Fiduciary laws must be carefully observed after a public offering due to the interests of the new shareholders. Whenever there is a potential conﬂict of interest between the company and its ﬁduciaries, management should obtain independent appraisals or bids and independent director approval (or even shareholder approval), depending on the nature and signiﬁcance of the transaction.
As mentioned previously, a further consequence of a company’s being publicly held is the expense it entails. Signiﬁcant costs and executive time is often incurred when periodic reports are prepared and then ﬁled with the SEC. Board and shareholder meetings/communications may also be expensive.
Because of its responsibilities to the public shareholders, the board of directors and the audit committee are signiﬁcantly more important in a public company. If the board were previously composed entirely of insiders, a number of outside directors would need to be added (which will likely result in incurring additional costs) to satisfy the NYSE or the NASDAQ National Market listing requirements.
Sample compliance calendar – assumes that the registrant is an accelerated ﬁler
Fiscal Year 2004 Second Quarter End
Effective Date of Registration Statement – Company becomes a reporting
Second Quarter Form 10-Q due (unless 6/30/04 ﬁnancials are included and
discussed in Registration Statement)
Fiscal Year 2004 Third Quarter End
Third Quarter Form 10-Q Due
Fiscal Year 2004 Year End
Schedule 13Gs due at SEC
Form 5s due at SEC
Initiate Proxy search
File Preliminary Proxy Statement, and form of Proxy with the SEC and NASD,
Fiscal Year 2004 Form 10-K due
Fiscal Year 2005 First Quarter End
Record Date – Annual Meeting of Stockholders
File Deﬁnitive Proxy Statement, form of Proxy and Annual Report to
Mail Deﬁnitive Proxy, form of Proxy and Annual Report to Stockholders
First Quarter Form 10-Q due
Annual Meeting of Stockholders
Section 11(a) Earnings Statement available to security holders as soon as
possible covering a period of at least 12 months beginning after the effective
date of the Registration Statement
Note: If a ﬁling date falls on a Saturday, Sunday, or holiday, the document may be ﬁled on the next business day (Rule 0-3(a)).