In order to prevent unfair manipulation of markets, companies are often subject to reporting requirements. These rules can influence many things, including when announcements have to be made and what sort of details will be included. Even if you're dealing with a small operation, it's important to be familiar with the rules that apply to your business. Likewise, it's prudent to understand how those requirements can change as an enterprise grows.
Are You Required to Report?
In most instances, a privately owned company is not required to submit reports about its finances and operations to the government. There are exceptions, especially with companies that are organized to invest large amounts of money in other businesses. Regardless of your circumstances, talk with a corporate lawyer and make sure your organization is considered private and does not need to report.
Publicly held companies, conversely, are likely required to submit at least yearly reports. Depending upon the size and market capitalization of the business, these requirements may be semi-annual or even quarterly.
What Has to Be Reported?
Publicly owned companies are expected to make public any information about who their corporate officers and shareholders are. Management compensation and financial condition are usually included in these reports, too. If your company changes its corporate structure or even proposes doing so, you'll likely need to issue reports at the time. Info about big events that can move share prices, such as bankruptcy filings or corporate acquisitions, should be handled with extreme care.
Bear in mind that the time of reports can impose limits on insiders who have actionable knowledge. It's a good idea to clear all reports and announcements with a securities law attorney before moving forward with them. Also, it's wise to remind company officers of their obligations to not disclose information or trade on it ahead of reports and announcements.
How is This Enforced?
Developing a history of failing to properly report these matters may lead to a variety of penalties, including SEC investigation and fines. If you've issued stock, the indexes that list your stock may also take action against your company, with certain sorts of black-mark listings that warn investors being the most common. Cases of extreme abuse or fraud may lead to criminal prosecutions.
Many companies also impose internal discipline to ensure compliance with securities rules. Officers may be stripped of their positions, and behavior can also be reported to the SEC.
Contact corporate lawyers in your area or visit their websites to learn more.