INTERNATIONAL LAW

PUBLIC COMPANIES

Antonio SpocciAdriano Pisculli

Valentino LongoAdil Eddal

Andrea Danni

Public Company in U.S.A.

Public companyin the U.S.A.

• A Public Company or a Publicly Traded Company is a Company that offers its securities for sell to the general public.

• The securities are sold through a stock exchange or through market makers operating in Over The Counter market (OTC).

• It has not to be confused with the publicly-owned company.

• Securities of a Public Company:

usually are owned by many investors;

• In the USA, in some istances, companies with over 500 shareholders may be required to report under the securities exchange act of 1934.

Public companyin the U.S.A.

• Advantages of a Public Company:

It’s able to find capital by selling its securities

• Disadvantages of a Public Company:

Publicly traded companies in the USA are required by the SEC to submit an annual “Form 10-K” containing a comprehensive detail of a company’s performance.

Public companyin the U.S.A.

• Stockholders:

In the USA , the Securities and exchange commission require that firms whose stock is traded publicly report their major stakeholders each year.

The reports identify all istitutional shareholders, all company officials who own shares in their firm, and any individual institution owning more than 5% of the firm’s stock.

Public companyin the U.S.A.

- The shares of a publicly traded company are often traded on a stock exchange.

- The “size” of a publicly traded company is called its market capitalization.

- This is calculated as the number of shares outstanding times the price per shares.

- A company’s market capitalization should not be confused with the fair market value of the company. As a whole since the price per share are influenced by other factors such as the volume of shares traded.

Public companyin the U.S.A.

Public Companies in Europe and Italy

LIMITED COMPANIES

In the most european countries we can find Public “Limited” companies.

The liabilities of the members of subscribers of the company is limited.

PUBLIC COMPANY IN ITALY

- Spread-out of shares

- In the cases of absence of important shareholders, all the power is concentrated in the hands of the management

- No auditing organisms

PUBLIC COMPANY IN ITALY

- The growth of big companies can be supported by an efficient financial market

- The main component of this type of market is a balanced banking system

- There is a lack of big institutional investors that are independent from banks and a lack of pension funds able to invest in the long-run

Authorities responsible for regulation of

public companies

Four point of view

ItalyUSA

EUInternationally

CONSOBSECESMAIOSCO

CONSOB

COMMISSIONE NAZIONALE PER LE SOCIETÀ E LA BORSA

Public authority responsible for regulating Italian securities market.

CONSOB seek to ensure:

- transparency and correct behaviour by securities market participants- disclosure of complete and accurate information to the investing in public by listed companies- accuracy of the facts represented in the prospectuses related to offerings of transferable securities to the investing public

It also conducts investigations with respect to potential infringements of insider dealing and market manipulation law

SEC

U.S. SECURITIES AND EXCHANGE COMMISSION

“The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”

It is the responsibility of the Commission to:

- interpret federal securities laws- issue new rules and amend existing rules- oversee the inspection of securities firms, brokers, investment advisers, and ratings agencies- oversee private regulatory organizations in the securities, accounting, and auditing fields- coordinate U.S. securities regulation with federal, state, and foreign authorities

SEC require from the firms the annual report called “Form 10-K”.

SEC

U.S. SECURITIES AND EXCHANGE COMMISSION

SEC Divisions:

- Division of Corporation Finance

- Division of Trading and Markets

- Division of Investment Management

- Division of Risk, Strategy and Innovation

- Division of Enforcement

ESMA

EUROPEAN SECURITIES AND MARKETS AUTHORITY

ESMA encourage the development and the convergence both among securities regulators, and across financial sectors.

Four work level

IOSCO

INTERNATIONAL ORGANIZATION OF SECURITY COMMISSIONS

115 Internationally ordinary members

- cooperate in developing, implementing and promoting adherence to internationally recognised and consistent standards of regulation

- enhance investor protection and promote investor confidence in the integrity of securities markets

- exchange information at both global and regional levels on their respective experiences in order to assist the development of markets, strengthen market infrastructure and implement appropriate regulation.

PUBLIC COMPANIES IN

EUROPE

PUBLIC COMPANIES IN EUROPE

The creation of a common European market leads to:

1. The need for a better level of information available2. The need for more transparency3. Common rules and regulation

All these factors lead to ongoing process of harmonization of the rules among all the European countries.

ACTORS OF THE HARMONIZATION PROCESS

The process of harmonization in EU is driven by different actors, that have to take into account the different regulations applied in the EU countries

Who's ruling?

1. EU Commission2. EU Parliament3. EMSA

Other independent authorities are helping the ruling bodies to find better rules and principles to apply in the regulation of the public companies.The major efforts are related to the accounting field.

IAS/IFRS

The IASB is an independent organism that is providing new standards and principles that are suitable for all EU countries.

Those principles are compulsory since 2005 for the consolidated financial statement for public companies which assets are traded in markets of other member countries by the Reg. (EC) n.1606/02

The most important principles are those related to:1. true and fair view2. substance over form3. neutrality4. prudence5. completeness

IAS/IFRS

The International Financial Reporting Standards, inside IAS n.1 (“Presentation of the Financial Statement”, par. 8) asks the main following structures of the financial statement (separated and consolidated):1. statement of financial position as at the end of the period

2. statement of comprehensive income for the period

3. statement of changes in equity for the period

4. statement of cash flows for the period

5. notes, comprising summary of significant accounting policies and other explanatory informations

PUBLIC COMPANIES IN UNITED STATES

U.S. COMPANIES DISCLOSURE

The U.S. federal securities laws require publicly traded companies to disclose information on an ongoing basis:

Form 10-K Form 10-Q Form 8-K Form 10-KSB Form 20-F and 40-F

Form 10-K

What is it?

It is the annual report required by the U.S. SEC that gives comprehensive overview about a company following U.S. GAAP:

Company history Organizational structure Executive compensation

Equity Subsidiaries

Audited financial statements Other useful information for investors and shareholders

Form 10-KPrincipal characteristic:

Different form “Annual report to shareholders” Annually redacted

Divided in 4 parts and 15 Items Must be available for any shareholders

EDGAR: internet database

Form 10-KWho has to fill it?

All U.S. public company listed in a stock exchange

Non listed U.S. Companies with >500 owners and >10M$ in assets

Foreign companies can fill Form 20-F (or 40-F)

Different deadlines for different companies' sizes (Form 10-KSB)

Convergence Agenda

IASB and FASB are working on the international convergence of accounting principles (short and long term objectives)

Relevant topics not included in convergence agenda are the classification of:

• Property plant equipment• Share based payments• Inventory

Reconciliation: for adapt 20-F which not use US GAAP company must

reconcile income and equity recalculating them with US accounting system voice by voice adding also a note for each one

Disclosures under IFRS are likely to be less comprehensive

than under U.S. GAAP. Is necessary to look through multiple notes, to piece

together fragmented disclosures from multiple locations in order to obtain

the complete disclosure about a topic.

THANK YOU FOR YOUR ATTENTION