5. The Going-Public Process 40

Dividend policy and restrictions. Your company must disclose its current dividend policy, any anticipated changes to that policy, and any restrictions on
the company’s ability to pay dividends. For example, it is not uncommon for many new public companies not to pay dividends, but rather retain earnings to finance operations and the company’s expansion. Restrictions might be based on debt, contractual agreements, or the regulatory environment in which your
company operates.
Capitalization. Although not a requirement of Regulation S-K, the capital structure of a company both prior to the offering and after all securities offered are sold, is usually presented in a tabular format.
Dilution. When a disparity exists between the IPO price and the net book value per share of tangible assets, dilution results. The effects of any material dilution to prospective investors must be disclosed; this is usually presented in a dilution table.
Underwriting and distribution of securities. Information must be provided about the price of the securities being offered, the members of the underwriting syndicate, the type of underwriting, and any relationship between your company and any of the underwriters.
Information about the company’s business. Your company must make extensive disclosures about its business. Among these are those items cited in the
list below:
A company’s business plan, particularly if it has less than three years’ operating results;
A description of its properties;
Information relating to foreign operations, if any;
Amount of research and development expenditures;
Regulations affecting the industry and company;
Pending or threatened legal proceedings; and
Revenues, profits, assets, products and services, product development, major customers, order backlog, inventory, patents, suppliers, and the competitive position of each major industry and geographic segment of the company.
40
PricewaterhouseCoopers LLP Roadmap for an IPO

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