A more thorough explanation:

An Emerging Growth Company (EGC) is a type of company that has relaxed disclosure and gun-jumping regulations. The Jumpstart Our Business Startups (JOBS) Act of 2012 created this category to increase smaller companies' access to public markets. According to the Securities Act, an EGC is a company that has annual gross revenues less than $1.07 billion during its most recent fiscal year and has not sold common stock under a registration statement. A company will be classified as an EGC for its first five fiscal years, unless its gross revenues exceed $1.07 billion, it has issued over $1 billion in non-convertible debt over three years, or it becomes a large accelerated filer.

EGCs have relaxed disclosure and gun-jumping regulations. For example, in their registration statements, they may include less extensive disclosures, such as in the description of executive compensation. Additionally, they only need to provide two years of audited financial statements, as opposed to three years for non-emerging growth companies, and do not need to provide an auditor attestation of internal controls.

For instance, a startup that has been in business for less than five years and has annual gross revenues of $500 million can be classified as an EGC. This classification allows the startup to access public markets with fewer regulatory requirements, making it easier for them to raise capital.

Another example is a small biotech company that has not yet sold common stock under a registration statement and has annual gross revenues of $800 million. This company can be classified as an EGC and take advantage of the relaxed disclosure and gun-jumping regulations to access public markets.

These examples illustrate how the EGC classification can benefit smaller companies by reducing regulatory requirements and making it easier for them to access public markets.