Public Company Annual Meetings
and Maintenance Best Practice Summary

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On-Going Reporting Requirements

Once a company is public it must maintain and uphold certain standards that concern the number of stockholders and market capitalization. Following the initial registration, a company may file other registration forms such as:

• Form S-3 to register additional shares at least 12 months following the initial public offering.
  
  
• Form S-4 to register securities issuable in connection with a business combination, such as a merger.
  
  
• Form S-8 to register securities issuable under a stock option plan.

If the company is also publicly-traded, it must meet reporting requirements of the Securities Exchange Act of 1934 (Exchange Act).

Periodic Reports

The Securities and Exchange Commission (SEC) and Section 13 of the Securities Exchange Act of 1934 require certain periodic reports of public companies.

Periods Covered by Reports	Form 10-K Deadline; No. of Days after Year End	Form 10-Q Deadline; No. of Days after Quarter End
Fiscal year ending after 12/14/02 but before 12/15/03, and subsequent three fiscal quarters	90	45
Fiscal year ending after 12/14/03 but before 12/15/04, and subsequent three fiscal quarters	75	40
Fiscal years ending after 12/14/04 and all subsequent fiscal quarters	60	35

Forms 10-K and 10-Q are not distributed to stockholders unless requested. All forms filed with the SEC are public. If filed after May, 1996 copies may be obtained free of charge at the SEC or EDGAR Online and usually the company's web site.

When filing the Form 10-K, it must be accompanied by a transmittal letter indicating whether or not financial statements reflect a change and is filed using EDGAR or EDGAR II. Small business issuers (annual revenues and/or public float under $25 million) may elect to file junior reports on Forms 10-KSB and 10-QSB.

Glossy annual reports are created by companies for distribution to stockholders and other potential investors. They may be obtained online at the Annual Report Service, at many company web sites or by calling the corporation.

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Section 16 Requirements

Pursuant to Section 12 of the Exchange Act, stockholders, directors and certain officers owning more than 10% of a company's registered stock must file the following forms with the SEC:

• Form 3, Initial Statement of Beneficial Ownership within 10 days of the qualifying event.
  
  
• Form 4, Statement of Changes of Beneficial Ownership of Securities must be filed within two days from the date of the qualifying transaction that changes the percentage of ownership occurred. A Form 4 filing, pursuant to the Sarbanes-Oxley Act of 2002 is also required when an officer or director in exempt transactions (such as stock option under Rule 16b-3) purchases from or sells to the Issuer.
  
  
• Form 5, Annual Statement of Beneficial Ownership of Securities must be filed within 45 days following the company's fiscal year end.

The need to report may result from information obtained from a Directors & Officers Questionnaire that is requested to be completed by all officers and directors by company counsel.

Designed to prevent insider trading, Section 16 of the Act sets forth reporting requirements therefore, these filings are also known as "section 16 compliance". The beneficial owner may choose to execute a limited power of attorney so that counsel may file necessary forms on his behalf. Form 4 filings must be made in real-time using EDGAR. By August 2003, pursuant to Section 403 of Sarbanes-Oxley Act of 2002, all Section 16 filings we have to be made electronically as well as posted on the company's web site.

Note: The filing deadlines for forms required under Section 16 are not the Company's responsibility, however, late filings are disclosed on the company's proxy statement. Therefore, making expeditious two-day filings imposed by Sarbanes-Oxley Act of 2002 will be easier by having an executed Section 16(a) Power of Attorney. Filers should also have obtained EDGAR filing codes.

Annual Meetings

Checklist and Timetable for Public Company Annual Meeting

Special Meetings

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The Role of the Transfer Agent

A transfer agent is typically a bank or trust company appointed by a vote of directors to keep the stock records of the company, issue stock and coordinate transfer of stock, options, warrants and other securities on behalf of a corporation. Transfer agents are typically contracted for public companies or for any company that many stockholders.

Beyond record keeping, stock ledger keeping and managing stock issuance and transfers, transfer agents may also be used as:

Proxy Solicitors and Inspector of Elections at stockholder (special or annual) meetings. As Inspector of Elections, the transfer agent will act as an impartial third party who will handling all voting activity and certify to the votes taken at the meeting. When notices and proxy statements are mailed to stockholders in anticipation of a meeting, the transfer agent will provide an Affidavit of Mailing certifying that all holders of record were mailed appropriate materials. If the mailing is done by someone other than the transfer agent, the transfer agent will provide an affidavit certifying the addresses of holders of record and the mailing facility will be responsible for providing an Affidavit of Mailing.

When a stockholder requests a transfer agent to transfer restricted stock, the transfer agent will request a clearance memorandum from the company’s counsel. This memorandum states that the stock restrictions have been cleared concerning the requested transfer and therefore allows for the transfer of stock and/or for the legends regarding restriction of transfer to be deleted from the back of the certificate.

When appointing the transfer agent, directors often authorize officers to provide instructions to the transfer agent. Popular transfer agents are:

Boston Equiserve

(800) 730-6001

Institutional Shareholder Services

(301) 545-4107

American Stock Transfer & Trust Company

(800) 937-5449

Insider Trading

Rule 10b-5 of the Exchange Act prohibits any “insider” of a corporation from buying or selling securities of that corporation while they have access to material non-public information. The term "insider" includes any person with a special relationship with the company who would or could be provided such material non-public information. Insiders are forbidden from using such information for their own use and/or passing such information to an outsider.

A public company requires adequate time to release and disseminate material nonpublic information, and therefore the company should establish “blackout periods” that impose trading restrictions on its stock for a certain amount of time during a public offering or before and after a merger or acquisition, a fiscal year end change, a change in accountants or stock plan administrators, an earnings announcement and any other major company announcement.

Higher level employees will generally have greater access to material nonpublic information. Therefore it is common for a company to impose different levels of trading restrictions on different levels of employees.

Pursuant to Section 306 of the Sarbanes-Oxley Act of 2002 and effective as of January 26, 2003, directors and executive officers of public companies are prohibited from engaging in buying or selling company securities during certain pension fund blackout periods.

Lock Up Agreements

In the course of a public offering, a corporation, its officers, directors and major stockholders are typically required by the underwriter to enter into a lock-up agreement whereby each party agrees not to sell any securities of the corporation for a specified period of time (typically 180 days) following the date of the final prospectus. The shares restricted by this agreement are referred to as being "locked up".

LeapLaw's
Related Best Practice Summaries

EDGAR and SEC Filings
Initial Public Offerings
Schedules 13D and 13G