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What is a Corporate Financing Committee?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 17 October 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Corporate financing committees are a form of regulatory committee that is charged with the responsibility of evaluating the underwriting terms and conditions that apply to public companies that are established in a given nation. The main function of a corporate financing committee is to make sure that these terms and conditions are fair to all parties involved. While the exact composition of a committee of this type may vary from one country to another, the essential purpose remains the same: establish a working relationship that is fair to both companies that issue securities and to the investors who purchase them.

In the United States, there is a formal Corporate Financing Committee that is established under the auspices of the National Association of Securities Dealers, or NASD. This committee is self-regulating, in that it is not accountable to any single investor or any investment market that operates within the USA. Instead, the Corporate Financing Committee focuses on making sure that all entities associated with NASD follow the rules and regulations issued by the Securities and Exchange Commission. The Committee also seeks to promote the standards that are set by NASD. This is accomplished by monitoring the investing activity conducted by all members of the Association.

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The powers of the Corporate Financing Committee are somewhat limited. It is possible for the Committee to suspend or even terminate the membership of a given member from the NASD roster. The Committee can also limit the ability of the expelled member to participate in certain exchanges. However, it does not have the authority to institute legal action against an expelled member. Instead, the Corporate Financing Committee would turn over its findings to the SEC, who would evaluate the data and determine if any further action was necessary.

The formation of a Corporate Financing Committee is one of the ways that securities dealers attempt to not only comply with national regulations, but also maintain standards that sometimes go above and beyond the basic requirements of law. Because of the nature of the Committee, it is possible for the standards to be revised to meet current economic situations while still remaining in compliance with the laws of the land.

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