Page 98 - Initial Public Offering - An Introduction to IPO on Wall Street

modified situations may nevertheless have to be reported as determined by the conditions for
disclosure of MD&A. Organizations should consider reviewing such details from a market and
investor relations perspective.

A new public corporation should ensure that the conditions for the use of the safe harbor clause
are properly met when releasing forward-looking details in annual reports and press releases.
In offering the required advice, legal counsel is essential. When forward-looking data is shared
verbally (e.g. in conference calls with analysts), such advice is especially important.

Restrict Trading on Non-Public Information
SEC laws forbid business insiders from selling the company's shares directly or forwarding this
data on to others before sensitive information is made public. Material details should be kept
secret inside the firm. It must be regarded as confidential by individuals privy to this data before
it is released to the public. Infringements of this law have been seriously dealt with in the past
(fined or otherwise reprimanded).

Perform Fiduciary Duties

Fiduciary laws mandate that dealings be fair to the business between an organization and any
of its officers, managers, or major shareholders. These laws refer to corporations owned both
privately and publicly. However, since a privately owned company's officers and directors are
typically the only owners, the implications of fiduciary laws are fewer than they would be for
a publicly held company.

After a public offering, fiduciary rules must be closely followed because of the needs of new
shareholders. Depending on the scope and value of the deal, leadership should seek
independent assessments or offers and independent director authorization (or even shareholder
consent) if there is a possible conflict of interest between the organization and its fiduciaries.

An IPO is a transitional event, involving several different parts of the organization to work
towards a common purpose together. From the drafting of the registration statement to the
preparation and auditing of financial records, legal and tax structuring, the creation of new
governance frameworks, the production of the equity tale, the selection of subscribers and
research analysts, the provision of valuation inputs, the identification and training of key
investors, the preparation of the roadshow and the preparation of the company for life as a
public entity, there will be several workstreams.

This will present a major cultural change and transition cycle for many businesses. The
prospects for a profitable transaction would be enhanced by better market fundamentals. Your
organization will need to be prepared for new deadlines and business cycles, progressive
operational and financial data needs, and clarity in fulfilling shareholder expectations once the
deal is finalized. The organization needs to work efficiently as a public corporation and scale
up its activities.

An accomplished advisor will help the cycles of "going public" and "being public" to remain
on track.

4.8 NASDAQ Listing Requirements
The NASDAQ is the world's second-biggest stock exchange by market value. It has listed over
3,100 businesses to date, with an estimated daily share trade volume of over two billion. No

Page 98