The cost of being a public company has increased significantly in recent years. This cost, which stems primarily from compliance, is a big reason why there are fewer and fewer public firms.
Being aware of this difficulty, Securities and Exchange Commission (SEC) proposed new rules This will allow companies to submit semi-annual reports instead of quarterly reports.
Companies that decide to submit a semi-annual report will submit one semi-annual report and one annual report for each fiscal year. Public companies will be able to determine the reporting frequency that will best serve investors.
SEC Chairman Paul Atkins He noted that reducing reporting requirements is just one part of the equation to encourage more companies to go public. He said the semiannual reporting was only the first step in a larger, more comprehensive review.
“Over the next few months, I expect the Commission to consider a number of proposals that, if adopted, would not only redefine what it means to be a public company, but would make being publicly traded attractive again,” Atkins said.
Commissioner Hester Peirce He voiced his support for the proposal, sharing that semi-annual reports were once the norm. He said some companies may view the frequency of reports and required disclosures as another reason to stay away from public markets.
“By providing greater flexibility, today’s proposal, if adopted, could help ease one aspect of the reporting burden, potentially making the public markets more attractive to companies.”
US Chamber of Commerce welcomed the proposal to reduce the reporting burden.
“Transparency and disclosure are vital to healthy and efficient capital markets, but when reporting requirements make it harder and more costly for companies to go public and stay public, these rules need to be re-evaluated,” he said. Mike FloodChamber Capital Market Competition Center Senior Vice President.
It is estimated that producing quarterly reports for large companies can cost more than $5 million. Compliance burdens have increased significantly over the past two decades. Application requirements have increased and at times its usefulness has become questionable. Last administration SEC Securities and Environmental CommissionA foolish ambition that will lead public companies into unknown costs and extensive liability traps.
Meanwhile, there is an ocean of private money waiting to invest in private firms. Prepared to raise money from accredited investors, Form D is a simple two-page document with no need for future applications. While investors typically receive a private placement memorandum outlining the deal, it does not need to be filed with the Fed. Private markets in the United States have become the envy of the world, raking in trillions each year, due in part to the simplicity of Regulation D.
Technology has also increased the liquidity of private securities. Multiple platforms now provide access to secondary trading of private securities before a company goes public, if it chooses to do so. The only problem with private securities trading is that it is an arena for the wealthy only, but pending legislation could change that.
Mayor Atkins wants to make the public markets great again while also improving the private markets. It’s left unfinished, but at least it addresses the issue; Something previous administrations ignored, they throw away.
The SEC is currently accepting comments on the proposal from interested parties.
