Let the experts at A2Q2 navigate the choppy waters of going public through a de-SPAC for you. Whether you are an Emerging Growth Company or an Accelerated Filer, we’ve got a proven strategy and customizable tools to ensure your seamless transition into SOX compliance.
How long have you worked with A2Q2?
I’ve been working with Kim and the team for 10-15 years. The experience has been consistently good over the years, and this engagement is no different.
EMERGING GROWTH COMPANY
Immediately after you complete your de-SPAC SOX requirements begin to apply to you. As an Emerging Growth Company you need to follow three key SOX provisions:
- Section 301 – Set up a confidential whistleblower hotline for the reporting of potential financial fraud
- Section 302 – Set up internal controls to ensure accurate financial disclosures (typically through a Disclosure Committee)
- Section 906 – Your CEO and CFO must certify that financial disclosures are accurate and complete
SOX 404A will become effective during your first full calendar year and will require you set in place internal controls over your financial reporting. Our experts at A2Q2 will arm you with business strategy plans, performance improvement guidelines, and all the necessary guidance and mentorship you might need as you phase through this process.
DE-SPAC & SOX 302
As an operating company, when you merge with a public company (your SPAC sponsor), you are now the public company and SOX compliance becomes relevant for you immediately, starting with Section 302. Forming a Disclosure Committee is important to ensure these requirements are met.
At A2Q2 we have experience setting up Disclosure Committees and can help you ease into SOX 302 compliance. We are here to support you with education and coaching before, during, and after the de-SPAC process.
When should you set up the Disclosure Committee in a de-SPAC?
- Right after the merger is approved or,
- After the de-SPAC occurred
You will need to be ready for your first 10Q or 10K filing. The sooner you set up the Disclosure Committee the sooner you can begin to build the muscle memory of the sequence of events that needs to happen. You only have 45 days after a quarter-end to file your 10Q and only a certain number of days to file your 10K at year-end.
After a de-SPAC, who is on the Disclosure Committee?
The membership of the Disclosure Committee after a de-SPAC will be much the same as a traditional IPO company Disclosure Committee. However, you will want to include as an observer a member of management from the SPAC (sponsor organization). After the de-SPAC process, this person can be helpful during the first several quarters in addressing any complexities or potential liabilities.
ACCELERATED FILER
Immediately after you complete your de-SPAC, SOX requirements begin to apply to you. As an accelerated filer you must set up all four of the key SOX provisions:
- Section 301 – Set up a confidential whistleblower hotline for the reporting of potential financial fraud
- Section 302 – Set up internal controls to ensure accurate financial disclosures (typically through a Disclosure Committee)
- Section 906 – Your CEO and CFO must certify that financial disclosures are accurate and complete
- Section 404
- SOX 404A: Management verifies internal controls are effective over financial reporting
- SOX 404B: External auditors attest to the effectiveness of your internal controls
For Accelerated Filers, attestation (404B) is required for the first complete fiscal year following your de-SPAC. This can be a big effort for hyper-growth companies because of changing processes and procedures to accommodate growth. Do not underestimate this effort because your accounting staff already has a full plate running the business.
When you partner with A2Q2, we start preparing for SOX 404B compliance well in advance of your first filing of the registration statement.
