This is a guest blog post by Joan Dromey, senior product manager & business analyst at Computershare. Don’t miss Joan’s panel discussion:
? 12/07/2016 1:00 pm
Panel Discussion “From Crowdfunding to IPO”
The JOBS Act of 2012 has made it much easier for private companies to connect with investors and raise capital. While this presents a great opportunity to grow your business, it also adds an additional layer of administration when it comes to managing your cap table, tracking your investors’ holdings and communicating with them regularly. And it also means there are more eyes on your business practices – both regulators and investors demand a high degree of transparency these days!
So before you begin attracting investors to your private company, there are a few things you should consider when it comes to corporate governance and investor relations.
What does corporate governance mean?
Adopting strong corporate governance practices means ensuring your company is being a good citizen as it relates to its stakeholders — this includes your employees, suppliers, and local community as well as investors. It’s a good idea to have these practices in place before you bring in outside investors — and you really should have them established once you have a board of directors.
Good corporate governance also helps you balance stakeholder needs with the potentially competing interests of your company and founder.
Be prepared for modernized investor services
Establish corporate bylaws, articles of incorporation and offering memoranda that give you the flexibility to reduce expenses and increase convenience for investors.
Rely on outdated templates for your bylaws, articles of incorporation and memoranda that have not kept pace with current technology and investor preferences.
Make sure your corporate governance documents allow for issuing book-entry shares as a default,as opposed to paper certificates. Paper certificates are expensive and cumbersome for you and your investors. They also impede the easy transfer or private sale of shares, even before you list on an exchange or trade over-the- counter.
Rely on snail mail for investor communications. Make sure your corporate governance documents designate email as the primary means of communications or consider defaulting to electronic communications with the option to opt in for paper. By setting this up from the start, you can reach out to investors quickly when needed without worrying about timing and costs associated with print/mail communications.
Postpone the decision to default to book entry and e-communications – do this right from the start! Changes down the road may require a special meeting or a shareholder vote…and failure to have this standard in place may cost you time and money.
Start working with a transfer agent early. A transfer agent keeps your records in compliance with legal and regulatory requirements from the very start. You’ll have established a solid governance infrastructure that can help you avoid issues as your company grows.
Spend valuable time tracking records or keeping up to speed on regulatory changes.
Partner with a transfer agent that can support your corporate life cycle from startup to IPO and beyond.
Think short-term. By working with the right partner you can access the services you need when you need them, without having to shop around at each stage.
By evaluating these things before you bring on investors, you can start the investor experience off on the right foot.