Consider this before IPO

Equity capital markets (ECM)

Prior to a company undertaking an IPO, its stakeholders should understand the implication of being a public listed company (“PLC”) and consider whether being listed is right for the company.

Consider the following:
• Business owners would no longer have total control of a company once it is listed. Certain matters require shareholders’ approval such as remuneration of directors and certain transactions undertaken by PLC.
• A PLC and its directors are held to higher standard of corporate governance.
• A PLC has more publicity than a private company, which may affect its business and reputation positively or negatively.
• Being listed may enhance the public image or credibility of a company.
• A PLC is subject to continuing obligations to comply with the Listing Requirements, failing which penalties may be imposed.
• A PLC incurs higher compliance cost. It needs to engage advisers when undertaking certain corporate exercises and ensure compliance with listing obligations and corporate governance.
• A PLC’s valuation is, to a certain extent, subject to public perception of the value of the PLC, which may not be reflective of the actual value.
• A PLC may become a target for a takeover by a competitor.

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This post was first posted on Linkedin on 21 April 2021.

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