16 May
Tips for How to Run a Public Company
Running a public company is an excellent way to build capital, expand a business, and position a company for growth. However, it also carries with it a unique set of responsibilities and obligations that must be met to remain compliant with government regulations and ensure success. As the CEO or CFO of a public company, it’s vital to understand what you need to do to run your company and comply with all applicable rules and regulations, whether you’re raising money as a new business or becoming public.
But, how can you get started if you’ve just transitioned from a private to a public company? If you’re wondering how to run a public company, below are some tips to help you get started so your investors remain confident in your company and you remain compliant.
Hire an Attorney
A lawyer with experience in corporate law and public offerings is vital if you’re unsure of the legal regulations behind your company. For instance, you might have taken part in a reverse merger and will now need help from an attorney to make sure you are compliant with securities laws. Not having help from an attorney, either in-house or outside the company, can be a major risk. Fortunately, corporate lawyers are available to guide you through the process. Some of the many tasks a lawyer can help you undertake include:
- Creating contracts and corporate documents
- Preparing registration statements to file with the SEC
- Submitting and responding to SEC comments
- Conducting due diligence for investors
- Provide advice on disclosure requirements
- and more.
Engage an Auditor and IR Firm
Auditors and IR firms play a key role in providing essential services to your public company. Your auditor will be responsible for assessing the accuracy of your financial statements, while an IR firm will help you create and execute a comprehensive investor relations program that includes communications with existing shareholders and potential investors.
When looking for an auditor, consider a firm that specializes in public companies. This will ensure they have the experience and knowledge to help you remain compliant with applicable regulations. Additionally, look for credentials such as CPA/CFA certification, and make sure they have in-depth knowledge of accounting regulations, including Generally Accepted Accounting Principles (GAAP).
Likewise, when looking for an IR firm, consider one that has experience working with public companies. They should be able to devise strategies to help your company raise capital through equity offerings or debt financing and will keep you informed on changing regulations. Also known as Financial PR firms, investing in help from an IR firm can give your company more visibility, helping you to attract and retain investors.
Keep Detailed Records
One of the most crucial steps for running a public company is keeping detailed records of transactions. Your financial statements, SEC filings, and audits must be accurate and up-to-date, so you should create an organized filing system that allows for easy access to all relevant documents. As a CEO or CFO, you might have difficulty keeping track of all financials and will need to build a team of competent financial professionals who can help with the day-to-day operations.
Stock transfer agents are also important for ensuring shareholders’ records are up-to-date and can be consulted for stock transactions. Additionally, it’s important to track company stock trading and ensure your executives understand the rules around insider trading so they don’t run into any issues. Establishing a quiet period where no insiders can buy or sell stock is also an important step to help avoid any legal issues.
Follow Regulations
Finally, it’s essential to stay updated on the latest regulations so you can remain compliant with all applicable laws. The SEC is responsible for regulating public companies and making sure they comply with U.S. securities market laws. To make sure you don’t run into any complications, research and keep up-to-date on new regulations and be aware of any changes that may impact your business.
In addition to laws and regulations by the SEC, there are other key changes you’ll need to stay on top of. For instance, NASDAQ’s new diversity rules require listed companies to submit annual disclosures on their board composition, including the gender and racial makeup of their directors. Other changes may include new regulations around corporate governance or environmental protection standards. Having an internal team that can help you stay informed and up-to-date on any changes will ensure your company doesn’t run into legal issues.
Final Thoughts
Running a public company is no easy task — it requires strategic planning, strong internal teams, legal and financial expertise, and staying abreast of the ever-changing securities laws. With the right knowledge, guidance from corporate advisors, and a thorough understanding of the regulations, your company can be managed successfully.