On Friday, March 12, 2010 the U.S. Securities and Exchange Commission’s Division of Corporation Finance posted three new Questions & Answers as part of its Compliance & Disclosure Interpretations (C&DIs). The new items posted pertain to:
Section 119. Item 402(c) – Executive Compensation; Summary Compensation Table
• New Question 119.25
• New Question 119.26
Section 133. Item 407 - Corporate Governance
• New Question 133.12
The full text of the new items is in this FEI Summary. Hat-tip to Broc Romanek of The Corporate Counsel.net Blog.
Staff Legal Bulletin On Suspension Of Certain Reporting Obligations
Earlier today (March 15, 2010) the SEC’s Division of Corporation Finance released Staff Legal Bulletin No. 18. The staff legal bulletin appears aimed at making a particular process more efficient by communicating the Division's response to a particular type of no-action letter request, as relates to suspension of certain reporting obligations, and offering guidelines for a common approach by which issuers would not have to request a no action response, although certain conditions would have to be met, and certain forms would still have to filed in connection with the suspension of reporting.
In summary, as stated in the staff legal bulletin:
“This staff legal bulletin provides the Division of Corporation Finance's views regarding certain situations in which issuers may utilize Rule 12h-3 under the Securities Exchange Act of 1934 to suspend their reporting obligations under Section 15(d) of the Exchange Act.”
The staff legal bulletin notes: “two common situations that give rise to no-action responses under Rule 12h-3,” and identifies “[four] conditions that must be satisfied in these two situations in order for an issuer to avail Itself of the reporting suspension provided by Rule 12h-3.”
Here are the two “common situations” (detailed further in the staff legal bulletin):
1. abandoned initial public offering, or
2. acquired issuer (defined as: “An issuer has been acquired by another entity, resulting in the class or classes of securities for which the issuer has a Section 15(d) reporting obligation being either: (1) extinguished; or (2) held or assumed by only one recordholder, the acquiring entity.”)
Here are the four “conditions” (detailed further in the staff legal bulletin):
1. The issuer must not have a class of securities registered under Section 12 of the Exchange Act
2. The issuer must comply with the other requirements of Rule 12h-3
3. The issuer must deregister any unsold securities from Securities Act registration statements and withdraw any registration statements if there were no sales
4. The issuer must not otherwise file Exchange Act reports during the time period in which it seeks to avail itself of the suspension provided by Rule 12h-3
Going Forward: Issuer Meeting Conditions Above Will Not Need A ‘No Action’ Response
“[O]n a going-forward basis,” the staff legal bulletin concludes: “an issuer that fits within either of the two situations identified above and satisfies the conditions set forth in this legal bulletin does not need a no-action response from the Division before filing a Form 15 to suspend its Section 15(d) reporting obligation in reliance on Rule 12h-3. In order to cease reporting, an issuer must file a Form 15 for each class of securities for which there is a Section 15(d) reporting obligation.”
Separately, the staff legal bulletin adds, “The Division will continue to entertain questions regarding the availability of Rule 12h-3 for situations that fall outside the facts and conditions discussed in this legal bulletin.”
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