What does it take to form a public company?

Question

I don't mean an exchange-traded company, just a small company that is allowed to advertise its stock and bonds to the public. I also want to qualify for SEC reporting exemptions by keeping it small.

Answer 1

The first thing you have to do is form a corporation.

In order to advertise your stocks and bonds you MUST register with and gain the approval of the SEC.  You can avoid the SEC if you do one or more private placements, but even then if you offer your stock to more than a ridiculously small number of prospective investors you are subject to SEC registration.

SEC registration isn't cheap.  You will need a bunch of expensive experts.  A CPA firm, lawyers, investment bankers, stock brokers, etc.  If you can do it for less than $100,000 I would be very surprised and if it cost a lot more than that I wouldn't be surprised.

As far as reporting requirements are concerned as long as you have any outside investors you can expect to have to provide the same information that a Fortune 500 does to its stockholders.  Indeed because you are small and your investors "know who to call" you will find yourself providing more information to them than anyone in the Fortune 500 provides to their investors.

Hope this helps

Jerry-the-bookkeeper