Expertises connexes

To broaden its funding opportunities, an incorporated company may decide to resort to the public market. Although involving important costs due to the participation of multiple professionals, it has several advantages. Each province has its own legislation on the subject, making it useful for a company to become eligible in the 10 provinces.

A company whose shares are freely traded on a stock exchange will benefit from wider sources of financing, many financial tools, more flexibility for merger, sale or acquisition of a business, and also from a great exposure with its suppliers and clients.

Listing the shares of a company on a stock exchange is certainly a challenge, amongst other things because of the initial and recurring fees, due to the preparation of the prospectus, and also due to the requirement to comply with securities laws, which include the duty to disclose certain information to the shareholders.

For its initial public offering, the incorporated company will at least require:

  • audited financial statements prepared in line with the generally accepted accounting principles and auditing standards (statement of operations, statement of retained earnings and a statement of cash flows for the last three financial years;
  • an appropriate information system (generally electronic);
  • a solid business plan (description of the strategy, leadership structure, business activity and products, market analysis, financial information and description of the financing needs);
  • a clearly defined and well planned business image (one that is not simulated artificially for the public offering).

The company will also have to choose carefully the accountancy firm and the investment broker. The former will need to be able to advise it, with regards to the size of its activities, concerning the advantages and disadvantages in becoming a public issuer, a public company. The reputation of the latter will be of great importance in the eye of the potential investors.

Of course, securities laws, through the Autorité des marchés financiers, the entity in charge of their administration, establish criteria to comply with in order to have access to the public markets, in order to protect the public. Accordingly, both the initial public offering and the prospectus must follow precise formal rules.