Essential Guide for IPO Governance Requirements in U.S. & Canadian Markets

If you are considering listing your company on a U.S. or Canadian Stock Exchange (IPO), you must fully understand their respective IPO governance requirements and recognize the importance of early preparation.

Preparing for an IPO is not just a financial milestone - it’s a governance transformation. Companies often assume that the biggest challenges lie in financial reporting or underwriting. In reality, weak corporate governance is often the cause of IPO delays and is the biggest obstacle to a smooth, successful IPO.

Why Governance Drives IPO Success

Regardless of where you list (ie: U.S. or Canada) an organization's governance maturity determines the following aspects related to IPO listing success:

• Investor Confidence & Valuation: Strong governance signals discipline, predictability, and transparency - key factors that influence valuation. Banks and underwriters are far more willing to champion a listing with governance predictability. Investors reward transparency, control discipline and board strength. Weak governance = higher perceived risk = lower valuation.

  
  

• Speed & Efficiency: Boards with clear roles, independent oversight, and risk systems reduce regulatory friction and rework. Regulators review company governance discipline as an essential part of risk management. Strong governance reduces queries, re-filings and conditional approvals.

  
  

• Execution Discipline: Control frameworks, internal audit readiness, and financial reporting maturity help build a high-functioning public company and send strong signals to analysts and the market. Analysts cannot model or forecast companies that lack reporting accuracy or clarity of strategy.

  
  

• Post-IPO Stability: Governance maturity safeguards against restatements, compliance breaches / failures, governance shocks, trading halts, board / management conflict and shareholder disputes.

  
  

• Strategic Alignment: Well-governed companies align strategy, resource allocation, and risk oversight - consistently making strategic and defensible decisions.

Why Governance Must Start Early

The mistake most organizations make is believing that governance can be done 'later.' In fact, the opposite is true. Effective and compliant governance structures, processes and practices need to be established before you start the formal IPO process. The reasons for this, generally, are as follows:

• committees must have independent directors

• board composition needs to be balanced, skilled and accountable.

• control environments must be documented and functioning

• financial controls need 12 - 18 months of evidence

• reporting disciplines must demonstrate maturity

• strategic governance must be aligned, defensible and applied

• risk frameworks must be operating

• ESG and sustainability expectations are rising.

  
  

Given the governance standards that must be met, you cannot accelerate governance at the last moment - experienced operators in the capital markets will detect this and likely take a less than favorable position with regard to your company's valuation, etc.

The U.S. and Canadian capital markets have different governance requirements, different exemptions for smaller companies, and different investor expectations. Your readiness depends on understanding these distinctions well in advance of filing.

U.S. Regulatory & Listing Requirements

When listing under U.S. exchanges like NYSE or Nasdaq, public companies must satisfy rigorous governance expectations, including the following:

• Sarbanes–Oxley Act (SOX): Establishing and testing internal control over financial reporting (ICFR) to ensure accurate, reliable disclosure, audit requirements.

• SEC governance rules & disclosure obligations: Formal management certifications, conflict-of-interest policies, CEO / CFO certifications, executive pay disclosures, and more.

• Exchange (NYSE or Nasdaq) governance requirements:

  • majority independent board

  • independent audit, compensation and nominating committees

  • financial literacy requirements for audit committee members

  • corporate governance guidelines

  • whistleblower frameworks

  • related-party transaction oversight

• Internal Controls Over Financial Reporting (ICFR)

• Disclosure Controls and Procedures (DCP)

• Code of conduct and ethics frameworks

• CEO / CFO responsibility for accuracy and control discipline.

U.S. Scaled Disclosure for Smaller Companies

For Smaller Reporting Companies (SRCs) and Emerging Growth Companies (EGCs), the SEC provides scaled governance and reporting requirements as per the following:

• Emerging Growth Companies (EGCs) under the JOBS Act:

  • Exemption from auditor attestation under SOX 404(b) (no mandatory auditor attestation of internal controls)

  • Scaled executive compensation and financial disclosures

  • Longer transition periods for accounting standards

  • Less-intensive disclosure on IPO registration forms (e.g., on Form S-1).

    
    

• Smaller Reporting Companies (SRCs):

  • Only two years of audited financial statements required (vs. three)

  • Simplified MD&A (Management’s Discussion & Analysis) disclosures

  • Reduced executive compensation governance disclosure

  • Less onerous board / governance reporting obligations

These scaled disclosure requirements make IPO readiness more accessible - but strong governance remains essential. Institutional investors, underwriters, and regulators still evaluate board effectiveness, risk frameworks, and control discipline as part of any IPO process. Even where exemptions exist, markets reward companies that voluntarily demonstrate higher governance maturity.

Canadian Governance Regulation for Public Listings

In Canada, companies listing on the TSX (Toronto Stock Exchange) must comply with governance standards such as:

• National Instrument 58-101 (Disclosure of Corporate Governance Practices)

• National Policy 58-201 (Corporate Governance Guidelines)

• NI 52-110 Audit Committees (independence, expertise, responsibilities)

• CEO / CFO certification of internal controls (based on NI 52-109)

• robust disclosure and financial reporting standards

• Board charters, board independence, committee mandates, risk oversight, succession planning, and more. While Canada is principles-based, TSX standards still expect:

  • independent chair or strong lead independent director

  • independent audit committee

  • written governance guidelines

  • clear mandate for the board

  • succession planning

  • strong risk management

  • strategic oversight discipline.

Canadian TSX-V (Venture Exchange) Exemptions for Smaller Companies

To support smaller companies, the Canadian Securities Administrators (CSA) have put in place temporary capital-raising exemptions:

• Reduced financial statements requirement: Only two years of audited financials required in an IPO prospectus (reduced from three).

• Follow-on financing exemption (12 months after IPO): Eligible newly listed issuers may raise up to the lesser of CAD $100 million or 20% of market value, under a streamlined prospectus exemption.

• Listed Issuer Financing Exemption (LIFE): Reporting issuers can raise up to a maximum of CAD $50 million within a 12-month period (or up to CAD $25 million, or 20% of market cap, whichever is greater) with simplified disclosure.

These CSA exemptions reduce the regulatory burden on smaller issuers - however investors and underwriters still expect sound board governance, committee structure, risk frameworks, and internal controls. Additionally, Canadian institutional investors increasingly expect TSX-V companies to voluntarily raise their governance maturity to TSX-like standards over time.

How Executive Agility Helps With IPO Governance & IPO Readiness

We help organizations accelerate IPO readiness - whether you're preparing for a U.S. SEC listing or a Canadian CSA-regulated IPO. We do this by building scalable governance structures, risk frameworks, and board discipline.

We work with companies to strengthen governance across the following areas:

• Design or refine board structure (committees, charters, independence)

• Run board effectiveness reviews and governance maturity assessments

• Implement controls and internal reporting systems (SOX-readiness, ICFR, DCP)

• Build risk management frameworks, provide oversight & escalation frameworks

• Set up reporting and disclosure processes (pre-prospectus, S-1 or prospectus, MD&A)

• Develop CEO / CFO governance discipline, accountability, and readiness frameworks

• Establish governance systems, processes and decision rights (delegation of authority)

• Ensure strategy-to-execution alignment incorporating structure, people, processes and systems.

We can also leverage our 'ready to go now' instantly assembled professional network of audit, accounting, legal, EDGAR / SEDAR, and underwriting specialists.

All clients have the assurance of quality and competence, through our 'Activate & Deliver™ 30 / 90-day framework,' whereby we can either embed executive leadership into your business, or work remotely - always delivering measurable progress - not just advice.

Start Your IPO Governance Journey Today

If you are preparing for an IPO (in the U.S., Canada, or cross-border), governance is one of your most important levers. Weak governance erodes value and investor trust - but early-stage maturity builds credibility, accelerates readiness, and reduces risk.

Contact us at info@executive-agility.com to assess your current board governance, organizational governance, risk framework, and IPO readiness. Engage Executive Agility to build a roadmap for strong, scalable, investor-grade governance that significantly increases your IPO success.