An initial public offering—also known as an IPO—is the process by which a privately-owned/privately-held company begins selling stock to outside investors, and transforms the company from a private company to a public company. Shares of public companies (also called publicly-traded companies) are usually traded on one of two stock exchanges—the New York Stock Exchange or the Nasdaq. A public company can raise money (capital) it needs by issuing and selling shares of its stock on the stock exchange on which it is listed. But public companies must comply with significant reporting and disclosure requirements established by the U.S. Securities and Exchange Commission that private companies do not have to comply with.

In Arkansas, as in all states, an initial public offering (IPO) is governed primarily by federal securities laws, particularly the Securities Act of 1933 and the Securities Exchange Act of 1934, which are enforced by the U.S. Securities and Exchange Commission (SEC). These laws require companies to file registration statements and prospectuses detailing financial and other significant information about the company, to ensure that investors have enough information to make informed decisions. Once a company goes public, it must adhere to ongoing reporting obligations, including quarterly and annual financial reports, and disclosure of material events that shareholders should know about. While state law is generally preempted by federal law in this area, Arkansas, like other states, has its own securities regulations, known as 'blue sky laws.' These laws are designed to protect investors from fraud and are enforced by the Arkansas Securities Department. However, most of the registration and reporting requirements are covered under federal law, and companies that comply with federal regulations typically qualify for exemptions from state registration requirements under the National Securities Markets Improvement Act of 1996.