A public company with a class of securities registered under Section 12 or which is subject to Section 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) must file Section 13 reports with the SEC (10-K, 10-Q and 8-K). A company registers securities under Section 12 by filing an Exchange Act registration statement such as on Form 10, Form 20-F or Form 8-A. A company becomes subject to Section 15(d) by filing a registration statement under the Securities Act of 1933, as amended (“Securities Act”) such as a Form S-1 or F-1. The Section 15(d) reporting requirements are scaled down from the full Exchange Act reporting requirements for a company with a class of securities registered under Section 12.
I have previously written about suspending the duty to file reports under Section 15(d) and the related question of determining voluntary reporting status (see HERE). This blog addresses the termination of registration under Section 12.
Terminating Registration under Section 12
Whereas reporting obligations under Section 15(d) can only be suspended and not terminated, registration under Section 12, and accordingly the requirement to file reports as a Section 12 registrant, can be terminated. However, even if a Section 12 reporting obligation is terminated, if a company has filed a Securities Act registration statement (such as a Form S-1 or F-1) a Section 15(d) obligation remains, and even if temporarily suspended, can be resurrected when the fact basis for suspension changes.
Exchange Act Rule 12g-4 allows for the termination of registration under Section 12 if the class of securities being deregistered is held of record by (i) fewer than 300 shareholders or, if a bank holding company, fewer than 1,200 shareholders; or (ii) fewer than 500 shareholders and less than $10 million in assets on the last day of each of the company’s three most recent fiscal years.
Termination of registration under Section 12 is effectuated through the filing of a Form 15. Under Rule 12g-4, termination is effective 90 days after the filing of a Form 15, or such shorter time period that the SEC may determine upon request. However, the company’s duty to file reports with the SEC terminates immediately upon filing the Form 15 and as such, in practice, it is rare to request an acceleration of the effectiveness of a Form 15. The 90-day period gives the company time to withdraw the Form 15, or for the SEC to deny it (such as if the qualifications are not satisfied). If the Form 15 is subsequently withdrawn or denied, the company must file any missed reports within 60 days.
Although the duty to file reports under Section 13 is immediately terminated upon the filing of a Form 15, the duty to file reports in accordance with the Section 14 proxy and tender offer rules, Section 16 for officer/director and 10% shareholders, and Section 13 for 5% or greater shareholder does not terminate until 90 days after the filing of the Form 15.
A Form 15 does not relieve the responsibility to file any currently due or delinquent reports. Accordingly, if a company files a Form 12b-25 extension in connection with a periodic report and then files a Form 15, it would still need to file the report to which the Form 12b-25 related.
Determining Holder of Record
The calculation of shareholders of record for purposes of Section 12 and Rule 12g-4 is made in accordance with Exchange Act Rule 12g5-1. Generally each entity or custodian shareholder is counted as a single shareholder. That is, a broker, dealer, bank or nominee may be counted as a single shareholder, even if they hold shares on behalf of several different beneficial shareholders. In addition, persons that received the securities under an employee compensation plan that was exempt from U.S. registration may be excluded. Securities issued in a Regulation A, Tier 2 offering may also be excluded.
Laura Anthony, Esq.
Anthony L.G., PLLC
A Corporate Law Firm
Securities attorney Laura Anthony and her experienced legal team provide ongoing corporate counsel to small and mid-size private companies, OTC and exchange traded public companies as well as private companies going public on the Nasdaq, NYSE American or over-the-counter market, such as the OTCQB and OTCQX. For more than two decades Anthony L.G., PLLC has served clients providing fast, personalized, cutting-edge legal service. The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker-dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions, securities token offerings and initial coin offerings, Regulation A/A+ offerings, as well as registration statements on Forms S-1, S-3, S-8 and merger registrations on Form S-4; compliance with the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers; applications to and compliance with the corporate governance requirements of securities exchanges including Nasdaq and NYSE American; general corporate; and general contract and business transactions. Ms. Anthony and her firm represent both target and acquiring companies in merger and acquisition transactions, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. The ALG legal team assists Pubcos in complying with the requirements of federal and state securities laws and SROs such as FINRA for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the small-cap and middle market’s top source for industry news, and the producer and host of LawCast.com, Corporate Finance in Focus. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.
Ms. Anthony is a member of various professional organizations including the Crowdfunding Professional Association (CfPA), Palm Beach County Bar Association, the Florida Bar Association, the American Bar Association and the ABA committees on Federal Securities Regulations and Private Equity and Venture Capital. She is a supporter of several community charities including siting on the board of directors of the American Red Cross for Palm Beach and Martin Counties, and providing financial support to the Susan Komen Foundation, Opportunity, Inc., New Hope Charities, the Society of the Four Arts, the Norton Museum of Art, Palm Beach County Zoo Society, the Kravis Center for the Performing Arts and several others. She is also a financial and hands-on supporter of Palm Beach Day Academy, one of Palm Beach’s oldest and most respected educational institutions. She currently resides in Palm Beach with her husband and daughter.
Ms. Anthony is an honors graduate from Florida State University College of Law and has been practicing law since 1993.
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