That’s a good question.Why in the world would any self-respecting, revenue producing, private company care to go public and in, of all places, the USA?
Once a company is publicly trading it no longer has privacy.The company has to answer to its investors and comply with all the general rules of the Security and Exchange Commission (SEC).The SEC requires current quarterly (10-Q) and annual (10-K) reports, 8-K current reports and proxy statements, just to name a few.What about the risk and liability?We are talking about the federal government of the United States of America and now with The Securities act of 1933 and The Securities and Exchange Act of 1934, to name a few.The cost of going public is another major issue.Today you can expect to pay fees from eight hundred thousand to millions of dollars for a full-blown Initial Public Offering (IPO), and it could take from one year to several years before you raise one dollar.So you say, “there had better be more than one reason for going public”.
WELL, HERE ARE A FEW EXCELLENT REASONS WHY THE USA USA: The U.S. economy isThirteen Trillion dollars and growing. MARKET: The U.S. stock exchange industry is the most trusted in the world. INVESTORS: U.S. public trading companies attract more investors from around the world. LIQUIDITY: The U.S. stock exchanges provide retail and institutional investors with access to U.S. capital markets, which are the largest and most liquid in the world.
WHY GO PUCLIC GROWTH: When your company has reached a certain level there is no better way to expand and tell the world who you are and that you are a creditable player in the world market today. MONEY: When asked, more companies will tell you raising money through the public is far easier and faster than private offerings and most of the time the cost is about the same or less. DEBT FOR EQUITY: Converting loans to equity has always been the investor's smarter choice. LEVERAGE: With public stock, your company can attract and keep more qualified personnel. STOCK ACQUISITIONS: With your company's stock, you can acquire assets and other companies. EXIT: There is no better incentive for an investor than a built in exit plan. With public stock, you have created a secondary means of return on investment that becomes the primary source of return for the investor.
Did you know the fastest growing public trading companies in the U.S. are based in Canada, Israel and the People's Republic of China?
If your company has the right business plan, good management and a strategic operating plan, it can raise the moneys required through the public for running its business. Therefore, the question should be "Why not go public?"
Getting Started One requirement of a private company wishing to become public is it must be able to produce an audit to include a history of its shareholders.Keeping a publicly held company qualified with the SEC is both vital and complex.The misfiling of one report or a badly chosen word in a press release could cause irrevocable harm with your company's ability to continue trading publicly.
First Dominion Financial, Ltd. has the experience needed to get the job done. We are in search of private companies with the "right stuff".We seek private companies with a strong possibility of future success in the public realm.Our criterion includes a good management team, strong growth, and an excellent product or idea for future revenue.The Company needs to have a comprehensive business plan completed and an independent financial audit. We require the following for our review: 1)Business plan executive summary (approximately 1-5 pages); 2) Two years to-date financial statements with cash flow; 3)Key management list with history. On our review of these documents, we will consult with you or your authorized representative to determine your company's acceptability as a candidate for becoming a United States public trading company.
What will First Dominion Financial, LTD (FDF) do for the CLIENT?
FDF will:
Consult with the Client through the process of becoming a U.S. publicly trading company.
Coordinate with the Client's lead person and account firm through the company's audit.
Complete and provide all required merger and registration documents.
Provide the CLIENT a Registered Company domiciled in the state of Nevada with an authorized 100,000,000 common shares and 5,000,000 preferred shares. The company will come with a fixed minimum 300 plus shareholder base with 100 shares or more each (a NASDAQ SmallCap requirement), and a minimum 3-year audited financial statement.
Obtain the emerging company's CUSIP number from Standards & Poor.
Upon receiving the CLIENT'S completed audited financial stement, FDF will:
Complete and file with the Securities and Exchange Commission the form 10-SB registration statement and reply to all comments until the effective date of the emerging public company or 180 days of the date of this agreement whichever is sooner.
Provide a letter of opinion from legal counsel on the tradability of the shares.
Provide a market maker for the Company's stock who will file the company's form 2-11 pursuant to rule 15c2-11 information statement with the NASD ad reply to all comments until trading or 180 days of the date of this agreement, whichever is sooner.
Have all required documents filed with the NASD.
Upon "letter of effectiveness" from the NASD, FDF will obtain the Company's stock trading symbol.
Provide a transfer agent for the emerging company's stock.
File all documents with the SEC via EDGAR until trading or 180 days of the date of this agreement, whichever is sooner.
Script and file the registered company's first 10-KSB annual form, the 10-QSBs and/or any 8-k forms due for the first 11 months of the date of this agreement.
Timing is of the essence and all things are subject to change.If becoming a U.S. public trading company interests you, call today for a private consultation.
You're Public, now what? You’ve completed form 10-SB, submitted it to the SEC, and answered all their comments.Now you have your “letter of effectiveness” from the SEC.What’s next?
Getting listed for trading on NASDAQ OTCBB Even though closely associated, “going public” and getting listed are two different and distinct processes. That’s because the “public” part deals with establishing the “free tradability” of your stock under the U.S. federal securities laws, while listing on a national quotation service is more directly controlled by the National Association of Securities Dealers, or NASD.
The U.S. federal laws prohibit sales of corporate securities by issuers to the public, or resale of stock by stockholders, unless the issuer has registered the securities under the Securities Act of 1933. The prohibition is not absolute, however, leaving open certain "exemptions" from the registration requirement in certain circumstances. Issuers are permitted an exemption from the registration requirements (commonly called the "private placement" exemption) when (a) the securities are sold to only wealthy, sophisticated investors, plus a few other investors, and (b) there is no public advertisement or general solicitation with the offers and sales. This is the exemption that entrepreneurs typically rely on in the organization and early financing phases of the business.
Resellers are afforded a similar exemption (the "Section 4(1) exemption") in cases of private resales that are not deemed to be an underwriting or involving a broker. In this context, "underwriting" is a vague concept, not specifically defined by the United States Securities and Exchange Commission. It has sometimes fallen to the courts of law to decide whether a particular resale transaction qualifies for the exemption.
To get NASD approval for quotation, a company must show that a sufficient amount of a class of its securities is eligible for public sale or resale. There are a couple of ways the company satisfies this requirement.One way is to file a registration statement under the Securities Act of 1933. This includes, but is not limited to, the well-known case of the "IPO." The latter term generally refers to the "first public sale" of stock by a company, but issuers are free to repeat the process of registering public offerings of stock any number of times to raise additional capital. In any event, once a registration statement becomes effective, all the shares so registered become "free-trading" and can be publicly sold (and resold) indefinitely, so long as the issuer continues to file its obligatory reports (e.g., 10-Ks, 10-Qs, etc.). A broker who underwrites a public offering will also arrange for listing of the company’s stock on a suitable exchange or national quotation service.
A company may, however, do a "self-underwriting," sometimes called a Direct Public Offering (DPO). In these cases, the securities may qualify for NASDAQ Bulletin Board listing as well, depending on the procedures followed in the offering. Because there usually is no underwriting broker involved in these offerings, the company will have to take the initiative in applying for listing. The company must make an application through a Broker-Dealer who is a member in good standing of the NASD, submitting the information prescribed by Rule 15c-2-11 under the Exchange Act in a form prescribed by NASD.
Listed below are the four greatest advantages to basing your company in Nevada:
Piercing of the Corporate veil;
Indemnification of officers and directors;
No Joint and Several Liability;
Jurisdictional Strategies
Let’s examine one at a time.First, let's look at piercing the corporate veil.What does that mean?When you form a corporation whether it is in Nevada, California, Texas or wherever, you must follow certain corporate formalities.Remember, a corporation can do everything you can do except act or think, and it does that through its board of directors, officers and shareholders.It is easier for someone to pierce the corporate veil of a company involved in a lawsuit if the corporation has not kept accurate corporate books or if it has commingled funds. Another contributing reason corporate veils get pierced has to do with low capitalization.In some states, like California, we recommend that you capitalize your corporation with at least $1,000.If not, it can be easier for someone to prove that you were simply the alter ego of the corporation (one and the same as the corporation) and pierce the corporate veil!
Nevada has a three-prong test that must be proven (all three parts must be proven) to pierce the corporate veil:
The corporation must be influenced and governed by the person asserted to be the alter ego;
There must be such unity of interest and ownership that one is inseparable from the other;
The facts must be such that adherence to the corporate fiction of a separate entity would, under the circumstances, sanction fraud or promote injustice.
The burden of proof of the three “general requirements” is on the plaintiff who seeks to pierce the veil, and a failure to prove any of the three will result in the veil not being pierced.Essentially Nevada says that unless you can prove fraud the corporate veil will not be pierced.That is awesome protection. The second great advantage to basing your company in Nevada came about in 1987 when the Nevada Legislature passed a revolutionary law.This law allows corporations to place provisions in their articles of incorporation that would remove the personal liability of officers and directors to the stockholders of Nevada Corporations. Contained in the Nevada Revised Statues (78.037), the law in part reads as follows: “The articles of incorporation may also contain; A provision eliminating or limiting the personal liability of a director or officer to the corporation or its shareholders for damages for breach of fiduciary duty as a director or officer, but such provision must not remove or limit the liability of a director or officer for:Acts or omissions which involve intentional misconduct, fraud or a knowing violation of laws.” Nevada Corporation Code allows for the indemnification of all officers, directors, employees, stockholders, or agents of a corporation for all actions that they take on behalf of the corporations that they had reasonable cause to believe was legal.This indemnification can include any civil, criminal and administrative action.(See NRS 78.751.)These two laws can provide complete protection for the officers and directors of Nevada corporations as long as they act prudently in their roles. The third significant change in Nevada law is the abolishment of joint and several liability.Joint and several liability means that should a judgment be entered against several defendants, they will each assume equal liability for the full amount of the judgment, regardless of their relative fault in causing the damages.Nevada now requires the court to assign a percentage of fault to each defendant, from zero to one hundred with the total equal to 100 percent.Every defendant found liable is required to pay a share of the total judgment no greater than his/her fault. When you operate a Nevada corporation doing business in another state you will enter several agreements and contracts.Those contracts and agreements would mostly fall under the laws of the other state.But you may have a choice.
The fourth great advantage to basing your company in Nevada is something called “choice of law jurisdiction.” What does that mean?It means you can enter a contract and decide that it falls under the laws of Nevada (state of domicile) not the other state (state of doing business).If there were a challenge you would have the laws of Nevada in your favor.This may work in your favor and discourage lawsuits!There is something also called “choice of forum”.This means you may want the case heard in the state you choose, which in most cases would be Nevada!Someone in the (state of doing business), bound by a choice of forum in Nevada, may have to travel to Nevada for that lawsuit to occur.That may curb this person’s enthusiasm to sue your company.Now you see why small and large companies are rushing to be domiciled out of Nevada!
