The Dark Side's Bright Side: Lower Compliance Costs

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Attention, CFOs at smaller, publicly listed companies overburdened by compliance costs (and facing delisting pressure): The dark side is waiting.

Just as the “Should we go private?” considerations arose at many smaller public companies following the Sarbanes-Oxley Act's passage in 2002, the “Should we go dark?” question is being asked during the global financial crisis, which is ushering in a brand-new era of regulation (or, as I heard an extremely visionary consulting firm chairman describe it today, “the era of re-regulation”).

To be sure, “going dark” is not the same as “going private,” take it from Dorsey & Whitney LLP Partner Theodore Farris, an expert on delisting processes.

“A ‘going private' transaction generally involves the cash-out of all or a substantial portion of a company's public shares so that the company becomes eligible to delist and deregister its shares under the Exchange Act,” Farris explains in his new article. "‘Going private' transactions can take many forms and may involve a merger, tender offer, or reverse split of the company's shares. ‘Going private' transactions require extensive and detailed disclosure filings under Rule 13e-3, the ‘going private' rule. ‘Going private' transactions are often undertaken by or at the direction of controlling shareholders or third-party acquirers and require extensive board consideration, disclosure, fairness opinions, SEC filings, and often a shareholder vote.”

For Farris's complete article, click here. ###

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GRC expert Eric Krell supplies the Business Finance community in-depth articles and commentary examining governance, risk, and compliance.

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