Page 91 - Initial Public Offering - An Introduction to IPO on Wall Street

Holding the Closing Meeting

The Closing Date—In general, this date is stated in the underwriting contract and is typically
between three to five business days of the offer being priced. A firm provides the underwriter
with the registered securities at closure and collects payment for the transaction. Different
documents are also shared, such as the bring-down letter compiled by the independent auditors.

Overallotment or “greenshoe” option—The organization and its underwriters can utilize an
overallotment right if an offering trades well after pricing, issuing more shares than originally
expected. 'Greenshoe' options are limited to fifteen percent of the offered shares, although they
can be lower. Overallotment rights offer a valuable method for book runners to handle an IPO’s
initial trading.

4.7 Preparation for Life as a Public Company

The IPO is not the end of the tale, it is just the start. When listed, an entity would be under
much greater public oversight and will have several ongoing responsibilities. Any process
vulnerabilities or non-compliance with regulations may publicly embarrass management, harm
the reputation of the organization, and possibly result in lawsuits. On the other hand, the
advantages of proper training and planning can be realized within the first year of the IPO.

4.7.1 Understand Your Reporting Obligations

Under the 1934 Act and Sarbanes-Oxley, public corporations are required by the SEC to submit
certain regular updates to keep the investing public aware. As long as the asset and investor
requirements are fulfilled, this obligation will continue.
As noted earlier, as it develops its filings, preparation to meet these criteria should be a priority
for an organization. To set out the responsibilities to ensure that they can be fulfilled, businesses
can negotiate their responsibilities under the different legislation with their lawyers and
accountants at the outset. A financial public relations company can assist businesses in
providing shareholders with annual reports.
SEC-Designated Filer Status

The SEC appoints businesses to three groups of filers to assess the deadlines for the submission
of Forms 10-K and 10-Q. An SRC filer option has also been provided by the SEC. The
differentiation between the various groups is based on the capitalization of the market (also
known as "public float") of non-affiliated firms (i.e. except major institutional holders,
directors, officers, etc.) as of the last business day of the organization’s most recently concluded
the second quarter.

Organizations should explore their categorization in-depth with their lawyers and accountants.
However, the basic rules for the categories are the following:

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