I was asked to join a panel on Risk from a Board member’s perspective at the 65th annual convention of the Society in Colorado Springs last week and found a weath of information about new governance procedures and the new paid role of the whistleblower for the SEC which may be game changing. SEC reporting in the small and mid cap companies is a daunting task, because you are managing and monitoring the securites disclosure process internally and doing “more with less”. How to effectively use outside counsel is key, because small and mid sized companies rarely have insiders who know all the pitfalls around equity plans and stock exchange listing requirements.
The issues for smaller reporting companies are numerous and becoming more so with the impact of reporting requirements using XBRL. Inside the company someone must read the rules-SEC, applicable exchange, state law and relevant proxy advisory positions, as well as monitor new developments, suce as Dodd-Frank updates. The role of the Corporate Secretary is key.
Documents are a team effort and involve legal, financial, investor relations, communications, auditing, HR, risk management functions( which are different for biotech, than other industries.) The draftspersons need to know: the company and its operations and history, competitior disclosures, management and/or investor “hot buttons” and the personalities involved. Managing more entrpreneurial businesses and personalities involves obtaining buy-in at an early stage and educating and managing less eperienced executives and directors. I for one would like to see methods of teaching and processes that apply some consequences if the directors don’t continue their education. Do you have helpful stories and ideas to share?