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Initial Public Offering Legal Requirements—Undergoing IPO is not as Easy as you Think
from: ForsgrensGrowth of their business is one thing that most investors want to happen during their tenure in the business industry. They want to see the operation of their business to grow and probably expand it to accommodate the needs of other potential clientele not just within the regional coverage but on the national or probably on the international coverage as well. Such growth in business operation alone already translates to huge revenues later on.
However, along with the sweet fruits of the growth of your operation, expect that you will incur additional expenditures resulting from such operation growth. You need to finance additional personnel who will handle the expanded operation as well as additional raw materials from your suppliers. In other words, once the growth is seen within the business operation, there is a need for you to sustain such growth by assuring that all additional expenditures will be met along the way.
Thus, you need additional funding to sustain your growing company. Additional capital must be raised to finance the expansion of business operation.
What will you do? Ask your financial advisers or even market experts, and they will just spell three significant words to you.
INITIAL PUBLIC OFFERING.
Also known as IPO, initial public offering is referred to as the first sale or issuance of a company’s common shares to the interested investors. Its main purpose is to raise additional capital or finances for the company through the distribution of their common shares to investors who want to purchase it. Take note that the term only applies to the first sale or issuance of a company’s common shares to the public. Any later issuance of shares will now be referred to as a secondary market offering.
IPO is considered to be an effective method of raising capital for a company. However, take note that the laws of a particular country where the IPO process will take place impose heavy legal requirements and compliances that every company going on public must met. In other words, undergoing an IPO process is not as easy as you think. You must be knowledgeable about the rules and regulations that you must comply with regarding IPO.
In the United States, the initial public offering is governed by the Federal Securities Act of 1993, together with the rules and regulation of the U.S. Securities and Exchange Commission. In addition, each exchange has their respective and separate rules that any company that will go on public must comply. For small companies that will undergo the IPO process, it may be affected by a certain state’s blue sky laws, though such laws may pre-empted by federal laws especially when the common shares are listed on major exchanges.
Before the IPO process jumps off, the issuer (the company that will sell its common shares to the public) must outline a prospectus. It will contain the overview of the company’s history, corporate background, products, operations, risk factors, and other essential information. The Securities and Exchange Commission will actively review the content of the prospectus and major law firms are involved in the drafting process.
Once the SEC approved the prospectus, the market value of the common shares will now be finalized and the IPO are now in the “free riding” stage wherein the shares will now be offered for sale on different methods, such as road shows, telephone calls, and institutional visits. All the offers must be accompanied by a copy of the prospectus.
The legal requirements are really heavy if your company will go on IPO. However, once such legal requirements have been complied with, expect that additional capital that you will use to sustain the growth of your business’ operation is within your reach.
Initial Public Offering Specific links
Initial Public Offering News
Sensata IPO Closes Up 3%; Upbeat Note For Market - Wall Street Journal
 Providence Business News | Sensata IPO Closes Up 3%; Upbeat Note For Market Wall Street Journal The second initial public offering of the week to price within its expected range in the US breathed new hope into the ... Sensata prices IPO at bottom of range-underwriter Sensata IPO Raises $569 Million at Low End of Range Sensata IPO nets $569M as bids stay low |
Options exchange CBOE files for $300 million IPO - The Associated Press
 Wall Street Pit (blog) | Options exchange CBOE files for $300 million IPO The Associated Press NEW YORK — The last major private exchange left in the US, the Chicago Board Options Exchange, filed for an initial public offering of up to $300 million ... CBOE Files to Sell as Much as $300 Million in IPO CBOE: At Last an IPO, But Questions, Too Largest US options exchange CBOE files for $300 million IPO |
AVEO cuts IPO price range -underwriter - Reuters
AVEO cuts IPO price range -underwriter Reuters O) cut the expected price range of its initial public offering on Thursday, according to an underwriter. The company expects to sell "less than 8 million" ... |
Athabasca IPO paves the way for other juniors - Globe and Mail
 Globe and Mail | Athabasca IPO paves the way for other juniors Globe and Mail 09, 2010 7:10AM EST Athabasca Oil Sands Corp. isn't the only party awaiting the results of the initial public offering the company unveiled last week. ... |
Bilfinger on course with Australian unit sale or IPO - Reuters
Bilfinger on course with Australian unit sale or IPO Reuters Germany's second-largest construction company also said on Thursday an initial public offering (IPO) of the unit, which had earnings before interest and tax ... |