On April 11, 2012, the Securities and Exchange Commission published a second set of Frequently Asked Questions, or FAQs, providing guidance on the implementation and application of the JOBS Act (Jumpstart Our Business Startups Act). The FAQs specifically address questions relating to the registration and deregistration of securities under Section 12(g) or to suspend reporting obligations under Section 15(d).
Obligations to Register Securities
The FAQs address how the amendments to Section 12(g) affect the obligations of issuers to register securities where such obligations were triggered as of a fiscal year-end before April 5, 2012. The JOBS Act increased the threshold requiring registration with the SEC for issuers other than bank holding companies to either (a) 2,000 holders of record or (b) 500 persons who are not accredited investors, and for issuers that are bank holding companies to 2,000 or more holders of record.
For issuers other than bank holding companies, if the issuer triggered a Section 12(g) reporting obligation for a class of securities as of a fiscal year-end prior to April 5, 2012, but would not trigger such obligation under the amended holders of record threshold in the JOBS Act, and the issuer has not yet registered that security under Section 12(g), then the issuer would no longer be subject to the registration obligation with respect to that security.
If an issuer, including bank holding companies, has filed a registration statement under the Securities Exchange Act of 1934, as amended, and the registration statement is not yet effective, the issuer may withdraw the registration statement. However, if an issuer has registered the security under Section 12(g), the issuer would need to continue that registration unless it meets the requirements for deregistration under Section 12(g).
Terminating Registration for Bank Holding Companies
After April 5, 2012, a bank holding company may file a Form 15 to terminate the Section 12(g) registration with respect to a security if such security is held of record by fewer than 1,200 persons. As the Form 15 has not yet been amended to reflect the new provisions of the JOBS Act, the issuer should include an explanatory note in its Form 15 indicating that it is relying on Exchange Act Section 12(g)(4) to terminate its duty to file reports with respect to that security. Until the registration is terminated 90 days after filing of the Form 15, the issuer will be required to file all reports required under Sections 13(a), 14, and 16 of the Exchange Act. A bank holding company may apply for immediate suspension of its Section 13(a) reporting obligations, effective upon the filing of a Form 15, if it meets all the requirements of Rule 12g-4.
Suspension of Reporting Obligations for Bank Holding Companies
A bank holding company may suspend its obligations during the current fiscal year to file reports under Section 15(d) with respect to a security registered under the Securities Act if such security was held of record by fewer than 1,200 persons as of the first day of the fiscal year; such suspension would be deemed to have occurred as of the first day of such fiscal year.
Where, during the current fiscal year, a bank holding company has a registration statement that becomes effective or is updated, it will not be able to suspend its reporting obligations under Section 15(d) for the current fiscal year. However, if the bank holding company (a) has a security held of record by fewer than 1,200 persons as of the first day of the current fiscal year, (b) has a registration statement that is updated pursuant to Section 10(a)(3) of the Securities Act, and (c) did not make any sales of such security under such registration statement during the current fiscal year, then the bank holding company may seek no-action relief to suspend its Section 15(d) reporting obligations.
Revised “Held of Record” Definition
Section 503 of the JOBS Act requires the SEC to revise the definition of “held of record” to provide that the definition shall not include securities held by persons who have received the securities pursuant to an employee compensation plan in transactions exempt from the registration requirements of the Securities Act of 1933, as amended. An issuer, including bank holding companies, may exclude such persons, whether or not the person is a current employee of the issuer, from its holder of record calculation before the effective date of the revised definition.
Members of Ballard Spahr’s Securities Group are available to assist clients as they prepare to address these new requirements. Please contact Justin P. Klein, 215.864.8606 or firstname.lastname@example.org; Gerald J. Guarcini, 215-864-8625 or email@example.com; Mary J. Mullany, 215-864-8631 or firstname.lastname@example.org; Katayun I. Jaffari, 215-864-8475 or email@example.com; Amit Kakkar, 215-864-8265 or firstname.lastname@example.org; or any member of the Securities Group with any questions.
Copyright © 2012 by Ballard Spahr LLP.
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