Cleaning up compliance records ahead of a Series B
A startup three years in was about to raise a Series B. We found and closed the compliance gaps before investor lawyers did.
A startup had grown quickly and kept its books well, but compliance had been handled by whoever had time. Annual filings were mostly up to date. The statutory registers, board minutes and the ESOP records were not.
A Series B investor’s lawyers would check each of these, and the founders did not know how many gaps they would find.
What we did
- Step 1
Audit the record
We checked annual filings, director and shareholder records, statutory registers, board and shareholder minutes, and the filings for every earlier allotment.
- Step 2
Rank the gaps
We grouped what we found into those fixable by a late filing, those needing board or shareholder ratification, and those needing the regulator’s consent.
- Step 3
Fix in order
We filed what was late, prepared ratification resolutions for what the board had missed, and prepared the application for anything that required regulator consent.
- Step 4
Install a calendar and an owner
We set up a yearly compliance calendar with an owner for each line, and a monthly check so gaps would not build up again.
Gaps closed, or on record with a plan, before the lawyers asked.
When the investor’s lawyers ran their checks, the company could show the filings made, the resolutions passed and a short note on the few items still open.
The ESOP records matched the cap table and the filings.
Late filings made
Overdue filings were submitted with the additional fees that applied.
Ratifications on record
Missed approvals were regularised through board and shareholder resolutions.
A monthly check
A named owner reviewed the compliance calendar every month.
Most startup compliance gaps are small and fixable. The costly ones are those found by someone else first.
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