What Documents Do Going Public Attorneys Review?
Proper disclosure is critical during the going public process. SEC disclosures are most often prepared by the company’s going public attorney. The securities laws require that companies provide expansive disclosures in registration statements filed with the Securities and Exchange Commission (SEC). Regardless of the venue for listing or trading, the securities laws require accurate and complete disclosure. A going public attorney assists the issuer in determining whether it should conduct an initial public offering or a Direct Public Offering as well as whether it qualifies for a national stock exchange and/or the most appropriate tier of the OTC Markets.
An issuer must generally disclose information about its business, operations, financial condition, risks, management, litigation and shareholders, in addition to how many shares it will offer and the share price. In addition, if Form S-1 is used, the company’s going public attorney must render a legal opinion as to certain corporate matters. Providing the required disclosures will help assure there are no future problems with DTC eligibility.
The going public attorney’s review can vary depending upon the size of the issuer, its type of business, its assets, revenues, location, and other factors.
Any private company seeking public company status needs a going public attorney to assist it with the process, accountants to audit at least two years of financial statements and–if an initial public offering (IPO) is planned–the issuer will also require underwriters to offer its securities to the public.
The issuer’s going public attorney will review of a variety of documents including the Company’s corporate records, stock issuances, shareholder records and material agreements.
The Going Public Attorney & The Corporate Records Review
The first documents to be reviewed by the Company’s going public attorney are the Company’s corporate documents. FINRA also reviews many of the company’s corporate documents such as:
♦ Certificate of incorporation and bylaws as amended;
♦ Corporate minute book, including minutes of meetings and actions taken by written consent of the board of directors and shareholders;
♦ Communications with shareholders, including notices of meetings, annual reports, proxy statements and other correspondence;
♦ Press releases; and
♦ Documents reflecting mergers, acquisitions, changes in control and divestitures.
In the attorney review period, the issuer should also provide its Going Public Lawyer with the same list of documents for any subsidiary, as well as a list of all corporations, partnerships, joint ventures and other entities in which the issuer holds interests, along with a description of the interest.
Lastly, the issuer should compile a list of all places where it is qualified to conduct business and provide its occupational licenses for each location, and a list of locations where it maintains inventory, owns or leases property or has employees, agents or independent contractors.
The Going Public Attorney & Securities Issuances
Both an S-1 Registration Statement and the OTC Markets OTC Pink Current Information tier require that the issuer disclose all securities issuances. As such, the going public attorney acting for the company will need copies of all agreements related to securities offerings. These documents are also required for the Form 211 sponsoring market maker package.
These documents include:
♦ stock purchase agreements and related documentation, such as offering circulars, private placement memorandum and prospectuses relating to the offer or sale of equity or debt securities, including convertible financings;
♦ Samples of common stock certificates, warrants, options, debentures and any other outstanding securities;
♦ Stock option and purchase plans;
♦ Repurchase, redemption, exchange, conversion or similar agreements involving securities and schedule of any dividends paid or declared;
♦ Prior registration statements;
♦ Registration rights agreements;
♦ Any other agreement related to or affecting the Company’s securities;
♦ Forms D or any other forms filed to qualify for an exemption under the Securities Act; and
♦ State Blue Sky filings.
The Securities & Going Public Lawyer Review of Shareholder Information
The private company going public should be prepared to provide its going public lawyer with all information concerning its shareholders, such as:
♦ Stock certificate books and stock transfer ledgers or other records that show all issuances, grants and cancellations of Company stock, options and warrants, including names of holders, dates of issuance, grant or cancellation, and number of securities;
♦ A list of names, addresses and holdings of current record and beneficial owners of the Company stock, indicating the dates such stock was issued and fully paid for;
♦ A list of names, addresses and holdings of current record and beneficial owners of options and warrants, including date of grant, exercise price, number of shares subject to the option or warrant and vesting terms;
♦ A list of agreements granting or issuing stock, options, warrants or any other form of interest in the Company;
♦ Stockholder agreements;
♦ Documents reflecting proxies, powers of attorney, voting trusts, or other assignment of rights attaching to any of the Company’s securities; and
♦ Documents limiting the Company’s ability to declare and pay dividends.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855