Page 33 - Initial Public Offering - An Introduction to IPO on Wall Street

3.1.1 Full Disclosure Requirements

Public corporations are usually expected to report only those details which can have a direct
effect on the business’s financial outcomes. Businesses are generally expected to disclose the
following items:

 Current lawsuits
 Audited financials
 Information and motives for weakening goodwill
 Accounting procedures used and modifications in accounting policies
 Asset retirement liabilities
 Losses in materials

It is important to understand that not all of the above instances can be measured with
certainty. Despite this reality all things may have a material effect on the financials of the
business. Moreover, leadership of an organization typically makes forward-looking
statements forecasting the business’s potential course and developments that could affect its
financial results.

3.1.2 Where to Disclose the Information?

The information is provided in regulatory reports, such as SEC filings, that must be submitted
by a public firm. The most essential disclosures include the annual and quarterly reports of the
company, which include multiple annotations and statements schedules, audited financial
reports, as well as the leadership's explanatory guidelines.

Management also explains the risks involved in the running of the business in the filings, and
produces forward-looking statements on future policies and actions. Conference calls with
leadership of the business may be used to understand the details contained in the reports.
Some other disclosures include identification of the stock' shareholders and confirmation of
removal of a class of securities.

3.2 Disclosure Document

Generally speaking, if you are a public entity issuing stock for sale (e.g., debentures or shares)
then you must supply prospective investors with a disclosure statement. A disclosure
document is the general term that includes all monitored financing materials for issuing of
stocks.

Disclosure documents that generally need to be provisioned include the following four types:

 A two-part, straightforward brochure on corporate bonds
 A prospectus
 A profile statement
 An information statement revealing the offer

All fundraising-entitled businesses can use a prospectus. They may also use an offer details
report or a profile statement based on the kind of fundraiser they want to run and whether

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