What happens if a company fails to meet regulatory hurdles?

When a company fails to meet regulatory hurdles, the most likely outcome is that the IPO may be delayed or canceled. Regulatory hurdles can include various requirements set forth by financial authorities, such as the Securities and Exchange Commission (SEC) in the United States, which ensure that companies provide adequate disclosures and comply with financial regulations. If a company does not meet these requirements, it cannot proceed with the IPO as planned. This can lead to postponing the offering until the issues are resolved or, in some cases, deciding not to pursue the IPO at all.

Choosing to delay the IPO allows the company time to address shortcomings and work towards compliance, ensuring that the potential investors have access to complete and honest information before deciding to invest. Moreover, regulatory bodies are strict about upholding the integrity of the market; hence, a failure to comply is taken seriously, making a delayed or canceled IPO the most prudent and likely response to such circumstances.