Good communication = Good governance

Good corporate governance is about creating trust, accountability, and transparency — and a clear communication strategy underpins all of these. It’s a stark assessment but during the IPO process, clear communication can be the difference between success and failure.

I am, at my core, a company secretary. Therefore my modus operandi, ultimately, is to listen to my clients and help them enhance their corporate governance. Sounds straight forward. However, a considerable part of what I do involves not only listening but guiding, advising and helping to identify practical solutions that fit that particular company. I wear many different hats in my role, and balancing the service part of my job with the equally important adviser part is key.

Ensuring a smooth, successful IPO is no small feat. I know from first-hand experience how taking a company to the next stage of its growth is often complicated, confusing and time-consuming. Which is why clear and concise communication needs to happen at every stage - before, during and after an IPO process. A company needs lots of support and there are many people involved in the process. From registrars, project managers, lawyers, bankers, accountants and financial PR firms — everyone needs to be kept in the loop as early as possible.

Once the decision to float has been made, every second spent in the run up to the listing itself is crucial. Indeed, the sooner a company engages all the relevant stakeholders the better. This process can be challenging. There will be many all-party calls and they could be perceived as over-kill to already brimming diaries, but let me assure you: they are necessary. This is the crucial time for all parties to speak and make themselves heard. This is where the minutia will be ironed out and dropped balls, caught.

There is, of course, a balance to be struck when the type of transaction is itself confidential — over-communication can bring its own risks — but it is important to manage expectations when aiming for a smooth and frictionless transition to listed status.

A new board, in a new world

During the process, a new board will be formed, and any new directors will need to be inducted into the organisation. Corporate governance and regulatory training will need to take place. Senior management as well as your board will need educating to new rules and regulations, and they will need to understand what will be expected of them in the new listed world.

Importantly, existing shareholders mustn’t be forgotten. An ongoing, two-way dialogue with the company’s shareholders throughout the whole listing process will give the board a clear understanding of their perspective. And once listed, shareholder communication can and indeed should be achieved through more than just the annual report and the annual general meeting — it will be important for the board to understand the shareholder view on the company’s performance against strategy and its approach to governance.

As a publicly traded company, the list of important stakeholders you will need to keep informed will continue to grow. Regulators like the FCA, your customers, suppliers and local communities will all need to be kept in the picture. Regular communication with them is not only prudent but expected, and the company’s approach to stakeholder engagement will need to be disclosed.

So many questions to be answered. What are the Market Abuse Regulations? How do you define insider information? Are our internal controls sufficient? What needs to be included in the annual report? What is section 172 of the Companies Act and why does it matter? How should you conduct your first AGM? As a newly listed entity, these issues will need serious attention, and you will need support to make sure everything is covered. But the good news is that the help and support is out there and the sooner you engage in these issues and get the advice you need, the better.

My final thoughts about the IPO process — it is exciting, demanding, and a huge achievement for a company, its directors and employees. Yes, there are a lot of moving parts to focus on, but when you start planning early, you can better enjoy the challenge — and the reward!

To hear more from Maddie Scrafton, Managing Director, UK Governance Services at Computershare, watch this video.