When floating a company a percentage of the shares will be made available on a public investment exchange for purchase by the general public - the Initial Public Offering (IPO). Advice from expert corporate lawyers for is necessary if you are considering floating your company.
Company flotation and Oratto
Oratto has been developed as an online method of connecting consumers of legal services with high quality legal advice in the specific sphere of their need. All of the corporate lawyers on this page are highly skilled in the areas of law pertinent to company flotation. Taking early legal advice will help to ensure smooth process from start to finish and should avoid any time consuming or costly mistakes being made. You can select an Oratto member lawyer from the list or send your details directly to Oratto and through our Match function we will identify the most appropriate corporate lawyer for your individual needs.
Floating your company
A company can be floated on one of three principal markets:
- OFEX
- London Stock Exchange
- The Alternative Investment Market
Although floating a company is an attractive idea, all legal and business perspectives must be considered before a decision to float is taken. Going public has a number of advantages; principally the increased ability to raise capital. This happens for several reasons:
- the IPO will provide a significant amount of capital which makes issues such as repaying investors much easier
- selling shares means that money is raised without incurring interest charges (such as with loans). This is especially useful to private companies with ongoing debt
- going public means an increased availability to alternative sources of capital. It also means a better debt to equity ratio, plus potentially improved terms of borrowing from conventional sources (e.g. banks) in the future
There are various conditions with which a company must comply in order to float. The regulatory and legal standards of a public limited company must be met and the right legal structure must be in place. Where shares are traded within a company, there are additional regulatory requirements to comply with:
- there's no longer a requirement to hold an Annual General Meeting (AGM). But if any director, or 10% of shareholders (5% if it's more than 12 months since the last AGM) request one, then holding an AGM is compulsory. In addition, all shareholders must be invited to an AGM
- full accounts must be published twice a year in the interests of transparency
- any important news must be swiftly and effectively communicated to all investors
- other advisers need to be involved. These include your lawyer and your auditor.
- a public company must have a £50,000 minimum share capital
- annual reports and accounts must comply with the accounting principles of the London Stock Exchange
- the independent regulations and rules of the market being joined must be complied with
Solicitors for due diligence
One of the most important aspects of the company flotation process is due diligence. Broadly speaking, this is for the protection of the investors and simply means that the internal operations and commercial activities of a company must be investigated before any kind of merger, acquisition or IPO goes ahead.
For any further information regarding company flotation, or to begin the process, contact Oratto today for advice and guidance from specialist corporate lawyers.