A prerequisite for a company to use an S-3 registration statement is that it owns a class of securities registered under Section 12(g) (or 12(b)) and is otherwise required to file SEC reports for a period of 12 months. For more information on S-3 eligibility, click HERE. Registration under paragraph 12(g) offers many commercial and legal advantages. Here are some of the most compelling benefits. An entity that would otherwise be required to register under paragraph 12(g) may instead register under paragraph 12(b) by registering with a national stock exchange and registering on a national stock exchange. Apart from the aforementioned legal section, the registration process and declarations used are the same as for a registration under Article 12 (g). The definition of «registrant» in Rule 12g5-1 has been amended so that when determining whether an issuer is required to register a class of equity securities with the Commission under section 12(g)(1) of the Stock Exchange Act, an issuer may exclude securities that: You may think so – but the answer is probably «no». Keep in mind that your issuer may have a dormant listing under Section 12(g) and a dormant reporting requirement under Section 15(d). They now come back to life, like Anakin Skywalker, who reappears in his new darth Vader form. See Article 12d(2)(d)(6) (for Section 12(g)) and Article 12d(d)(7) (for Section 15(d)). At the risk of putting you on your toes, we`ll look at sections 12(g) and 15(d) in the next episode. And remember, you have to face these rules – then, only then, you will be a Jedi.
The JOBS Act and the FAST Act raised the thresholds for registration and termination of the registration of a class of equity securities under Section 12(g) of the Exchange Act. As a result of the amendments to the Act, an issuer that is not a bank, bank holding company or savings and loan holding company is required to register a class of equity securities under the Foreign Exchange Act if: As a result of those changes, banks, savings and loan holding companies and bank holding companies can rely on sec.s rules. when making such decisions on the listing of a class of securities and suspending their obligation to submit up-to-date and regular reports. All securities that must be listed on the stock exchange must be registered with the SEC. Detailed requirements for the registration of companies and funds under management are set out in the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940. These three laws provide the framework for the registration of companies, the registration of securities, the issuance of securities in the context of publicly traded and private investment offers, and the trading of securities. Certain other securities are exempt from the calculation of paragraph 12(g), including (i) a security issued under an employee stock option or similar plan that is transferable only in the event of death or incapacity for work; (ii) subject to certain rules, interest or a bank`s participation in a pooled trust fund solely for collective investment schemes; (iii) any class of equity securities that are not outstanding 60 days after the filing of a registration statement in respect of it; (iv) standardised options issued by a clearing house and traded on a national stock exchange; (v) futures contracts in securities traded on a national stock exchange; and (vi) certain compensatory stock options. Form SEC 15-12G exempts companies from some of their reporting requirements under sections 12(g), 12(h), 13, and 15(d) of the Securities Exchange Act of 1934. Companies may use this form if they intend to terminate the listing of a class of securities. Form SEC 15-12G can also help businesses be relieved of certain reporting requirements. When completing Form SEC 15-12G, issuers have the option to terminate or suspend the filing in accordance with the following provisions: Rule 12g-4(a)(1), Rule 12g-4(a)(2), Rule 12h-3(b)(1)(i), Rule 12h-3(b)(1)(ii), Rule 15d-6 and Rule 15d-22(b). In addition, unless an exception is available, a corporation must register in accordance with paragraph 12(g).
if, on the last day of its fiscal year: (i) it has assets of $10 million or more as disclosed in the Corporation`s balance sheet; and (ii) the number of its registered security holders is either 2,000 or more worldwide or 500 persons who are not accredited investors or who are more accredited worldwide. Such a registration declaration must be submitted within 120 days of the last day of the fiscal year. How does a corporation complete its registration under paragraph 12(b)? OK, enough background already. How do we get out of paragraph 12(b)? The answer can be found in Form 25 and Rule 12d2-2. Like Yoda himself, Form 25 is short (on one side), but powerful. Similarly, registration under the Foreign Exchange Act affects the distribution period applicable to an offer under Regulation S. More information on Regulation S can be found HERE. A distribution compliance period is defined in Rule 903 of Regulation S and provides for a holding period during which securities issued in connection with a Settlement S transaction may not be resold to or for the account or benefit of a United States person. There are three categories of distribution compliance periods. Rule 903 imposes obligations on an entity, distributor and all affiliates of the company or distributor to ensure that distribution compliance timelines are met in order to prevent the sale of securities to a U.S. person during the distribution compliance period. Form SEC 15-12G allows companies to terminate their registration in accordance with the provisions required by Article 12(g).
Section 12 of the Securities Exchange Act of 1934 outlines the registration requirements for all types of securities. Article 12(g) deals specifically with registration requirements for enterprises involved in interstate trade. Section 12(h) describes the SEC`s power to provide reporting exceptions for Section 12(g). Rule 144 is the most commonly used exception to remove the restrictive legend and sell securities not listed on the public market. More information on Article 144 can be found HERE and HERE. To apply Rule 144, the security holder must comply with certain requirements, including a holding period. The holding period depends on whether or not the company is subject to sec reporting requirements.1 Admittedly, our favorite resident of the dagobah system doesn`t need another introduction or hyperlink (although a hyperlink would be a good thing – if we think about it, we could also use a lightsaber from time to time).2 The threshold in Section 12(g) is actually 1 million but the 12g-1 rule sets the bar higher at $10 million. Form SEC 15-12G is provided by the Securities and Exchange Commission (SEC) with respect to Sections 12(g), 13, and 15(d) of the Securities Exchange Act of 1934. The form allows issuers to request the termination of a class of listed securities or the suspension of the requirement to file reports mandated by the SEC. It is important that all private corporations with more than 500 shareholders consider the accredited status of their shareholders from the last day of each fiscal year to ensure that they do not inadvertently violate federal securities laws requiring registration.
In times of financial uncertainty and dramatic impact on some people`s net worth due to the Covid crisis, it is all the more important to keep an eye on this ball. All this, companies should consult a competent securities advisor. As mentioned above, a company is required to register in accordance with Article 12(g) if, on the last day of its financial year, the number of its registered security holders is 2,000 or more worldwide or 500 persons who are not qualified investors or more worldwide. The determination of registration holders and the determination of accredited status take place from the last day of the exercise. Permission to use a particular form of registration is determined by consulting the instructions on this form at the time of use. A Form 10 is the general form of registration declaration for a U.S. national corporation; However, Form 8-A may be used by a corporation that is already required to file returns under the Foreign Exchange Act, usually on the basis of the filing of a registration return under the Securities Act, or that, at the same time, qualifies a Class 2 offer statement in respect of that class of securities using Form S-1 or Form S-11. As a general rule, a declaration of registration under the Foreign Exchange Act automatically takes effect on the 60th day following the filing. However, a company may require accelerated efficiency from the SEC.