Pre – Listing Considerations

Once the decision has been made to introduce ‘public’ shareholders, whether through stock exchange listing or otherwise there probably are a number of matters which the board should possibly consider either to set up ‘proper’ systems and practices and/or which will be easier to do now/beforehand with a ‘closed’ shareholding and/or before the company is subject to public scrutiny.

These might include (not in any special order):

  • Delegation of responsibilities/authorities (including in particular all trust related matters such as creation/winding up schemes, product disclosure statements, property acquisitions/disposals, loan/security documents, trustee appointments, calling meetings, services providers contracts, reports/returns)
  • Corporate governance and related committees/policies (follow ASX guidelines), including, share trading policy, continuous disclosure and confidential/sensitive information circular to staff
  • Internal due diligence – books and records in order
  • Properly approve/document related party interests, in need, or even remove them entirely (note – these matters usually addressed before even becoming a public company as could be more difficult then)
  • Share register (who/how handle)
  • Additional compliance (eg, annual report/AGM and half-yearly audit)
  • D&O insurance – including prospectus cover
  • Deeds of Access & Indemnity
  • Locate/appoint appropriate Non-exec Directors and prepare appointment letters
  • Executive Directors employment contracts (related party benefit exemption if reasonable)
  • Employee Shares/Options Plan
  • Secondary sale of securities (if not listing)
  • Constitution (is it appropriate/compliant) – eg, remove pre-emptive rights
  • Escrow (stock exchange and/or voluntary) founders/promoters shares
  • Quantify risks/benefits/rewards of business (use for prospectus)
  • Business plan/budgets
  • Board size/committees
  • Directors fees (aggregate – requiring shareholder approval if listed)
  • Web-site – shareholder/corporate section
  • Increased compliance – ASX and/or ASIC (disclosing entity provisions if unlisted).

By the way, I spoke to the Company Secretary of a listed Responsible Entity re pointabove (simply saying that we were considering ‘better’ ways to handle the myriad of resolutions requiring board decision) and in his opinion there is no real way around it because most of such matters really do need board oversight for proper governance (and many actually need to be done ‘pursuant to a board resolution’). He says they cover most things through regular monthly board meetings (they believe monthly meetings are essential given the number of on-going matters) – although it still leaves occasional things nearly every month that cannot wait till next meeting and must be dealt with by Circulating Directors Resolution.

*Originally written by Company Secretary, an Australian virtual company secretary service.

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