Tag Archives: Current Pink

SEC Adopts Amendments to Implement JOBS Act and FAST Act Changes for Exchange Act Registration Requirements

The Securities and Exchange Commission has approved amendments to revise the thresholds for registration of securities, termination of registration, and suspension of reporting obligations under Section 12(g) of the Securities Exchange Act of 1934.

How Do the Amendments Affect SEC Reporting Companies?

For the majority of microcap OTC Bulletin Board and OTC Markets public companies, the practical effect of these amendments make it easier for delinquent SEC reporting companies which are facing de-registration to file SEC Form 15 in order to become Current Pink Sheets on OTCMarkets.com under the Alternative Reporting Standard.

What are the JOBS Act Amendments to Exchange Act Rules 12g?

The Commission approved final rules to implement the JOBS Act and FAST Act by:

  1. Amending Exchange Act Rules 12g-1 through 12g-4 and 12h-3, governing registration and termination of registration under Section 12(g), and suspension of Section 15(d) reporting obligations, to reflect new thresholds established by the JOBS Act and the FAST Act.
  2. Using the definition of “accredited investor” in Securities Act Rule 501(a) to determine which record holders are accredited investors for purposes of Exchange Act Section 12(g)(1).
  3. Allowing the Issuer to make the accredited investor determination as of the last day of its fiscal year.

New Thresholds for Assets and Number of Shareholders of Record

As a result of JOBS Act and FAST Act changes, 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 Exchange Act if

  1. it has more than $10 million of total assets; and
  2. the securities are “held of record” by either 2,000 persons; or
  3. 500 persons who are not accredited investors.

The vast majority of OTC Bulletin Board and OTC Markets SEC filers have far less than $10 Million in total assets and most never reach 2,000 shareholders.

Filing SEC Form 15 to Cease Exchange Act Reporting Obligations

For this reason, the key threshold change as a result of the JOBS Act is that SEC filers which are delinquent in their 10-K, 10-Q filings due to audit costs can more readily file the Form 15 to cease reporting under the Exchange Act.

By reviewing a Shareholder List as of the end of the Issuer’s last fiscal year, Management with close to 500 shareholders may be able to identify several which are clearly accredited, in order to meet the threshold of 500 non-accredited shareholders.

OTC Securities Lawyer for Delinquent SEC Filers Seeking to Become Pink Current

Matheau J.W. Stout, Esq. represents delinquent SEC filers in becoming current using the OTC Markets Alternative Reporting Standard and can be reach at (410) 429-7076 or mstout@otclawyers.com.

As part of the Pink Current process, securities attorney Matt Stout can file SEC Form 15, prepare Information and Disclosure Statements for OTCMarkets, and issue the Current Information Legal Opinion.

 

Pink Sheets and the Current Public Information Requirement of Rule 144(c)(2)

One of the requirements of Rule 144 is that current information about the Issuer must be publicly available before the sale.

SEC Filers Must Have Audited Financials to Be Current

For SEC reporting companies, this means that the Issuer is current in its reporting obligations under the Securities Exchange Act of 1934, which includes audited financials on forms 10-K, and 10-Q.  Without “current information” an SEC filer will be marked “delinquent” and its Shareholders will not be permitted to use the abbreviated Six (6) Month Holding Period for removing restricted legends on their OTC stock.

Non-Reporting Issuers Do Not Need Audited Financials to Be Marked Pink Current

Non-reporting companies, and voluntary SEC filers, are not eligible for the Six (6) Month holding period even if they are “current” since they are not “subject to” the Exchange Act.

For non-reporting Pink Sheets, being current under the Alternative Reporting Standard means filing an up-to-date Information and Disclosure Statement and either the latest Quarterly Report or Annual Report on OTCMarkets.com.

Together, these OTC Markets filings contain information regarding the nature of the Issuer’s business, its officers and directors, and its financial statements, similar to what would be found in a Form 211 filed under 15c211.

Non-Reporting Pink Sheets are not required to have audited financials in order to meet the current reporting requirement under Rule 144(c)(2).

Securities Attorney for OTC Bulletin Board and OTC Markets Filers

Securities lawyer Matt Stout works with public companies that are delinquent in SEC and OTC Markets filings in order to help them become “current.”   In this context, he can review or draft SEC filings and issue OTC Markets Current Information Legal Opinions for those Issuers filing on OTCIQ.   Matt Stout, securities attorney can be reached at (410) 429-7076 or mstout@otclawyers.com.