Opinions expressed by Entrepreneur contributors are their own.
If you're sailing your business toward an initial publicoffering (IPO), be aware of the Aircraft Carrier on the horizon.Launched by the U.S. Securities & Exchange Commission (SEC),the Aircraft Carrier is more than 500 pages of regulatory proposalsaimed at modernizing the U.S. Securities Act of 1933.
In an effort to streamline and accelerate the registrationprocess for public offerings, the SEC has proposed that:
1. restrictions be relaxed on communications sent out around thetime of an offering;
2. investors be provided with all necessary information beforethey invest;
3. periodic reports be filed sooner and include more information(such as risk factors and additional relevant events); and
4. the five current registration forms be replaced withthree.
What does this mean for your future IPO? Some of therecommendations may actually help entrepreneurs take theircompanies public. The relaxation in quiet-period restrictions, forexample, and clearer guidelines on what can and can't be saidwill benefit entrepreneurs.
However, "on balance, from the perspective of a smallcompany, the Aircraft Carrier proposals do more harm thangood," contends Tod Ackerly, securities partner at theWashington, DC, law firm of Covington & Burling. The proposals"significantly increase the burden and potential liability ofcomplying with the ongoing reporting requirements once a company ispublicly held."
"The Aircraft Carrier [affects] the way people have beendoing business for decades, so [there has been a lot of] publiccommentary," says the SEC's spokesman John Heine. In thewake of such input, Heine predicts the SEC staff will either"recommend adopting the proposals as a final rule or recommendthat the proposals be amended for further public comment . . .there are too many variables to predict when it will bedecided."
While Wall Street is reportedly bucking the changes (theinvestment community likes things the way they are), observerspredict the SEC will reconsider, rewrite and resubmit the proposalswith substantial changes.
Paul DeCeglie (MrWritePDC@aol.com) is a formerstaff reporter for Journal of Commerce and AmericanBanker.
Contact Sources
Covington & Burling, (202) 662-5296
U.S. Securities & Exchange Commission, (202)942-0020
