SEC RULES!!
Securities law requires private companies that exceed a certain level of stock disribution to file quarterly financial data with Federal Regulators. If the law is applied to a company, Then the companies executives would have to disclose the company's closely guarded financial information, and it could ultimately play into the decision on whether or when to take the company public.
A private company must report it's finances once it has more than 500 common shareholders-- or stock-option holders--and $10 million in assets,according to section xll(g) of the Securities and Exchange Act of 1934. That means a private company must file quarterly forms with the Securities and Exchange Commission (SEC) that disclose operating expenses, profits, partnerships, shareholders and many other details-- a laborious process that can cost as much as $2million annually.
SEC standards require that qualifying private companies report with in 4 months of the end of their calender year.
It is a pain in the neck to have the buedens of being a public company without the benefits of a publicly traded stock.
This rule was designed to protect shareholders by requiring disclosure of corporate financial informationand risks once a company reaches the size and ownership makeup of a public company, Corporate attourneys say. But filing reports to the SEC can prove onerous, and many private buisnesses carefully watch their stock allotments or repurchase shares to stay under the threshold as a result.
If a company falls with in reporting standard, it would have to first file a form 10, wich is a long description of the buisness and it's officers, similar to an IPO prospectous in terms of the amount of detail required. Following that, it would be required to file forms 10k and 10q quarterly. These forms include a description of the company's business, financials and risks. It also has to file proxy statements and hold share holder meetings.
The reporting standard also involves a significant added expense. Corporate Attourney's say it can cost in the high hundreds of thousands of dollars up to $2million.Many companies will go public before they have to deal with this reporting standard.Private companies will also want the attention from investors that they get by doing a pre-IPO road show, versus disclosing that information to the SEC beforhand.
So,Please! Chill out on our financials.We are up and coming and by law Walter is not behind and he is being safe and smart with our holdings. Ihope this will begin to shed some light.To those who are interested.
Have a great day!
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