Financial Corporate Management

CORPORATE
FINANCIAL
MANAGEMENT
REPORT
2/19/2020

Contents
Introduction............................................................................................................... 2
IPO and Significant areas in context of ownership................................................................2
Valuation of the shares of the company.............................................................................4
Other considerations.................................................................................................... 9
Bibliography............................................................................................................ 11

Introduction
The prime aim behind the initiation of the Initial Public Offering is the capitalization on the
varied and large base of the investors, and also on the liquid capital markets. It is significant
to note that the IPO process is regulated by the US Securities and Exchange Commission
(SEC), and the legislative rules and regulations must be mandatorily followed. The aim of the
following report is to guide the management of the entity No Regrets, Inc. on the various
aspects of security valuation and going public process.
IPO and Significant areas in context of ownership
Some of the key aspects of the IPO in relation to the impact on the existing and the future
ownership would be described in the following segment.
Change in the management processes
It has been assessed that the current owners of the above mentioned company wish to retain
20% to 25 % ownership in the company. Thus, the existing owners would be required to sell
their shares to public, to raise the capital in the company. It is to be noted that there would be
significant changes in the management processes if the new public owners would have a
75%- 80% shareholding in the company. Further to note, there would be enhanced
management processes in the newly formed public company which were absent in the case of
a private limited company. Some of the key changes in the management processes are listed
as follows.
On becoming a part of the Security Exchange regulations, the public company would be
required to file the financial statements and the annual returns on a periodic basis. In addition,
these financial statements must be audited by the independent auditors. The owners must be
careful of retaining the non-public information so as the same may not be used for the insider
trading purposes. Since the existing owners want to retain the 20% - 25% shareholding in the
company, there lies a duty to file a report relating to the disclosure of the shares possessed,
changes and transactions during the year in the said shareholding during the fiscal period, as
it is mandatory for the owners possessing more than 10 per cent of shareholding
("International Legal Business Solutions - Global Legal Insights"). The existing owners
would be still be liable for the acts of the company in the light of being the control person for

the violations of the requirements as mentioned in the section 11, section and section 15 of
the act. These are in addition to the requirement relating to the appointment of the directors,
holding of the meetings of the shareholders, and other statutory processes as guided in the
act. In addition, it is significant to note that there is enhancement in the expenses on account
of finance and reporting, information technology and investor relations, internal controls and
others.
Public company and the issues of privacy
It is important to be noted that the yet other prime change on the conversion of the private
company into a public company is in the form of the loss of privacy. While the most of the
information of a private company is not available in the public domain, the case is opposite in
the case of the public company, because of the statutory guidelines on the same. Some of the
key aspects that must be disclosed mandatorily are as follows, and the same would be
available not only to the stakeholders of the company, but also the competitors as well.
 Financial information in the form of the financial position, related-party transactions,
data on business segments, key customers, sustainability and governance approach
and others ("SEC.Gov | Going Public").
 Compensation or remuneration structure of the directors and other officers of the
company, which not only includes the compensation in cash but also deferred
compensation plans, and the stock option plans, if any.
 Shareholding patterns and the changes therein for the officers, directors, and key
shareholders.
Short term financial reporting requirements
As stated in the previous parts, there are significant changes in the various business aspects
out of the conversion of the private owned company to a public listed company, including the
management processes and privacy. There are several other aspects that makes the public
company different from a private company. The short term reporting requirements are a
complex and lengthy affair for the management of an enterprise, however there is an
enhanced transparency in the reporting and business management from the point of view of
stakeholders such as regulators, investors, suppliers, customers and others. The risk is spread
by widening of the shareholder base, and not only the profits are distributed, but so the losses
as against in the private companies. The public companies are further advantageous in