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Obligations of a public company 6.1 Reporting and compliance requirements Cleary Gottlieb Steen & Hamilton LLP (a) Periodic and other reports After the IPO, the company must file regular “periodic” and other reports with the SEC in accordance with the requirements of the Exchange Act, which for U.S. companies include: Periodic reporting: • Annual report on Form 10-K • Quarterly reports on Form 10-Q Current reporting: • Current reports on Form 8-K Stockholder meetings and proxy solicitations: • Proxy statements • Rule 14a-3 “glossy” annual report The periodic reports contemplate a system of “integrated disclosure,” in which portions of the various reports may be incorporated by reference into other reports to avoid repetition. This incorporation by reference is not required but is very common in U.S. company reports, particularly Form 10-K and the proxy statement. Incorporation by reference is also a concept that permits more streamlined disclosure for securities offerings, in particular after the company has been public for at least a year and is eligible to use a registration statement on Form S-3 for public offerings. Existing and future reports that the company files with the SEC will be incorporated into Form S-3, keeping the information current and eliminating the need to include detailed disclosure about the company in a prospectus for an offering. The timing and some of the required content of these reports will depend on the company’s reporting category, which is largely based on the size of its worldwide “public float,” or the market value of the voting and nonvoting common equity held by nonaffiliates, as of the last business day of the most recent second fiscal quarter: Reporting category • Large accelerated filer • Accelerated filer • Nonaccelerated filer Public float $700 million or more $75 million or more (but less than $700 million) All others The large accelerated filer and accelerated filer categories also require at least 12 calendar months of reporting, including at least one Form 10-K, so that after the IPO, the company will be a nonaccelerated filer for the first year. In many cases a nonaccelerated filer will also qualify as a smaller reporting company, with scaled-back information requirements. The thresholds to enter and exit these reporting categories are different from those used for the initial determination. Emerging growth companies may also take advantage of scaled-back information requirements (see Chapter 4), and there are some differences for foreign private issuer reporting as well (see Section 9.6). The remainder of this chapter describes the reporting requirements for a U.S. domestic company that does not qualify as an emerging growth company. The general legal framework for communications described in Section 5.5 also generally applies to the company’s required reporting, including the need for complete and accurate disclosure, the duty to update and the rules related to non- GAAP financial measures. For information about the financial statements that are required for the company’s various reports, see Section 2.2. The SEC does not automatically review these regular reports, but it is required to review each company’s reports at least once every three years, and it may provide comments to improve disclosure or remedy noncompliance at any time. Annual report on Form 10-K: A U.S. company must file an annual report on Form 10-K with the SEC after the end of each fiscal year. A nonaccelerated filer must file Form 10-K no later than 90 days after the end of the fiscal year. This deadline shortens to 75 days for an accelerated filer and 60 days for a large accelerated filer. The contents of Form 10-K are largely similar to the IPO prospectus, with several important differences: • Internal control over financial reporting—Beginning with the second Form 10-K filed by the company, Form 10-K must include a management report on the effectiveness of internal control over financial reporting and a related auditors’ attestation, as described in more detail below. • Disclosure controls and procedures— Disclosure about management’s evaluation of the effectiveness of disclosure controls and procedures, as described in more detail below, is also required, without any transition period. • Certifications—The company’s CEO and CFO must certify Form 10-K, as described in more detail below. • Unresolved SEC staff comments— An accelerated or large accelerated filer must include disclosure of any unresolved SEC staff comments on its periodic or current reports that the company received at least 180 days before the end of the fiscal year. • Stock repurchases and use of proceeds—The company must disclose its stock repurchases (for more information, see Section 6.3), as well as the use of the proceeds from the IPO. • Incorporation by reference from proxy statement—Most of the required disclosure about the company’s management and governance arrangements, including the detailed disclosure of executive compensation arrangements, is typically incorporated by reference from the proxy statement. • XBRL—The financial statements contained in Form 10-K must also be filed in an exhibit using the XBRL interactive data format (see Section 2.2). • Mine safety disclosure—A company with mining operations in the United States is required to include certain health- and safety-related disclosure about those operations. 64 NYSE IPO Guide
Obligations of a public company • Sanctions-related disclosure—The company must disclose certain activities relating to Iran, materials likely to be used for human rights abuses and transactions with persons designated for their support of terrorist activity or the proliferation of weapons of mass destruction. Proxy statement and “glossy” annual report: Following the IPO, a U.S. company will be subject to the proxy rules under the Exchange Act. The company must furnish a proxy statement to stockholders before soliciting voting authority for a matter submitted to stockholders’ vote. The stock exchange listing rules typically require a listed company to hold a regular annual stockholders’ meeting, for which the company will solicit proxies, so most companies prepare an annual proxy statement. The proxy statement must contain information about the stockholders’ meeting, the matters to be considered (including stockholder proposals, if any) and voting procedures. The company should be sure to consider any requirements imposed by its charter, bylaws or state law, in addition to SEC and stock exchange requirements. The most common item on the meeting agenda is the election of directors. In this case, the proxy statement will contain much of the same disclosure about the company’s management and governance arrangements that was included in the IPO prospectus, including the detailed disclosure of executive compensation arrangements and the compensation discussion and analysis. There are also several items that were not included in the IPO prospectus, including officer and director compliance with Section 16 filings (for more information, see Section 7.4) and information about code of ethics compliance and waivers. Other typical agenda items include the approval or ratification of the company’s auditors, which requires disclosure about fees paid to the auditors, and the adoption or amendment of equity compensation plans, for which the material terms must be described together with a table summarizing all of the company’s equity compensation plans. In addition, as described in Section 2.4, at the first annual meeting after the IPO and from time to time thereafter, the company must hold sayon-pay and say-on-pay frequency votes. If the agenda includes the election of directors, the proxy statement must be accompanied or preceded by an annual report. This can be the Form 10-K but more typically is a separate “glossy” report with pictures and other investor-friendly information, which is also often used for other investor relations purposes. Some companies choose to combine the two, creating a “wrap” for Form 10-K to create the “glossy.” For proxy solicitation purposes, the annual report (also known as the “Rule 14a-3 annual report”) must contain audited financial statements, MD&A, selected financial data and disclosure about market risk, stock prices and dividend payments, as well as a brief description of the company’s business, a stock performance graph and a list of the directors and executive officers. Until recently, the proxy statement and annual report had to be mailed to all stockholders; however, the SEC “e-proxy” rules permit the company to post proxy materials on a publicly accessible website and mail only a notice to stockholders. This process is known as “notice and access.” The stock exchanges also used to require a physical mailing of an annual report to stockholders but now permit website posting, and the NYSE recently eliminated the need for a press release about the posting in most cases. Although e-proxy procedures are less expensive, many companies still choose to physically mail these documents to stockholders, primarily for investor relations purposes. Quarterly reports on Form 10-Q: A U.S. company must file quarterly reports on Form 10-Q with the SEC after the end of each of the first three quarters of each fiscal year. A nonaccelerated filer must file Form 10-Q no later than 45 days after the end of the fiscal year. This deadline shortens to 40 days for accelerated and large accelerated filers. Form 10-Q largely consists of unaudited interim financial statements and the related MD&A. It also includes disclosure about effectiveness of disclosure controls and procedures, changes in ICFR (but not a full assessment as in Form 10-K) and CEO and CFO certifications, as well as information about risk factors, legal proceedings and company stock repurchases, among other things. As for Form 10-K, the financial statements must also be included in XBRL format. Current reports on Form 8-K: The U.S. securities laws generally do not require current reporting of all material company events, unlike in some other jurisdictions, unless the company is buying or selling securities or makes other disclosure for which information about the material event is needed to make that disclosure complete and accurate. Instead, a U.S. company must file a current report on Form 8-K with the SEC only for certain specified events and generally within four business days. The more common, day-to-day events that trigger this reporting include: • an earnings release or other information about historical results of operations and financial condition; • the entry into or amendment or termination of a material definitive agreement; • a significant acquisition or disposition of assets (which may also require pro forma financial information); • the creation of a material direct financial obligation or a contingent offbalance-sheet obligation or a related triggering event; • costs associated with exit and disposal activities or material impairments; • unregistered sales of equity securities or material modifications of the rights of security holders; • a change in accountants; • various governance items, such as the departure or election of directors and executive officers, results of stockholder votes, amendments to charter documents and amendments to or waivers of the code of ethics; and • for mining companies, certain healthand safety-related disclosures. 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Appendices Appendix IV: NYSE financ
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Contributor profiles NYSE IPO Guide
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Contributor profiles (SEC) register
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Contributor profiles The Children
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Contributor profiles KPMG 345 Park
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Contributor profiles Morrow & Co.,
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