Public Company SEC Reporting Requirements -SEC Requirements to Go Public

A public company with a class of securities registered under either Section 12 or which is subject to Section 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) must file reports  (“Public Company SEC Reporting Requirements”) with the Securities and Exchange Commission (the “SEC”). These Public Company SEC Reporting Requirements keep investors and market participants informed about important information about the issuer.  Reports and filings made with the SEC can be viewed by the general public without charge on the SEC’s website.

Companies subject to Public Company SEC Reporting Requirements must file Annual Reports on Form 10-K, Quarterly Reports on Form 10Q’s and Current Reports on Form 8-K.  As discussed below, certain issuers must file proxy statements and other reports and their officers, directors and certain large shareholders must file beneficial ownership reports with the SEC.

Becoming Subject to Public Company SEC Reporting Requirements

Companies become obligated to file reports with the SEC pursuant to Section 12 or Section 15(d) of the Exchange Act. Generally, this occurs one of the following ways:

• SEC Registration under the Securities Act – Form S-1 and Form F-1 – Section 15(d)

An issuer becomes subject to SEC Public Company reporting requirements upon SEC effectiveness of a  registration statement on Form S-1 or other form under the Securities Act of 1933, as amended (the “Securities Act”).  Unlike registration under the Exchange Act on Form 10 or Form 8-A, registration statements under the Securities Act are not automatically effective. After effectiveness of a Securities Act registration statement, the issuer may be obligated to file or can elect to file an Exchange Act registration statement under the Exchange Act.

• NYSE or NASDAQ Listing Pursuant to Section 12(b)

 An issuer that elects to list a class of debt or equity securities on  the Nasdaq Global Market (“NASDAQ”), the New York Stock Exchange (“NYSE”) or another national securities exchange must register a class of securities pursuant to Section 12(b).  The issuer’s registration statement on Form 8-A or Form 10 pursuant to Section 12(b) must be effective prior to listing its securities.

• Mandatory Exchange Act Registration Pursuant to Section 12(g)

An issuer must register a class of securities pursuant to Section 12(g) of the Exchange Act if a class of its equity securities (other than exempted securities) is held of record by either (i) 2,000 persons, or (ii) 500 persons who are not accredited investors and, on the last day of the issuer’s fiscal year, its total assets exceed $10 million. Note that this “held of record” requirement does not include securities received by the stockholder pursuant to an employee compensation plan in exempt transactions under Section 5 of the Securities Act or in a crowdfunding offering.

A company registers a class of securities pursuant to Section 12(g) by filing  a registration statement on Form 10  or Form 8-A under the Securities Exchange Act. Upon effectiveness, the company is subject to Public Company SEC Reporting Requirements. Upon effectiveness, the issuer must file Form 10-K annual reports, Form 10-Q quarterly reports, and current reports on Form 8-K. Additionally, the company’s large shareholders and management become subject to various requirements reporting requirements upon effectiveness of the company’s Form 10 registration statement or Form 8-A.

A company whose Form 10 or Form 8-A has been declared effective must comply not only with the Public Company SEC Reporting Requirements, it must also comply with the SEC’s proxy rules whenever its management submits proposals to shareholders that will be subject to a shareholder vote, usually at an annual or special meeting of shareholders.

SEC Proxy rules and Public Company SEC Reporting Requirements

The proxy rules get their name from the common practice of management asking shareholders to provide them with a document called a “proxy card” granting authority to vote the shareholders’ shares at the meeting. The proxy rules require the company to provide certain disclosures in a proxy statement to its shareholders, together with a proxy card in a specified format, when soliciting authority to vote the shareholders’ shares. Proxy statements describe matters up for shareholder vote and include management and executive compensation information if the shareholders are voting for the election of directors.

If shareholders will take action on a matter but management is not soliciting proxies, the company must provide shareholders with an information statement that is similar to a proxy statement. The proxy rules also require the company to send an annual report to shareholders if the shareholders are voting for directors. The proxy rules also govern when your company must provide shareholder lists to investors and when it must include a proposal from a shareholder in its proxy statement or information statement.

Beneficial Ownership Reports – Public Company SEC Reporting Requirements for Insiders

If a company has registered a class of its equity securities under the Exchange Act, shareholders who acquire more than 5% of the outstanding shares of that class must file beneficial owner reports on Schedule 13D or 13G until their holdings drop below 5%. These filings contain background information about the shareholders who file them as well as their investment intentions, providing investors and the company with information about accumulations of securities that may potentially change or influence company management and policies.

Public Company SEC Reporting Requirements and Transaction Reporting by Officers, Directors and 10% Shareholders

Section 16 of the Exchange Act applies to an SEC reporting company’s directors and officers, as well as shareholders who own more than 10% of a class of the company’s equity securities registered under the Exchange Act. The rules under Section 16 require these “insiders” to report most of their transactions involving the company’s equity securities to the SEC within two business days.

Section 16 also establishes mechanisms for a company to recover “short swing” profits, or profits an insider realizes from a purchase and sale of the company’s security that occur within a six-month period. In addition, Section 16 prohibits short selling by insiders of any class of the company’s securities, whether or not that class is registered under the Exchange Act.

Public Company SEC Reporting Requirements and Tender offers

The SEC’s tender offer rules apply to transactions in which a public company faces a third-party tender offer or “takeover.” The rules also apply if a public company makes a tender offer for its own securities. The filings required by these rules provide information to the holders of the securities about the person making the tender offer and the terms of the offer. The company that is the subject of a takeover must file its responses to the tender offer with the SEC. The rules also set minimum time periods for the tender offer and provide other protections to shareholders.

Public Company Listing standards and SEC Reporting Requirements

If your company lists its securities on a securities exchange such as the Nasdaq or New York Stock Exchange, it will be subject to the rules or “listing standards” governing all companies listed on that exchange, including rules on corporate governance and audit committees. Companies whose securities are not listed on an exchange but are traded only through the facilities of the OTC Markets Group’s OTC Link typically are not subject to additional standards on corporate governance and audit committees.

This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes. For more information about going public with Form S-1, Form F-1 and Regulation A Securities Offerings, Rule 506 and Regulation CF crowdfunding,  sponsoring market makers and Form 211,  dual listings and foreign issuer listings and public company SEC reporting requirements, please contact Hamilton & Associates Law Group.

Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
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Boca Raton, Florida 33432
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