How to Understand the Effects of Securities Law on Your Public Limited Liability Company

When the bottom fell out of the stock market in 1929, the lack of securities laws was partly to blame. Since that time, the Securities and Exchange Commission (SEC) was created to protect investors and to generally keep the market above board. To this day, the Securities Act of 1933 and the Securities Exchange Act of 1934 govern the basic tenets of selling shares of a company to the public.

Difficulty: Moderate

Instructions

Things You'll Need:

• Computer with Internet access
• Help from a securities lawyer

1. Research the effects securities law will have on your public limited liability company.

2. Meet with a securities lawyer to learn about the laws, your initial reporting requirements and whether your company requires additional reporting.

3. Retain the services of your securities lawyer to help your own company's accountant or bookkeeper comply with all necessary regulations on an ongoing basis.

4. Consider that reporting requirements can change from year to year as your shareholder numbers or profits increases.

5. Search the SEC Web site to find specific forms you need to submit, as well as what sort of reporting your company and its members need to do once the company is public (see Resources below).

Tips & Warnings

• When you take your company public, it's best to work with a securities lawyer. When a company decides to offer shares to the public, you must file many forms, and then repeat the process the following year. Understanding all the SEC rules and their effects is an on-going process, and your lawyer will help you comprehend all of this information.
• Securities law is serious business, as evidenced by recent high-profile white-collar crimes. If you take your limited liability company public, be sure you have all of your bases covered in terms of disclosures and reporting.
• For the purposes of raising capital, it's not always advisable or even necessary to take your limited liability company public. Small businesses, especially, should consider other possibilities, such as a loan from the Small Business Administration, bank or other financial institution.

Who Can Help Sponsored

• Start Your LLC Online Today - LegalZoom
• Fax without a fax machine! Over 11 million people use eFax® to fax online. Get your free trial today
• Onebox® - Virtual Phone System for Small/Medium Businesses. Service includes Toll Free, Local Number, Call Forwarding, Voicemail, Online Fax & more. Free Trial!