuer can use the confidential filing process for its F-1 registration statement, a procedure unavailable under the HKEX’s A1 submission regime.

Core IPO Convenience Measures for EGCs

Confidential Submission and Non-Public Review

The most significant procedural advantage for an EGC is the ability to submit a draft registration statement (DRS) to the SEC on a confidential basis under Section 106 of the JOBS Act. The SEC’s Division of Corporation Finance reviews the DRS and provides comments, and the issuer responds, all without public disclosure. Only the final prospectus, including all SEC staff comments and issuer responses, must be publicly filed at least 15 days before the roadshow commences.

For a Hong Kong issuer accustomed to the HKEX’s requirement under Listing Rule 9.10A that an A1 application must be published on the HKEX website upon submission, the JOBS Act’s confidentiality window is a material advantage. It allows the issuer to engage in pre-marketing discussions with cornerstone investors — typically family offices and sovereign wealth funds based in Hong Kong and Singapore — without exposing the full financials or business model to competitors. The SEC’s 2025 review priorities have specifically flagged that non-US EGCs must ensure their DRS submissions include all exhibits and consents, not merely the body of the registration statement, to avoid delays in the comment process.

Reduced Executive Compensation Disclosure

Under Section 102 of the JOBS Act, an EGC is exempt from the requirement to include a compensation discussion and analysis (CD&A) in its proxy statement or registration statement. Instead, the issuer need only provide a scaled-back summary compensation table covering the three most recently completed fiscal years for the named executive officers (NEOs), typically the principal executive officer, principal financial officer, and the three highest-paid officers.

For a Hong Kong-listed company transitioning to a US listing, this provision is particularly relevant. The HKEX’s Listing Rule 13.91 requires disclosure of directors’ and chief executive’s emoluments in the annual report, but the format and level of granularity differ from the SEC’s Item 402 of Regulation S-K. An EGC can avoid the full CD&A narrative, which often requires discussion of compensation philosophy, benchmarking against peer groups, and detailed pay-for-performance analysis. The exemption applies only while the issuer remains an EGC; upon loss of EGC status, the issuer must include CD&A in its next annual proxy statement.

Extended Phase-In of New Accounting Standards

Section 102(b) of the JOBS Act provides that an EGC is not required to comply with any new or revised financial accounting standard until the date that a private company is required to comply with such standard. This effectively delays adoption of new accounting standards by one to three years, depending on the standard’s effective date for public companies versus private companies under the FASB’s effective date framework.

For a Hong Kong issuer reporting under IFRS as adopted by the HKICPA, the JOBS Act provision means the issuer can continue using its existing IFRS accounting policies without immediately adopting new US GAAP standards that may have different effective dates. The SEC staff has confirmed in its 2024 Compliance and Disclosure Interpretations that an EGC using IFRS as issued by the IASB is not required to reconcile to US GAAP under Item 18 of Form 20-F, but must still comply with the SEC’s rules on financial statement presentation. The practical effect is that a Hong Kong company can file its F-1 with financial statements prepared under IFRS, with only the note-level reconciliations required under Item 17 of Form 20-F if it is a foreign private issuer.

Interaction with Hong Kong Regulatory Requirements

SFC Code of Conduct and Sponsor Obligations

A Hong Kong company pursuing a US listing while maintaining its HKEX listing must navigate the overlap between the JOBS Act’s EGC provisions and the SFC’s Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. Paragraph 17 of the Code requires sponsors to conduct reasonable due diligence on an issuer’s business, financial condition, and compliance with applicable laws. This obligation exists irrespective of whether the issuer is using the JOBS Act’s confidential filing process.

The SFC’s 2023 guidance on cross-border listings, issued in consultation with the HKEX, confirmed that a sponsor’s duty under the Code applies to the Hong Kong-listed entity’s ongoing disclosure obligations under the Listing Rules, not to the US registration statement. However, where the same group of directors and officers controls both entities, the SFC expects the Hong Kong sponsor to ensure that any information provided to the SEC is consistent with the information filed with the HKEX. An EGC issuer that uses the confidential DRS process must still comply with the HKEX’s disclosure requirements under Listing Rule 13.09 for inside information, meaning that a material SEC comment letter could trigger an inside information announcement on the HKEX if it relates to a matter that is price-sensitive in Hong Kong.

HKMA Circulars on Cross-Border Capital Flows

The Hong Kong Monetary Authority’s Supervisory Policy Manual module IR-1 on “Interest Rate Risk in the Banking Book” and its 2024 circular on “Cross-Border Capital Flow Management for Listed Entities” are directly relevant for a PRC-based VIE issuer that intends to repatriate US IPO proceeds to the mainland via Hong Kong. The HKMA’s circular of 15 March 2024 reminded authorised institutions that remittances from a US-listed entity to a Hong Kong intermediary for onward transmission to the PRC must comply with the SAFE rules on foreign exchange registration and the PRC’s Circular 37 on offshore special purpose companies.

For an EGC that raises less than US$100 million in its US IPO — the typical size for a Hong Kong biotech or tech-enabled services company — the JOBS Act’s scaled disclosure provisions do not affect the HKMA’s capital flow requirements. The issuer must still file a Form F-1 with the SEC, and the proceeds remittance must be structured through a Hong Kong-licensed bank that complies with the HKMA’s anti-money laundering guidelines under the AMLO. The JOBS Act’s confidentiality window does not exempt the issuer from the HKMA’s notification requirements for cross-border capital movements exceeding HKD 8 million per transaction.

Strategic Considerations for Hong Kong Issuers

Timing the EGC Window

The five-year EGC clock starts on the date of the first registered sale of common equity securities in the US. For a Hong Kong company that completes its IPO on 1 June 2025, the EGC status expires on 1 June 2030, unless an earlier triggering event occurs. A CFO must model the revenue trajectory to determine whether the $1.235 billion threshold will be breached before the fifth anniversary. If the company’s annual revenue is growing at 20% compound annual growth rate from a base of US$800 million, the threshold will be crossed in approximately the third year post-IPO, causing early loss of EGC status.

The practical consequence is that the issuer should front-load its confidential DRS submissions in the first 18 months, when the EGC protections are fully available. After the third year, the issuer may need to prepare for full CD&A disclosure and adoption of new accounting standards, which requires a transition plan embedded in the audit committee’s work plan under the HKEX’s Corporate Governance Code provision C.3.3.

Dual-Listing vs. Secondary Listing Structure

An EGC issuer that is already listed on the HKEX Main Board has two structural options under the JOBS Act: a dual-primary listing on NYSE or Nasdaq, or a secondary listing under the SEC’s Rule 12g3-2(b) exemption. For a dual-primary listing, the issuer files a Form F-1 and becomes subject to the full SEC reporting regime, but can use the EGC provisions during the transition period. For a secondary listing, the issuer relies on its HKEX filings and files a Form 40-F with the SEC, which does not qualify for EGC treatment because the issuer is not conducting an initial public offering of common equity securities in the US.

The JOBS Act’s EGC benefits are only available for an issuer that is conducting its first registered sale of common equity securities under the Securities Act. A Hong Kong company that has already completed a US IPO in 2020 cannot re-qualify as an EGC for a subsequent follow-on offering. The SEC’s 2025 review priorities have reiterated this point, specifically cautioning issuers against attempting to reclassify as an EGC after a prior US listing.

Actionable Takeaways

1. Confirm EGC eligibility by calculating consolidated group revenue for the most recently completed fiscal year against the US$1.235 billion threshold, using IFRS or US GAAP figures as filed with the HKEX under Listing Rule 13.46.
2. Structure the US IPO timeline to maximise the confidential DRS window, ensuring all SEC staff comments are resolved before the 15-day public filing requirement, to avoid market leaks that could affect the HKEX-listed share price.
3. Prepare a transition plan for the loss of EGC status, including a timeline for adopting new accounting standards under FASB’s effective date framework and drafting a full CD&A for the proxy statement.
4. Coordinate with the Hong Kong sponsor and legal counsel to ensure that the confidential DRS process does not conflict with the SFC’s inside information disclosure requirements under the Code of Conduct and the HKEX Listing Rules.
5. Verify that the US IPO proceeds remittance structure complies with the HKMA’s Supervisory Policy Manual and SAFE Circular 37, regardless of the JOBS Act’s reduced disclosure obligations.