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 Montana, as in all U.S. states, an initial public offering (IPO) is governed by both federal and state securities laws. The process allows a private company to become a public company by selling stock to the public. The primary federal regulator for IPOs is the U.S. Securities and Exchange Commission (SEC), which enforces rules that ensure investors are provided with essential information about securities being offered for public sale. To conduct an IPO, a company must file a registration statement, typically including a prospectus, with the SEC. The registration statement must provide detailed information about the company's business, financial statements, and risks involved in the investment. Once the SEC reviews and approves the registration statement, the company can proceed with the IPO. Public companies are subject to ongoing SEC reporting and disclosure requirements, such as annual and quarterly reports, and must comply with regulations like the Sarbanes-Oxley Act. In Montana, the company must also adhere to state securities laws, which are enforced by the Montana Commissioner of Securities and Insurance. These state laws are designed to protect investors and ensure fair dealing in securities transactions within the state. Companies must ensure compliance with both federal and state regulations when conducting an IPO.