Pre-Filing Matters – What corporate steps should be taken to prepare for an IPO? – (18)

corporate governance requirements are not applicable to foreign private issuers although home country requirements are often required to be disclosed.
A company proposing to list securities on an exchange should review the exchanges’ respective financial listing requirements as well as their differing governance requirements before determining which exchange to choose.
A company should consider adopting anti- takeover defenses, such as a staggered board of directors or a shareholders rights plan. The underwriters should be involved in these discussions so that the company avoids adopting any anti-takeover measure that might negatively affect the marketing of the offering.
The company should analyze its capitalization to determine whether it will be appropriate after the IPO. For example, because of the risk of “market overhang” (the concern that a large number of shares may flood the public market and depress the market price of the shares), most underwriters advise companies to try to cause the conversion or exercise of outstanding convertible preferred stock, warrants and convertible debt into common stock prior to the IPO if the original documentation does not already require conversion or exercise. The underwriters may also advise the company whether a stock split or reverse stock split is appropriate in order for the company’s stock to trade at an attractive price for its industry and size after the IPO.

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