By Laura Anthony, Esq.
Non-bank, Bank Holding Company and Saving and Loan Holding Company Issuers
Title V and Title VI of The JOBS Act amended Section 12(g) and Section 15(d) of the Exchange Act. Section 501 of Title V amended Section 12(g) of the Exchange Act to increase the “holders of record” threshold for triggering Section 12(g) registration for issuers with total assets of more than $10 million (other than banks and bank holding companies) from 500 or more persons to either (i) 2,000 or more persons or (ii) 500 or more persons who are not accredited investors. Issuers are required to register within 120 days after its fiscal year-end, if on the day of such fiscal year-end, it meets these thresholds.
Although Section 501 went effective upon passage of the JOBS Act, the automatic amendments did not include a change to the deregistration provisions under Section 12(g). Accordingly, since April 2012, a company would not be required to register until it had 2,000 shareholders of record or 500 or more persons who are not accredited investors, but could not deregister unless it had fewer than 300 shareholders, or 500 shareholders for those companies with less than $10 million in assets.
The new rules have now aligned the right to terminate registration or suspend reporting obligations with the higher threshold amounts.
With the passage of the new rules, together with all the JOBS Act rules enacted previously, a company is not required to register a class of securities under Section 12(g) if, on the last day of its most recent fiscal year: (i) the company has total assets not exceeding $10 million; or (ii) the class of securities is held of record by fewer than 2,000 persons or 500 persons that are not accredited as defined in Securities Act rule 501.
Bank, Bank Holding Company and Saving and Loan Holding Company Issuers
Section 601 of the JOBS Act amended Section 12(g) to increase the total assets to $10 million and the holders of record threshold for triggering registration for banks and bank holding companies, as such term is defined in the Bank Holding Company Act of 1956, as of any fiscal year-end after April 5, 2012, from 300 or more persons to 2,000 or more persons. Similarly, Section 601 of the JOBS Act amended Sections 12 and 15 of the Exchange Act to increase the holders of record threshold for deregistration and suspension of reporting obligations for banks and bank holding companies from 300 to 1,200 persons.
Following enactment of the JOBS Act, regulators realized that the Section 601 provisions had inadvertently left out saving and loan holding companies from the new registration and deregistration threshold changes. Accordingly, both the SEC through rule making, and the legislature through the FAST Act, have implemented changes to correct the oversight and include saving and loan holding companies in these changes. Following implementation of the FAST Act, the SEC also issued guidance through Compliance and Disclosure Interpretations (C&DI) to help clarify the provisions. My blog on that guidance can be read HERE.
The new rules clean up the procedures and timing of termination of registration for banks, bank holding companies and savings and loan holding companies as well such that these entities may immediately terminate registration upon the filing of a Form 15 rather than the existing procedures, which required the entities to wait 90 days after filing the Form 15 to be relieved of their obligations. Similarly, the existing procedures only allowed for the suspension of reporting obligations at the beginning of a fiscal year. The new rules allow banks, bank holding companies and savings and loan holding companies to suspend reporting obligations, effective immediately, at any time during the year by filing a Form 15, as long as they meet the thresholds for such suspension.
Note 1: Read Part I of this Article. Click HERE
Note 2: Original appeared on Legal & Compliance, LLC on 10 May 2016. Click HERE
Securities attorney Laura Anthony is the founding partner of Legal & Compliance, LLC, a corporate, securities and business transactions law firm. The firm’s experienced legal team provides ongoing corporate counsel to small and mid-size private companies, OTC and exchange traded issuers as well as private companies going public on the NASDAQ, NYSE MKT or over-the-counter market, such as the OTCQB and OTCQX. For nearly two decades Legal & Compliance, LLC 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.