Avery Marz

Going public is a significant milestone in the lifecycle of a business, but it also marks the beginning of new challenges and responsibilities. As a public company, you must now comply with the many rules and regulations of the U.S. Securities and Exchange Commission (SEC), stock exchange for financial reporting, internal controls and corporate governance — while meeting the expectations of shareholders and regulators.

Read on for an outline of the core obligations and best practices to address after your initial public offering (IPO), including understanding and managing reporting obligations, creating an effective reporting calendar, assessing internal controls, establishing investor relations strategies, managing investor expectations, and maintaining ongoing regulatory compliance.

Understand and Plan for Reporting Obligations

Once the IPO is completed, a company becomes subject to the SEC’s ongoing public reporting and disclosure regime. This begins with the filing of annual reports on Form 10-K and quarterly reports on Form 10-Q, each of which provide, among other things:

• Inclusion of audited and unaudited interim financial statements.
• Management discussion and analysis (MD&A).
• Risk factors.
• Business description.
• Corporate governance overview.

The reporting obligations also include the filing of current reports on Form 8-K to disclose specified material developments on a timely basis, such as:

• Entry into (and terminations/amendments of) material contracts.
• Material acquisitions and dispositions of assets.
• Incurrence of (and amendments to) material indebtedness.
• Bankruptcy events.
• Stock exchange communications.
• Amendments to organizational documents.
• Voting results at shareholder meetings.
• Changes in directors and executive officers and the reasons for such.

In addition, directors, officers and certain shareholders have their own reporting obligations to the SEC regarding equity ownership and transactions.

A public company must also comply with state and federal law in preparing and mailing a proxy statement to shareholders in connection with annual and special meetings. The SEC governs the contents and disclosure of proxy statements under Schedule 14A of the Securities Exchange Act of 1934 (Exchange Act), including information on the election of directors, as well as a compensation discussion and analysis (CD&A) and compensation of certain executive officers of the company and the inclusion of a shareholder advisory vote known as “say-on-pay” to approve the executive compensation presented. The proxy statement will also include other items that require shareholder approval such as adoption of (and amendments to) equity incentive plans and amendments to the company’s charter that may be viewed as adverse to shareholders (such as an increase in authorized shares or procedural changes to dispute resolution). In addition, the company is required to review and consider proposals under Exchange Act Rule 14a-8 and director nominees by shareholders for inclusion in the company’s proxy statement.

Beyond SEC filings, public companies must observe stock exchange listing standards, including prompt disclosure of material news, corporate governance requirements (e.g., board and committee composition, independence and charters), and shareholder approval rules for, among others, certain equity issuances, amendments to charters, and adoption of compensation plans.

Establish Investor Relations Strategies

The company should also implement an investor relations and communications strategy designed to ensure that material information is disseminated broadly and consistently — most importantly, the timing and content of the company’s annual and quarterly financial performance and results of operations — presented through both an earnings release and a management call with analysts.

Create a Reporting Calendar

In order to ensure timely filings, companies should establish a comprehensive reporting calendar that maps each recurring and event-driven obligation across the full fiscal year, with clear internal ownership and deadlines. At a minimum, build backward from filing due dates for annual and quarterly reports, proxy materials, and stock exchange submissions. In addition, layer event-driven items such as current reports, insider transaction reporting windows, and beneficial ownership updates. To ensure sufficient time for drafting and review, integrate key internal milestones like audit committee meetings, external auditor timelines, legal and finance disclosure committee meetings, board approvals, and blackout periods.

A robust calendar reduces filing risk, prevents last-minute surprises, and strengthens the reliability and consistency of disclosures (as a factor in establishing effective disclosure controls). It also helps coordinate input from finance, legal, investor relations, human resources and internal audit, and aligns them with external stakeholders (e.g., auditors, counsel, listing exchange and financial printers). Companies should revisit and update the reporting calendar after each quarter to incorporate regulatory changes; evolving listing standards, such as loss of emerging growth company (EGC) status and phase-in period for fully independent board committees; and business events such as acquisitions, capital markets activity, leadership changes and analyst/investor conferences.

Assess Internal Controls

The Sarbanes-Oxley Act of 2002 imposes significant obligations on public companies with respect to financial reporting integrity, and the company must move promptly to build the infrastructure necessary to satisfy these requirements. Under Section 302 of Sarbanes-Oxley, the company's CEO and CFO must personally certify in each annual report on Form 10-K and quarterly report on Form 10-Q that they have evaluated the company's disclosure controls and procedures and that such controls are effective in ensuring that material information is recorded, processed, summarized and reported within the time periods specified by SEC rules. This certification requirement places a direct personal obligation on senior management and underscores the importance of establishing a rigorous disclosure committee and a formal process for gathering and reviewing information across business units prior to each periodic filing.

Under Section 404 of Sarbanes-Oxley, management is required to assess and report on the effectiveness of the company's internal controls over financial reporting and, once the company ceases to qualify as an EGC or non-accelerated filer, the company's independent auditors will be required to attest to and report on that assessment as well. Building a sustainable internal-controls framework from the outset, rather than retrofitting one as filing deadlines approach, is among the most consequential operational challenges facing a newly public company and will require close coordination among finance, legal, operations, internal audit, and external auditors.

Ensure Securities Law Compliance Is Now Company Policy

After the IPO’s completion, your company has now transitioned into a heavily regulated environment that demands robust internal policies and procedures to ensure compliance with federal securities laws. Chief among these is the adoption of a comprehensive insider-trading policy, which must prohibit directors, officers, employees and other corporate insiders from trading in the company's securities while in possession of material nonpublic information. A well-crafted insider trading policy should also establish pre-clearance procedures and designated blackout periods —typically surrounding earnings announcements and other significant corporate events — during which trading by covered persons is restricted or prohibited entirely.

Equally important is the implementation of policies addressing the obligations of Section 16 of the Exchange Act, which requires directors, certain officers, and greater-than-10% stockholders to report their beneficial ownership of and transactions in the company's securities on Forms 3, 4 and 5, and subjects them to liability for any "short-swing profits" realized from purchases and sales of company securities within a six-month period. The company should establish a process — typically administered by the general counsel or outside securities counsel — to assist Section 16 reporting persons in meeting their filing deadlines, which can be as short as two business days following a reportable transaction.

The company should also adopt a Regulation FD policy to govern the disclosure of material nonpublic information to analysts, institutional investors and other market participants. Regulation FD requires that when the company intentionally discloses material nonpublic information to such persons, it must simultaneously make public disclosure of that information. In the case of an unintentional selective disclosure, prompt public disclosure is required (which can be satisfied by the filing of a Form 8-K or issuing of a press release). A Regulation FD policy should designate authorized spokespersons; establish protocols for analyst calls, investor meetings and conference presentations; and provide guidance on the use of social media and emerging communications channels.

Beyond these specific requirements, the company should adopt a broader suite of corporate governance policies now expected of public companies, including a code of business conduct and ethics, a related party transactions policy, a clawback policy governing the recovery of erroneously awarded executive compensation (as required by SEC rules and applicable stock exchange listing standards), stock ownership guidelines for directors and executive officers, and an anti-hedging and anti-pledging policy restricting certain transactions in company securities.

Next Steps

The completion of an IPO is a transformative milestone — but it is best understood as a beginning rather than an end. The transition from private to public company brings with it a new and demanding set of legal, regulatory and operational obligations that touch virtually every corner of the organization, from the boardroom to the finance function to day-to-day employee conduct. Meeting these obligations demands sustained investment in people, processes and outside advisers, as well as a cultural shift toward the transparency and accountability that public company life requires.

Companies that approach these responsibilities proactively — building the right infrastructure, assembling experienced counsel, and fostering a compliance-minded culture from the outset — will be best positioned not only to meet their obligations, but also to earn and maintain the confidence of the investing public who the IPO process was designed to engage. The journey of being a public company is a long one, and the decisions made in the months immediately following the IPO will set the tone for everything that follows.

How We Can Help

We are well-versed in the reporting obligations and regulatory guidelines applicable to public companies and can provide practical, tailored guidance on the specific issues your company may face. Learn more about our Corporate, Mergers & Acquisitions, and Securities practice.