Page 44 - Initial Public Offering - An Introduction to IPO on Wall Street

In draught registration statements provided for a private audit, a company may withhold interim
financial details, which it fairly believes is not necessary to be provided individually at either
(i) the point of the proposed offer (if the business is an EGC) or (ii) the time a registration
statement is submitted publicly (if the business is a non-EGC).

However, if a corporation registers publicly (even though it is an EGC), it will need to disclose
all the needed interim phases, even if those phases are not the same periods that are expected
to be addressed individually as the proposed bid.

The financial reports contained in an IPO registration statement would have to adhere to the
conditions and procedures specified by the SEC staff as well as the US GAAP requirements
relevant to public companies, which may vary from a business's previously prepared financial
reports.
It is also important to aspiring IPOs to evaluate the need for supplementary financial reports
for particular entities that have been specified. Advanced planning is needed to evaluate
whether the IPO document will involve supplementary financial reports from certain specified
entities, such as affiliates whose securities guarantee a registered debt issuance (Rule 3-09),
major businesses acquired or pending acquisition (Rule 3-05), public debt securities guarantors
(Rule 3-10), and specific equity method investments (Rule 3-09).

These supplementary financial reports must also conform to SEC regulations and laws on
content and form (Regulation S-X), although a non-profit organization does not need to provide
reports from public entities, such as reports on divisions, benefits and earnings per share (EPS).

However, the SEC permits a lower level of documentation with simplified summarized
financial details or stated narrative declaration as a substitute for complete financial reports
only in relation to financial data required under Rule 3-10, assuming certain requirements are
met.

While there is some flexibility for incorporation in a pre-effective report, acquiring
supplementary financial reports that may be needed under Rule 3-05, 3-09, 3-10 or 3-16 can
often be a complicated and costly undertaking which may potentially prolong an IPO.

Furthermore, if the financial reports are not compiled according to IFRS as provided by the
IASB, supplementary financial reports for any non-US entities may warrant a US GAAP audit.
However, under Rule 3-13 of Regulation S-X, businesses may ask the SEC to revoke the
criteria for some financial reports.

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