Page 56 - Initial Public Offering - An Introduction to IPO on Wall Street

It is useful for a business to consider which shareholders it may have and what governance
standards are preferred by them. Large shareholders frequently make policy statements
detailing their priorities and perspectives on governance frameworks. The statements also
provide some hint of how they are expected to vote on routine topics, such as directors' elections
and director pay, and on measures for governance, such as separating CEO and board chair
positions or adjusting directors' terms from a three year period to a one year period (also defined
as declassification of board).

It is also important to assess the principles and practices for corporate governance in an
organization.

Both NASDAQ and NYSE have unique corporate governance requirements that must be met
in conjunction with an IPO and the listing on their exchanges of an organization’s equity
offerings. These listing criteria discuss concerns such as board makeup, structure and procedure
including selection of directors, pay practices and the like

The guidelines are partially a reaction to Sarbanes-Oxley, but they go further and discuss
concerns such as developing a set of ethical standards for employees and managers, setting up
an internal audit feature for NYSE-listed organizations, and authorizing related party
transactions for NASDAQ-listed companies.

Considering the general of participation of shareholders and the investing public in corporate
governance issues, while preparing their public offerings, it is critical for businesses to look
more closely at their corporate governance standards and practices.

There are some other governance issues to address as well. For senior financial officers,
Sarbanes-Oxley needs an ethical code or explanation of why one has not been enforced. Many
exchanges often involve an ethical code and whistleblower policies

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