What Every Investor Must Understand About SEC Regulatory and Business Laws

It is highly significant that investors and entrepreneurs learn which governmental laws on a local to federal level apply to them as an investor or business owner. Even if you are working for a corporation and a member of their investment plan, SEC laws protect you as an investor. If you work for a publicly-traded company, you can review its overall performance and vital information through their filings of insider trading SEC forms.

The Securities and Exchange Commission is a recommended site for insider and outsider investors, the public, and publicly traded companies to gain knowledge on various topics. It is useful for entrepreneurs who are planning to go public and start selling shares of stocks on major exchanges, such as NYSE and NASDAQ. The Small Business Administration has plenty of educational materials relating to starting a new business and the step-by-step process.

SEC Forms You Can Review to Provide Insight About a Company

  • Form Def-14A
  • Form 10K
  • SEC-Form Three
  • SEC-Form Four
  • SEC-Form Five

You can find information about the owners or management, yearly performance, insiders’ trades, changes of ownership, and the amount of interest of a company. Form Def-14 A is a proxy statement report showing each person who is running the business and their individual salaries and bonuses. It lists all the executives or management team members who hold over ten percent ownership.

To learn about a publicly-traded company’s performance in previous years, you can find this information in a report submitted in Form 10K. It provides a summary description of the business operations, products, and services that are like an annual report. Understanding this report can be complex for those individuals who are not knowledgeable about interpreting financial statements.

SEC Forms Three, Four, and Five are for insiders to report their recent buy and sell transactions of shares of stock. Shareholders must disclose this information immediately for the public to access and make decisions about purchasing or selling their stock shares. These forms are essential for disclosure and very helpful for outside investors and SEC to track unethical behavior and violations.

Why Accurate Documentation is Important for Compliance

Business owners, management, and other insiders of corporations and organizations must comply with regulations and governmental laws to protect outside investors. They have to secure documentation of procedures, policies, and requirements to prove compliance with local, state, and federal governments. If you want your business to grow and become successful, your legal documentation must be accurate and prepared thoroughly. Advanced technology and a reliable cloud-based application for storage are helpful for safeguarding important documents for operations and financial reporting.

Types of Business Structures for You to Consider Before Launching a Business

  • Sole Proprietorship
  • Partnership
  • Limited Liability Company
  • C-Corporation
  • S-Corporation

Before launching a business legally, decide how you want it structured. You might want a sole proprietorship, partnership, limited liability company, Corp C, or Corp S. If this is your first business venture, a sole proprietorship structure may be the solution until you are confident your idea is a hit on the market. You have one hundred percent control of the business and liable for its liabilities personally. There is no separation of personal and business liabilities and assets.

The two types of business partnership structures are limited partnership (LP) and limited liability partnerships (LLP). LP has a structure comprising a general partner with unlimited liability and control and partners with limited liability and control. An LLP partnership provides limited liability for all of its owners and protects them from debt obligations incurred by the business.

If you want full protection of your personal assets, the limited liability company structure protects you from the personal liability of your company. When the company grows, you have the option of staying privately operated or going public and offer shares of stock to outside investors. C-Corp and S-Corp structures are legal entities that allow owners to raise capital through the sale of stock.

You must register LP, LLP, C-Corporation, and S-Corporation businesses with the state agency you are physically conducting business. If you want to be a sole proprietor, you can register your trade name with the city’s local government. It is necessary for investors and entrepreneurs to understand SEC regulatory and business laws before they invest or start a business.

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