Going Public Methods Brenda Hamilton
Submitted 2014-01-05 18:24:40 There are several methods a private company may use in a going public transaction. Filing a registration statement with the Securities and Exchange Commission ("SEC") subjects the company to the reporting requirements of the Securities Act of 1933
Wholesale Jerseys Free Shipping , as amended (“Securities Act”), depending on the form chosen. One method of going public is by conducting an Initial Public Offering (“IPO”). The traditional IPO is rarely used by small companies as most will not meet the eligibility requirements to trade on a national securities exchange such as the New York Stock Exchange (“NYSE”) Euronext, NASDAQ, or NYSE MKT (formerly Amex). Moreover, traditional IPO process takes time and money most small companies are unable or unwilling to commit.
For the many private companies seeking to go public that don’t qualify for listing on a national stock exchange, the OTCMarkets offers several alternatives that provide the issuer with the benefits public company status offers.
Quotation on the OTCMarkets
Choosing the method it feels is most suitable, a private company will typically seek to have its shares quoted on the OTCMarkets OTCQB or OTCQX if it is subject to the Exchange Act's reporting requirements. If not, it will seek to list on the OTCMarkets OTCPink Sheets. Either way, the private company going public must locate a sponsoring market maker to submit a Form 211 to the Financial Industry Regulatory Authority (“FINRA”).
Traditional Initial Public Offerings
In a traditional initial public offering (“IPO”), a private company will engage an underwriter to sell shares to the public as part of its going public transaction. In order to do so it must file a registration statement under the Securities Act with the SEC. The SEC will review and render comments in most instances. Once the SEC has completed its review, and all comments have been answered to its satisfaction
Wholesale Jerseys Cheap , the company will file a request for acceleration to allow the registration statement to be deemed effective quickly. Once the SEC files a Notice of Effectiveness, the shares registered can be offered to the public. Companies that qualify will seek to have their shares listed on a national securities exchange, such as the NYSE Euronext, NASDAQ, NYSE and NYSE MKT.
Selling Shareholder l Resale Registration Statement
One method of going public is through a selling shareholder or resale registration statement that registers securities held by the company’s existing stockholders. These shares are typically issued in exempt offerings under Regulation D, Rule 504 or Rule 506. Under a selling shareholders registration statement, the private company will file a Form S-1 with the SEC. Once the S-1 is declared effective, the private company can file its Form 211 with FINRA. The selling shareholder registration statement allows the stockholders whose shares were registered to sell them publicly. Upon effectiveness of the Form S-1, the private company becomes subject to the reporting requirements of the Exchange Act under Section 15(d). When the stock is assigned a ticker and begins to trade, the selling shareholders may sell their shares publicly. Exceptions to that are officers, directors
Wholesale NFL Jerseys China , and affiliates, who are bound by Rules 144's volume limitations, which stipulates that those persons- individually, not as a group-may sell no more than the equivalent of 1% of the shares outstanding every quarter.
Direct Public Offering l Company Registration Statement
Like an IPO, a direct public offering involves the filing of a registration statement with the SEC. The direct public offering is conduct by the company on its own behalf without the assistance of an underwriter. Like a resale registration statement, Form S-1 is typically used. Upon the SEC declaring the registration statement effective, the Company may sell its shares to the public, thereby raising capital that can be used in a variety of ways to help the company grow. Unlike a traditional IPO, in a direct public offering using a company registration statement an underwriter will not be engaged; instead, the company’s officers and directors will offer its shares, or the securities registered will be offered and sold through a placement agent such as a FINRA licensed broker-dealer. As with a selling shareholders registration statement
Wholesale Jerseys From China , the effectiveness of the company registration statement will subject the company to the reporting requirements of the Exchange Act.
The Form 10 Registration Statement
Unlike a traditional IPO, selling shareholders or direct public offering registration statement, a Form 10 registration is a registration statement under the Exchange Act, rather than the Securities Act.
Form 10 is the most recognized registration statement under the Exchange Act. It is frequently used by issuers voluntarily seeking to file reports with the SEC. It is the general form used by a domestic issuer for registration of a class of securities pursuant to Section 12(b) or (g) of the Exchange Act when no other registration statement form is prescribed. Unlike a selling shareholders or company registration statement under the Securities Act, a Form 10 registration statement automatically becomes effective 60 days after it is filed, whether the SEC has completed the comment process or not. After this 60 day period, the issuer’s reporting obligations under the Exchange Act begin.
A Form 10 registration statement registers a class of securities and not a securities offering.
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