New
Obligations
-
You must continue to
keep shareholders informed about the company's business operations, financial condition, and management,
incurring additional costs and new legal obligations.
-
You may be liable if
you do not fulfill these new legal obligations.
-
You may lose some
flexibility in managing your company's affairs, particularly when shareholders must approve your actions.
-
Your public offering
will take time and money to accomplish.
Reporting obligations because of
Securities Act registration
Once
the staff declares your company's Securities Act registration statement effective, the Exchange Act requires you to
file reports with the SEC. The obligation to file reports continues at least through the end of the fiscal year in
which your registration statement becomes effective. After that, you are required to continue reporting unless you
satisfy the following "thresholds," in which case your filing obligations are suspended:
-
your company has
fewer than 300 shareholders of the class of securities offered; or
-
your company has
fewer than 500 shareholders of the class of securities offered and less than $10 million in total assets for
each of its last three fiscal years.
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