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Prior to enactment of the JOBS Act, Section 12(g) of the
Exchange Act required issuers to register a class of equity
securities with the SEC if, on the last day of the issuer's
fiscal year, such class of securities was held of record by 500 or
more record holders and the company had total assets of more than
$10 million. After a company registers under Section 12(g), all of
the reporting requirements under the Exchange Act apply; therefore,
a company would need to file annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and proxy
statements on Schedule 14A, and certain persons would be required
to report transactions on Forms 3, 4, and 5 and Schedules 13D and
13G. Historically, a company could deregister a class of equity
securities under Section 12(g) when such class of equity securities
was held of record by fewer than 300 persons, or by fewer than 500
persons and the total assets of the issuer had not exceeded $10
million on the last day of each of the issuer's three most
recent fiscal years. Title VI of the JOBS Act, "Capital
Expansion," amends Section 12(g)(1)(B) of the Exchange Act,
and requires that a bank holding company register under the
Exchange Act not later than 120 days after the last day of its
first fiscal year ended on which its total assets exceed $10
million and on which it has a class of equity security (other than
an exempted security) held of record by 2,000 or more persons.
Title VI the JOBS Act also permits banks and bank-holding companies
to suspend registration under Section 12(g) if the number of
holders of record falls below 1,200 persons. Banks are already
taking advantage of this new flexibility and filing to deregister,
which will result, over time, in significant cost savings for these
institutions. Of course, many of these same institutions may be
facing higher compliance and legal costs as they attempt to address
the requirements of the Dodd-Frank Act. If Ben Franklin were alive
today, he might want to footnote his aphorism about a penny saved
being a penny earned. He just wasn't focused on compliance
costs.
Because of the generality of this update, the information
provided herein may not be applicable in all situations and should
not be acted upon without specific legal advice based on particular
situations.
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