D&O Questionnaires for Public Companies & Private Placements

When preparing a registration statement for a public offering of securities or periodic report required under the Securities Exchange Act of 1934, as amended, counsel will rely heavily on the information provided in questionnaires circulated to officers, directors and principal shareholders (i.e., shareholders that beneficially own 5% or more of any class of the company’s securities). While the requirements for each form or registration statement may vary, each document must include a wide range of detailed information regarding officers, directors and principal shareholders, including biographical information on officers and directors, a description of shareholdings, and compensation for senior executives. The primary focus of the questionnaire is to obtain objectively verifiable information, not opinions from the respondents regarding the company's business activities or internal controls. For example, while directors should presumably be aware of the existence of disclosure controls and procedures, background information on that topic is best collected through interviews and observations, as well as copies of written policies adopted by the board of directors. The questions should, of course, be adapted to the company's particular circumstances and line of business. If the company is subject to other types of regulation, additional questions may be inserted into the questionnaire to collect information that may be of interest to regulators other than the Securities and Exchange Commission.  For example of questionnaires that can be used for public companies, see the Master Forms appearing at §§ 151:138 and 290:90 in Business Transactions Solutions on Westlaw Next.

An abbreviated form of a public company questionnaire should also be used by private companies in conjunction with any private placement memorandum, prospectus, business plan, or other document containing disclosures about a proposed or existing business entity to facilitate full disclosure and satisfy due diligence requirements. A number of the questions may be inapplicable where the entity is yet to be formed; with minor revisions, however, the form may be used in conjunction with a pre-incorporation agreement.  See the Master Form appearing at § 152:167 in Business Transactions Solutions and the fuller discussion in Offering and Disclosure Documents (Ch. 152).

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