Under The Microscope

Does reading all this make you have second thoughts about taking a company public? Don’t despair. Not all news is bad. Sarbanes-Oxley has been successful in its primary mission — restoring the confidence of investors. The number of accounting scandals has come way down and investors are now more confident that financial reports issued by companies are accurate.

Many companies have found ways to save money on all these reporting requirements — some have put more lawyers and accountants on payroll, which is more cost effective. And it has been clearly shown that compliance with the law costs less than non-compliance.

So what if you decide all this scrutiny and legal jargon is just too much for you, and you want to “delist” your company and take it private again? If you do this, the law says you can’t have more than 300 shareholders, which will severely limit your ability to raise capital to grow your business. For this reason, most corporations have concluded that meeting all the stringent reporting requirements is worth the effort and cost after all.