SEC Issues Guidance on Registration and Deregistration Under Jobs Act

On April 5, 2012 President Obama signed the JOBS Act into law.  Some of the rules went into effect immediately, such as the ability of an Emerging Growth Company to file a registration statement and seek confidential treatment during the review process.  For this process the EGC would avail itself of the new Securities Act Section 6(e).  The SEC issued, albeit limited, guidance on this process for EGC’s yesterday, April 10, 2012.


SEC Guidance on the JOBS Act

On April 11, 2012, the SEC issued guidance on the JOBS Act amendments to Section 12(g) and Section 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act).  The full text of this guidance, and the guidance issued on new Section 6(e) is available on the SEC website.

The JOBS Act amends Section 12(g) and Section 15(d) of the Exchange Act as to threshold shareholder requirements and registration and deregistration requirements for banks and bank holding companies.  This blog only addresses the rule changes not related to bank or bank holding companies.  The relevant rule changes effective April 5, 2012, are as follows:

1.         The shareholder threshold before requiring registration and subsequent reporting with the SEC has been increased from 500 to either (a) 2,000 or more, or (b) 500 or more unaccredited shareholders;

2.         In calculating the number of shareholders of record for purposes of determining registration requirements, or the ability to deregister (i.e. file a Form 15), Issuers may exclude may exclude those persons that received their shares as part of an employee compensation plan in an exempt transaction (i.e.  unregistered transaction).


Retroactive Effect on JOBS Amendments

Although the amendments are effective April 5, 2012, they have somewhat of a retroactive effect.  So if an Issuer reached the 500 shareholder limit for their fiscal year end prior to April 5, 2012, but has not yet filed a Form 10 registration statement, they no longer have to, unless of course, they have over 2,000 shareholders.  In this case, delinquency is forgiven.  If the Issuer has filed the registration statement but it has not yet gone effective they can withdraw.  Moreover, even if it has gone effective, as long as they are under the 2,000 shareholder limit, they can now file a Form 15 and relieve themselves of further reporting obligations.

Likewise, the new calculation exclusion of employees that received their shares under an exempted employee compensation plan, are in essence retroactive.  An Issuer calculating the number of shareholders it has would use the new rule as a basis of calculation and could therefore exclude qualified employees, whether they are current or past employees or whether they received their shares under a current or prior compensation plan.

The Author

Attorney Laura Anthony,
Founding Partner, Legal & Compliance, LLC
Securities, Reverse Mergers, Corporate Transactions

Securities attorney Laura Anthony provides ongoing corporate counsel to small and mid-size public Companies as well as private Companies intending to go public on the over the counter market including the OTCBB and OTCQB. For almost two decades Ms. Anthony has dedicated her securities law practice towards being “the big firm alternative.” Clients receive fast and efficient cutting-edge legal service without the inherent delays and unnecessary expense of “partner-heavy” securities law firms.

Ms. Anthony’s focus includes but is not limited to crowdfunding, registration statements, PIPE transactions, private placements, reverse mergers, and compliance with the reporting requirements of the Securities Exchange Act of 1934 including Forms 10-Q, 10-K and 8-K and the proxy requirements of Section 14. Moreover, Ms. Anthony represents both target and acquiring companies in reverse mergers and forward mergers, including preparation of deal documents such as Merger Agreements, Stock Purchase Agreements, Asset Purchase Agreements and Reorganization Agreements. Ms. Anthony prepares the necessary documentation and assists in completing the requirements of federal and state securities laws and SRO’s such as FINRA and DTC for corporate changes such as name changes, reverse and forward splits and change of domicile.

Contact Legal & Compliance LLC for a free initial consultation or second opinion on an existing matter.



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