For many private companies, going public is an attractive opportunity to access capital, enhance liquidity for stockholders, and gain public recognition. However, as you consider taking the next step into the public arena, it is important to ask: Is the company and its management team prepared for the compliance requirements and accountability that come with being a public company?

Taking your company public will subject it to new rules and obligations, including the rigorous Securities and Exchange Commission reporting requirements. These requirements mandate the public disclosure of information about not only the company but also its management, directors, and significant security holders. This article provides a foundational overview of many of the primary reporting requirements to consider before making the decision to take your company public. 

Consider the company’s public filing requirements.  Pursuant to the Securities Exchange Act of 1934¹, as amended, otherwise known as the Exchange Act, public companies are required to file current, quarterly, and annual reports. These reports are typically prepared in collaboration with the company’s independent registered public accountant and outside counsel, and are filed publicly on the Securities and Exchange Commission’s Electronic Data Gathering, Analysis, and Retrieval system, or EDGAR². Timely and accurate reporting requires implementing a system of disclosure controls that ensure relevant information is identified and analyzed in a timely manner to permit inclusion in the filing if required by applicable rules and regulations. 

Annual Report on Form 10-K. Annually and within a proscribed period following the company’s fiscal year end (typically 90 days for companies that have just completed an initial public offering), public companies must file an annual report on Form 10-K to update investors on the financial condition of the company for that fiscal year.³ The Form 10-K is a comprehensive filing that must include, among other things⁴: 

• audited financial statements, 
• a thorough discussion and analysis by management of the company’s financial condition and results of operations, 
• a summary of material legal proceedings, 
• a summary of unregistered sales of equity securities, and 
• biographical and other information regarding the company’s directors, director nominees, and executive officers (unless such information is included in the company’s proxy statement). 

In addition, a variety of the company’s key documents, such as the articles of incorporation and bylaws, material contracts, management compensatory agreements, indentures, and insider trading policies and procedures are required to be filed as exhibits to the Form 10-K.⁵

Importantly, the Form 10-K must be accompanied by certifications of the company’s principal executive officer and principal financial officers under Sections 302⁶ and 906 of the Sarbanes-Oxley Act of 2002.⁷ Each officer must certify that the Form 10-K fully complies with the Exchange Act; the information in the Form 10-K, including the financial statements, fairly presents, in all material respects, the financial condition and results of operations of the company; and the Form 10-K does not contain any untrue statement of material fact or any material omission. The officers must also certify that they are responsible for establishing and maintaining the company’s disclosure controls and procedures and certify as to their effectiveness. Knowingly including a false statement in these certifications could result in criminal penalties.⁸

Quarterly Report on Form 10-Q. A quarterly report on Form 10-Q is required to be filed in each of the first three quarters of the public company’s fiscal year within the proscribed period following the company’s fiscal quarter end (typically 45 days for companies that have just completed an initial public offering), covering any material updates in the quarter to the disclosures made in the company’s Form 10-K.⁹ The Form 10-Q must also include certain unaudited financial statements as of quarter end, in addition to management’s discussion and analysis of such financials.¹⁰ Companies must also file certain new key documents as exhibits, such as any material contracts or other required documents executed in the relevant quarter. Like with the Form 10-K, Forms 10-Q must also include Sarbanes Oxley Act certifications covering the quarterly period.¹¹

Current Report on Form 8-K. Supplemental to the company’s Form 10-K and Form 10-Q filing requirements, public companies are obligated to file current reports on Form 8-K within four business days of the event triggering the Form 8-K obligation. Examples of triggering events include: 

• entry into or termination of a material definitive agreement, 
• departure or election of directors, 
• departure or appointment of certain officers, 
• amendments to the company’s articles of incorporation or bylaws, 
• material cybersecurity incidents, 
• acquisitions or dispositions of assets or change in control, and 
• unregistered sales of equity securities.¹²

A document that triggers a Form 8-K filing typically must be filed as an exhibit unless otherwise included with the subsequent quarterly report on Form 10-Q or annual report on Form 10-K covering the period in which the triggering event occurred.¹³

Consider Individual Public Filing Requirements.  In addition to the filing obligations of the public company, certain insiders and stockholders of the company are required under the Exchange Act to make public filings on EDGAR reporting their ownership and transactions in the company’s securities, including those described below. 

Section 16 Reporting Obligations. All directors, executive officers, and holders of more than ten percent of any class of the company’s securities registered under Section 12 of the Exchange Act are subject to the reporting obligations set forth in Section 16 of the Exchange Act.¹⁴ Pursuant to Section 16, these insiders must report their ownership in the registered securities by filing a Form 3 on EDGAR within 10 days of becoming a director, executive officer, or more than ten percent holder.¹⁵ Thereafter, unless an exemption is available, the insider must report on Form 4 all of their transactions in the company’s securities within two business days of such transaction.¹⁶ In certain circumstances, the insider will also be required to report certain transactions by filing an annual ownership statement on Form 5 following the company’s fiscal year end.¹⁷

Ownership Reports on Schedule 13D and 13G. Section 13(d) of the Exchange Act¹⁸ requires owners (including certain groups) of more than five percent of any class of the company’s securities registered under Section 12 of the Exchange Act to disclose their beneficial ownership of such securities with the Securities and Exchange Commission on EDGAR. Beneficial ownership includes not only shares directly owned but also shares over which such person has or shares voting or dispositive power. Within five business days of the date such owners acquire more than five percent, a Schedule 13D (or the more limited Schedule 13G, if certain requirements are met) setting forth such owner’s beneficial ownership of company securities must be filed. Obligations to monitor ownership and amend the Schedule 13D or 13G at the required times will continue until such person’s or group’s beneficial ownership drops below five percent and a report showing that decrease has been filed.¹⁹

Consider your Annual Meeting.  Upon becoming a public company, the company’s annual and special meetings of stockholders will be subject to extensive rules regarding proxy solicitation set forth in Section 14 of the Exchange Act²⁰ and any requirements of the national stock exchange on which the company is listed. The requirements of state law and the company’s organizational documents will continue to apply. 

Proxy Statement.  Federal proxy laws require companies that have a class of securities registered under Section 12 of the Exchange Act to deliver a proxy statement to each of its stockholders to solicit proxies for an annual or special meeting of stockholders.²¹ The proxy statement is a lengthy document that must include specific information proscribed by federal rules and regulations, including Schedule 14A²² and Regulation 14A²³ of the Exchange Act. 

• Depending on the action to be voted on, required disclosures may include: 
• information regarding the company’s directors and director nominees, including their work experience, family relationships, and relevant skills; 
• beneficial ownership of the company’s securities held by directors, officers and greater than five percent stockholders; 
• compensation of certain of the company’s officers, including salary, perquisites, equity grants, and any other form of compensation; 
• an analysis of compensation paid to executives as compared to performance using certain proscribed metrics for comparison; 
• an extensive corporate governance discussion, including discussions of board committee structure and responsibilities, as well as management’s role in oversight of such functions; and 
• a discussion of the company’s insider trading policy. 

Conclusion.

The items above are just a few of many things that should be considered prior to taking the next step toward “ringing the bell.” The decision to go public should also involve, among other things: 

• establishing and maintaining an effective system of internal controls; 
• analyzing your corporate governance structure, particularly against the requirements of any national stock exchange on which you intend to list; 
• assembling a qualified management team and providing them with skilled accounting and legal advisors to assist in both taking and keeping the company public; 
• adopting and implementing an insider trading policy and briefing your management, employees, and other insiders on confidentiality obligations to which they will be subject, including prohibitions on insider trading; and 
• reviewing your company website to ensure compliance with public disclosure and investor relations rules. 

While the path to operating a public company involves complex disclosure requirements, with the right team and proper preparation, your company will be up to the challenge.

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¹ Securities Exchange Act of 1934, as amended, 15 U.S.C. § 78a, et seq.  

² Company filings made on EDGAR can be searched on the following SEC website page: sec.gov/search-filings. 

³ See 15 U.S.C. § 78m and 17 C.F.R. § 249.310. The information required in Form 10-K is set forth in the instructions to Form 10-K, which can be found at the following website: sec.gov/files/form10-k.pdf. The instructions direct the reader to sections of federal rules and regulations, including Regulation S-K, 17 C.F.R. Part 229, and Regulation S-X, 17 C.F.R. Part 210.

 ⁴Id. 

 ⁵The full list of exhibits to be included in Form 10-K are set forth in Item 601 of Regulation S-K, 17 C.F.R. 229.601. 

 ⁶See 17 C.F.R. § 240.13a-14(a), implementing Section 302 of the Sarbanes Oxley Act of 2002, Pub. L. No. 107-204, § 302, 116 Stat. 777 (2002). The language of the certification can be found in Item 601(b)(31) of Regulation S-K, 17 C.F.R. 229.601(b)(31). 

 ⁷See 17 C.F.R. § 240.13a-14(b), implementing Section 906 of the Sarbanes Oxley Act of 2002, § 906, 18 U.S.C. §1350. 

 ⁸See 18 U.S. Code § 1350.

 ⁹See 15 U.S.C. § 78m and 17 C.F.R. § 249.308a. The information required in Form 10-Q is set forth in the instructions to Form 10-Q, which can be found at the following website: sec.gov/files/form10-q.pdf. The instructions direct the reader to sections of federal rules and regulations, including Regulation S-K, 17 C.F.R. Part 229, and Regulation S-X, 17 C.F.R. Part 210.

¹⁰Id. 

¹¹The full list of exhibits to be included in Form 10-Q are set forth in Item 601 of Regulation S-K, 17 C.F.R. § 229.601.

¹²See 15 U.S.C. § 78m and 17 C.F.R. § 249.308. The information required in Form 8-K is set forth in the instructions to Form 8-K, which can be found at the following website: sec.gov/files/form8-k.pdf. The instructions direct the reader to sections of federal rules and regulations, including Regulation S-K, 17 C.F.R. Part 229, and Regulation S-X, 17 C.F.R. Part 210.

 ¹³The full list of exhibits to be included in Form 8-K, if applicable, are set forth in Item 601 of Regulation S-K, 17 C.F.R. § 229.601.

 ¹⁴See 15 U.S.C. § 78p. See also Rules 16a-1 through 16a-13, 17 C.F.R. §§ 240.16a-1 through 16a-13. 

¹⁵ Id. The instructions for Form 3 can be found at the following SEC website: sec.gov/files/form3data.pdf.

¹⁶ Id. The instructions for Form 4 can be found at the following SEC website: sec.gov/files/form4data.pdf. 

¹⁷Id. The instructions for Form 5 can be found at the following SEC website: sec.gov/files/form5data.pdf.

¹⁸See 17 C.F.R. § 240.13d-1. 

 ¹⁹See 17 C.F.R. § 240.13d-2.

 ²⁰See 15 U.S.C. § 78n. 

 ²¹See Regulation 14A of the Exchange Act, 17 C.F.R. § 240.14a-1 through 17 C.F.R. § 240.14b-2.  

²² Schedule 14A of the Exchange Act, 17 C.F.R. § 240.14a-101. 

²³ Regulation 14A of the Exchange Act, 17 C.F.R. § 240.14a-1 through 17 C.F.R. § 240.14b-2.