Direct Public Offering Definition
Direct Public Offering or DPO is a term that is used to describe the process of offering shares by a business enterprise or a non-profit organization to the general public. Once the process of registration of the DPO is completed and approved, the business or non-profit organizations is free to advertise their offering in some newspaper or magazines or through social media or wherever they wish to as long as the proper regulations and laws are met IE: Blue Sky Laws, etc.
In general a DPO includes the offering for an investment, both by accredited and non-accredited investors. The offering of shares by the corporation is made directly without the mediation of an investment banker or the agent hence the term direct public offering, as you are connecting directly to the public.
There are certain procedures and laws that needs to be followed to complete the process successfully. These procedures can be summed up and explained with the following examples: Let us suppose that you are running an organization in the state of Washington, where it is operating under the laws and regulations set by the Washington state authorities. The product that your company is offering is also used mostly by the local residents from whom you also want to raise funds for your company by offering them the shares of the companies by running the process of the DPO. If you want to start the process of a direct public offering, you do not need any special requirements to be met since the offering is in the same state other than pay whats called a blue sky fee, which allows the sale of the securities in that particular state. The only thing that you have to do is to register this offering with the securities and exchange commission. With the help of an experienced going public advisors, the DPO process can be completed in under six months, as long as the proper steps are followed. You should start with retaining a going public advisors who has real experience and connections in the industry, this will save you a lot of time, money and keep you from some potential headaches in the long run. Our consultants will help you with all the necessary preparation. Once everything is in order the process starts by filling out an application form that includes the information regarding your business, your investors, stakeholders, management, your company’s financial condition and all the risk factors that should be known by the investors before making an investment in your company etc, this is known as an S-1 filing. The SEC will then verify the information and would either directly accept it or raise the relevant queries that should be addressed by the company immediately. After the complete satisfaction, the state would allow you to offer your securities to raise investment by the general public of Washington.
There are certain companies that run the business beyond national boundaries or are operating their business globally. For such situations, it is still possible for you to raise investment capital for your company through DPO by hiring an advisors to assist with preparation and filling the registration process with the SEC. In case you are a non-profit organization you even do not have to go through this process at all. And for international DPO, the permission of the state, where you want to do DPO, would be necessarily required.
Generally there is no restriction for the total number of investors for a Direct Public Offering DPO but it is highly recommended that the number of unaccredited investors should not be more than 500 and the number of total investors involved in a single DPO should not exceed beyond 2000.
Direct Public Offering Definition