Tag Archives: Matt Stout Securities Lawyer

What is the 3(a)(10) Exemption from Registration?

Section 3(a)(10) of the Securities Act of 1933 is an exemption from SEC registration for offers and sales of securities when the following conditions are met:

The securities must be issued in exchange for “securities, claims, or property interests” but not in exchange for cash (Usually convertible debt is exchanged for the Issuer’s common stock);
A court or “authorized governmental entity” must conduct a fairness hearing and approve the terms and conditions of the exchange.

What Are The Requirements of 3(a)(10)?

Before issuing an Order which approves a settlement between an Issuer and a Creditor, for instance,

  1. The Court must find that the terms and conditions of the settlement are “fair to those to whom securities will be issued”; and
  2. The Court must be advised by the Issuer before the fairness hearing that the Issuer intends to rely upon Section 3(a)(10) as an exemption from registration for the securities being exchanged for the Issuer’s debt; and
  3. The Court must actually hold a fairness hearing before approving the the terms and conditions of the settlement; and
  4. The fairness hearing must be open to everyone to whom securities would be issued if the proposed settlement is accepted; and (In the typical 3(a)(10) case, there is one creditor which is exchanging convertible debt which may have been purchased from one or multiple debt holders.)
  5. Adequate notice must be provided to all Parties; and
  6. There cannot be “any improper impediments” to the appearance at the fairness hearing by any Party that should be present.

Legal Representation for Issuers and Debt Holders in 3(a)(10) Matters

Securities lawyer Matt Stout represents OTC Markets public companies and their debt holders in resolving 3(a)(10) litigation and settlement of bona fide and documented 3(a)(10) claims in accordance with the SEC requirements discussed here.

3(a)(10) Lawyer for OTC Markets Companies

OTC Bulletin Board and OTC Markets Issuers that would like to learn more about how 3(a)(10) works in practice can contact securities attorney Matt Stout at (410) 429-7076 or mstout@otclawyers.com.