As numerous little known companies have begun to get ready to make the leap to publicly traded status, following on the heels of Facebook’s IPO last month, by making investors aware of the risks inherent in their smaller size & lack of experience in the public exchange. However, going beyond those more traditional risks that come with making their entrance into the U.S. stock exchange, many have also begun to include the Jumpstart Our Business Startups (JOBS) Act as a potential risk as well.In fact, more than a dozen companies did so just last month, citing that the lack of proper disclosure requirements that come in compliance with the act may come as a deterrent to many potential investors.
This development is just one inadvertent result of the JOBS Act, being that while taking advantage of related disclosure standards companies are in turn being spurned by investors whose confidence is compromised by the act’s disclosure policies which would allow certain information to be withheld. In accordance with this act, those companies whose revenues are less than $1 billion in a year – also known as emerging-growth-companies – have up to five years following their initial public offerings before they will be expected to comply with all of the rules & regulations to which their larger counterparts are held. For example, they are exempt from conducting votes for say-on-pay, they only have to submit two financial audits to the SEC, & perhaps most significantly, they are do not have to have auditors sign off on their internal controls.Article Source: http://EzineArticles.com/7181311
