A private company going public is subject to three federal securities laws, each with its own unique requirements. The three laws are the Securities Act of 1933 (the “Securities Act”), the Securities Exchange Act of 1934 (the “Exchange Act”) and the Sarbanes-Oxley Act of 2002 (”Sarbanes-Oxley”). In addition to the federal securities laws, companies going public are subject to state securities regulation of their securities public and private offerings. The Securities Act sets forth the regulations that govern the offer and sale of securities by an issuer and certain shareholders.
The Securities Act governs both private offerings such as those conducted under Regulation D and public offerings such as those registered on Form S-1, Form S-8 or Form S-4.
Upon completion of a going public transaction, the Exchange Act imposes periodic reporting obligations including the filing of Form 10-K, 10-Q and 8-K. For issuers who register a class of securities under the Securities Exchange Act in connection with their going public transaction, the Exchange Act imposes proxy rules requiring certain disclosures be made on Schedules 14A or 14C and certain procedures for the solicitation of shareholder votes.
Lastly, for companies with a class of securities registered under the Exchange Act, the Company’s management and large shareholders must file beneficial ownership reports of their trading activities in the company’s common shares.
In addition to governing the disclosure obligations of public companies, Rule 15c-211 of the Exchange Act also regulates the disclosures public companies must provide in order for a market maker to enter quotations of their securities. The disclosures required by Rule 15c-211 are providedon Form 211. Form 211 disclosures also enable market makers to publish quotations in a company’s securities the secondary market after the going public process is completed.
The Sarbanes-Oxley Act of 2002 established corporate governance, corporate accountability and accounting oversight provisions for the federal securities laws that apply to publicly traded companies.
During and upon completion of its going public transaction, a company remains subject to the corporate laws of the state of its incorporation. The state securities laws of the individual states also regulate private and public securities offerings unless the offering is preempted under federal law. Even where offerings are preempted under federal law, states may impose filing fees and notice filing requirements which is common in Rule 506 offerings under Regulation D.