If a Washington company has sold equity securities, the Washington Business Corporations Act gives shareholders certain rights even though the principals may still retain majority ownership of the company.
Where a company has registered a public offering of securities under the Securities Act to sell securities in the State of Washington, the company must provide annual financial information to Washington investors within days of the close of the company's fiscal year during the offering period.
For answers to specific questions, you are urged to contact the Securities Division at A call to the Division will put you in touch with a small business specialist who will attempt to answer your questions.
Additional information is also available on our Small Business Assistance webpage. Your attorney and accountant may also provide assistance. They know you and your business and can help you identify those issues which may need to be discussed in a disclosure document.
This document is meant only to introduce the small business person with the concept of disclosure and the legal requirements relating to giving disclosure in connection with an offering of securities. It should not be relied upon to make a securities offering. There are many other important items with which a person making a securities offering must comply. This document addresses only one of these items.
Set forth below are examples of risk factors normally associated with offerings of start-up or developmental stage businesses which make the securities offered by these companies speculative in nature.
An example of the type of wording normally used to describe the risks of the investment is illustrated by the sample wording appearing under Item 1 of each category. Inclusion of any of the examples of risk factors or additions to them should be determined by whether the risk factor relates to a specific problem faced by the issuer or arising on account of the offering. Mere general negative statements without explanation should be avoided.
Risk factors should be cross-referenced to detailed discussions found elsewhere in the disclosure document. Sample Wording: The Company has never operated profitably since its inception. The Company expects that these losses will continue for the next several years and there is no certainty the Company will ever become profitable.
See Financial Statements. The Company has significant indebtedness - [some of] which will be paid from the proceeds of the offering and benefit current management of the company. Sample Wording: The company is in a start-up period developmental stage and has not engaged in any significant operations to date.
There is no certainty that the company will be successful in overcoming the substantial risks as set forth below in order to advance beyond the start-up period developmental stage. See p. The Company faces competition from existing entities in similar business which have greater resources. The Company uses trademarks and patents, for which royalties are paid, that are not owned by the company. Principals of the Company have prior records in similar or other prior business ventures which resulted in losses to investors.
Sample Wording: Principals of this Company have operated businesses of this type prior to organizing this Company which resulted in losses to investors.
Can I refuse to provide Financial Disclosure and what happens if there is a failure to provide Financial Disclosure? If, within the Court proceedings, full and frank financial disclosure is not provided, there can be consequences for the non-disclosing party which include: The Court drawing adverse inferences from the non-disclosure If the non-disclosure is discovered after an Order has been made, then in some circumstances, the Order can be challenged and may lead to it being set aside Cost Orders can be made against the non-disclosing party and whilst this does not assist with obtaining the missing disclosure, it does act as a punishment The party that has failed to provide full and frank financial disclosure can be found to be in contempt of Court.
Remember, a Statement of Truth on the Form E is signed confirming that full, frank, clear and accurate financial disclosure has been provided and there is a warning at the bottom of the Statement of Truth to say that proceedings for contempt of court may be brought against you if you have signed the statement when you have knowingly failed to provide full, frank, clear and accurate financial disclosure. If the non-disclosing party is found to be in contempt, this can result in them being fined or imprisoned.
It may be decided that the non-disclosing party has committed fraud by failing to provide disclosure which could lead to a fine or imprisonment. How Elite Law Solicitors can help Financial disclosure is the bedrock for any process dealing with the division of assets following the breakdown of a relationship.
Make a Free Enquiry If you have any queries relating to any of the issues discussed in this article or would like any advice or assistance in relation to a financial settlement following a divorce or separation, please make a free enquiry by calling , emailing info elitelawsolicitors.
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Necessary Necessary. Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information. Key Takeaways Federal regulations require the disclosure of all relevant financial information by publicly-listed companies.
In addition to financial data, companies are required to reveal their analysis of their strengths, weaknesses, opportunities, and threats.
Substantive changes to their financial outlooks must be released in a timely fashion. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.
This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Terms Full Disclosure Full disclosure is the general need in business transactions for both parties to tell the whole truth about any material issue pertaining to a transaction. What Is Insider Trading? Insider trading is using material nonpublic information to trade stocks and is illegal unless that information is public or not material.
Regulation Fair Disclosure Reg FD Regulation Fair Disclosure is a rule to prevent selective disclosure by public companies to market professionals and certain shareholders. What Is Insider Information? Insider information is a fact that can be of financial advantage if acted upon before it is generally known to shareholders.
Proxy Statement Definition A proxy statement is a document the SEC requires companies to provide shareholders that includes information needed to make decisions at shareholder meetings.
Partner Links. Related Articles. Fiscal Policy Sarbanes-Oxley Act vs. Your Money. Personal Finance. Your Practice. Popular Courses. What Is a Disclosure? Explained in Plain English Disclosure is the process of making facts or information known to the public. Key Takeaways Disclosure is the process of making facts or information known to the public.
Proper disclosure by corporations is the act of making its customers, investors, and analysts aware of pertinent information. Companies often place disclosures that protect them in case their financial forecasts are wrong due to changing economic conditions. Corporate disclosures also state that investors speak with a financial advisor before investing in the stock since it might not be right for them. Article Sources. Investopedia requires writers to use primary sources to support their work.
These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.
You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.
This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Articles. Equity Analyst. Partner Links. Transparency is investor access to financial information about a company such as their prices, market position, and audited financial reports.
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