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U.S. Securities and Exchange Commission

Exchange Act Sections

Last Update: December 4, 2012

These Compliance and Disclosure Interpretations ("C&DIs") principally comprise the Division's interpretations of the registration and reporting provisions of the Exchange Act — Sections 12, 13 and 15. Some of these C&DIs were first published in prior Division publications and have been revised in some cases. The bracketed date following each C&DI is the latest date of publication or revision.

N.B. C&DIs for Exchange Act Section 16 have been separately published and can be found at Exchange Act Section 16 and Related Rules and Forms.

QUESTIONS AND ANSWERS OF GENERAL APPLICABILITY

Sections 101 to 109. Exchange Act Section 3

Section 101. Section 3(a)

None

Sections 102 to 109. [Reserved]

Sections 110 to 129. Exchange Act Section 12

Section 110. Section 12(a)

None

Sections 111 to 115. [Reserved]

Section 116. Section 12(g)

Question 116.01

Question: Are benefit plan options regarded as a separate class of equity securities for Section 12(g) purposes?

Answer: Yes. [September 30, 2008]

Question 116.02

Question: A company that is not required to register a class of equity securities under Section 12(b) or Section 12(g) nevertheless voluntarily registers the class under Section 12(g). Since the registration of the securities under Section 12(g) is voluntary, can the company later stop filing periodic and current reports without first deregistering the securities under the Exchange Act?

Answer: No. Once a company registers a class of equity securities under Section 12(g), it is required to file periodic and current reports, even if the registration of the securities under Section 12(g) is voluntary. The only method provided by the Exchange Act and rules for such a company to properly cease filing periodic and current reports is to deregister the class of securities under the Exchange Act. [September 30, 2008]

Question 116.03

Question: Can a company file periodic and current reports without first registering the offer and sale of securities under the Securities Act or a class of securities under the Exchange Act?

Answer: No. Assuming that the company did not previously have a Section 15(d) or Section 13(a) reporting obligation, it would not be able to file periodic or current reports without first registering an offer and sale of securities under the Securities Act or a class of securities under the Exchange Act. If a company's reporting obligation has been suspended or terminated, our EDGAR system will continue to accept Exchange Act reports that are filed on a voluntary basis, and the company must disclose that it is a voluntary filer on the cover of its Form 10-K or Form 20-F. [October 8, 2008]

Question 116.04

Question: Can a company that files a Section 12(g) registration statement on Form 10, Form 20-F, or Form 8-A delay the effectiveness of the registration statement to a date after the 60-day period specified in Section 12(g)?

Answer: No. A registration statement on Form 10, Form 20-F, or Form 8-A to register a class of equity securities under Section 12(g) becomes automatically effective 60 days after the date of filing. A company cannot seek to delay the automatic effectiveness of such registration statement. The only way to delay or prevent effectiveness is to withdraw the Section 12(g) registration statement before the effective date. Such a withdrawal, however, is not permitted for a company that is required to register a class of equity securities under Section 12(g). [September 30, 2008]

Question 116.05

Question: Can a company withdraw a Section 12(g) registration statement before it becomes effective?

Answer: Yes. A company can withdraw a Section 12(g) registration statement prior to the date of effectiveness. If the last day before the registration statement becomes automatically effective pursuant to Section 12(g) falls on a non-business day, however, the company cannot rely on Exchange Act Rule 0-3 to submit the withdrawal request on the first business day following. The withdrawal request must be filed with the Commission before the date of effectiveness. [September 30, 2008]

Question 116.06

Question: A company files a Form 10 registration statement to register a class of equity securities under Section 12(g). This registration statement will become effective automatically 60 days after it is filed with the Commission. If the registration statement is selected for review by the Commission’s staff, is the company still required to file periodic and current reports?

Answer: Yes. Once the Section 12(g) registration statement becomes effective, the company is subject to Exchange Act reporting obligations, including the filing of periodic and current reports. The fact that the staff has selected the registration statement for review, or that the review is not completed at the time of effectiveness, does not relieve the company of these obligations. [September 30, 2008]

Question 116.07

Question: As part of its plan of liquidation and dissolution, a company plans to form a liquidating trust, transfer its remaining assets to the trust, and distribute interests in the trust to the company’s security holders. The company plans to request a no-action position from the Division that would relieve the trust from having to register its interests under Section 12(g). The company is required to file a certificate of dissolution with the proper state authorities. Will the Division grant no-action relief from the Section 12(g) registration requirement if the certificate of dissolution is not yet effective?

Answer: No. A company’s certificate of dissolution must be filed and effective before a no-action position granting relief from Section 12(g) for the interests in the liquidating trust is issued by the Division. [September 30, 2008]

Section 117. Section 12(h)

Question 117.01

Question: Are lack of trading and an inability to locate a significant number of stockholders sufficient bases to warrant a Section 12(h) exemption for a Section 12(g) registered company?

Answer: No. These bases alone are not sufficient to warrant a Section 12(h) exemption for a Section 12(g) registered company. [September 30, 2008]

Question 117.02

Question: Does Section 12(h) of the Exchange Act afford any exemptive relief for periodic reports that are delinquent?

Answer: No. [September 30, 2008]

Sections 118 to 129. [Reserved]

Sections 130 to 149. Exchange Act Section 13

Section 130. Section 13(a)

Question 130.01

Question: How does an issuer in bankruptcy demonstrate that the nature and extent of the trading in its securities is sufficiently limited to warrant no-action relief to file modified Exchange Act reports?

Answer: The Division is regularly asked to express a “no-action” position regarding an issuer in bankruptcy’s ability to file modified Exchange Act reports. In reviewing these no-action requests, the Division applies the general criteria in Exchange Act Release No. 9660 (June 30, 1972) and the specific factors outlined in Staff Legal Bulletin No. 2 (Apr. 15, 1997). With respect to the nature and extent of trading in the issuer’s securities, the Division has indicated that it will not issue a favorable response to a request for modified reporting if there is an active market for the issuer’s securities. Specifically, the Division has required issuers to demonstrate that their securities are not traded on a national securities exchange and that there is otherwise minimal trading in the securities. The staff believes that the nature and extent of trading of the issuer’s securities as described in the Evolve Software, Inc. no-action letter (Jul. 16, 2003) is representative of “minimal” trading for purposes of determining whether modified Exchange Act reporting is consistent with the protection of investors. [September 30, 2008]

Question 130.02

Question: When a registrant becomes delinquent in its reporting obligation under Section 13(a) or 15(d), what must it do to become current?

Answer: A delinquent filer must file all delinquent reports in order to become current in its Exchange Act reporting. While filing required documents late will not “cure” Section 13(a) or 15(d) violations, and will not make the registrant timely for purposes of eligibility to use certain Securities Act forms, it will permit the registrant to become current in its Exchange Act reporting. [September 30, 2008]

Sections 131 to 132. [Reserved]

Section 133. Section 13(d)

Question 133.01

Question: The application of Exchange Act Sections 13(d), 13(g), 14(a), 14(c) and 14(d) to a class of securities depends on whether the class is registered under Exchange Act Section 12. If unregistered securities convey a right to acquire or are convertible into or exercisable for Section 12-registered securities, should the unregistered securities be treated as Section 12-registered securities for purposes of determining whether Sections 13(d), 13(g), 14(a), 14(c) and 14(d) apply?

Answer: No, with one exception. Unregistered classes of securities convertible into, exercisable for, or that otherwise grant a right to acquire, securities registered under Section 12 generally are not treated as if they were securities registered under Section 12 for purposes of Sections 13(d), 13(g), 14(a), 14(c) and 14(d). The exception is that in some cases, Exchange Act Rule 13d-3(d) will require certain security holders to treat the unregistered securities as if they had been exercised for or converted into the Section 12-registered securities for purposes of Sections 13(d) and 13(g). [Aug. 14, 2009]

Sections 134 to 146. [Reserved]

Section 147. Section 13(r)

Question 147.01

Question: Section 219(b) of the Iran Threat Reduction and Syria Human Rights Act of 2012, signed into law on August 10, 2012, specifies that new Section 13(r) of the Exchange Act “shall take effect with respect to reports required to be filed with the Securities and Exchange Commission after the date that is 180 days after the date of the enactment of this Act,” which would be February 6, 2013. If an issuer’s periodic report is required to be filed on a date after February 6, 2013 — such as, for example, the 2012 Form 10-K for calendar year filers — is the issuer required to disclose Iran-related business activities pursuant to Section 13(r) if it files the periodic report on or before February 6, 2013?

Answer: Yes. We interpret “reports required to be filed” to include any periodic report with a due date after February 6, 2013, regardless of when the report is actually filed. [Dec. 4, 2012]

Question 147.02

Question: If an issuer’s annual report is required to be filed after February 6, 2013, must it include disclosure of activities specified in Section 13(r)(1) that occurred during the fiscal year but prior to enactment of the Iran Threat Reduction and Syria Human Rights Act of 2012 on August 10, 2012?

Answer: Yes. An issuer is required to disclose activities specified in Section 13(r)(1) that occurred during the period covered by the report, which, for a Form 10-K, is the entire fiscal year. For example, an issuer that files an annual report for the fiscal year ending December 31, 2012 is required to disclose any activities specified in Section 13(r)(1) that took place between January 1, 2012 and December 31, 2012. [Dec. 4, 2012]

Question 147.03

Question: Section 13(r) covers activities by an issuer “or any affiliate of the issuer.” How is the term “affiliate” defined for purposes of Section 13(r)?

Answer: The term “affiliate” in Section 13(r) is as defined in Exchange Act Rule 12b-2. [Dec. 4, 2012]

Question 147.04

Question: If an issuer and its affiliates have not engaged in any of the activities specified in Section 13(r)(1) during the period covered by the report, must the issuer include a statement to that effect in its periodic report?

Answer: No. Disclosure is required only if the issuer or any of its affiliates engaged in any of the activities specified in Section 13(r)(1) during the period covered by the report. [Dec. 4, 2012]

Question 147.05

Question: Section 13(r)(1)(D)(iii) requires disclosure if an issuer or any of its affiliates knowingly conducts any transaction or dealing with “any person or entity identified under section 560.304 of title 31, Code of Federal Regulations (relating to the definition of the Government of Iran) without the specific authorization of a Federal department or agency.” Would this provision allow issuers to omit disclosure of transactions or dealings that have been specifically authorized by foreign governmental authorities, but not any U.S. federal department or agency?

Answer: No. A transaction or dealing with any person or entity identified under 31 CFR 560.304 must be disclosed unless it was specifically authorized by a U.S. federal department or agency. If a disclosable transaction was specifically authorized by a foreign governmental authority, an issuer could disclose that fact in addition to the other information required by Section 13(r)(2) to provide the appropriate context for the disclosure. [Dec. 4, 2012]

Question 147.06

Question: The Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury issues both general and specific licenses. A general license authorizes a particular type of transaction for a class of persons without the need to apply for a specific license. A specific license is a document issued by OFAC to a particular person or entity, authorizing a particular transaction in response to a written license application. See OFAC’s Frequently Asked Questions and Answers #74, available at http://www.treasury.gov/resource-center/faqs/Sanctions/Pages/answer.aspx#60 (explaining the difference between a general license and a specific license). Does a general license issued by OFAC count as a “specific authorization of a Federal department or agency” for purposes of Section 13(r)(1)(D)(iii)?

Answer: Yes. Both general and specific licenses constitute specific authorization by OFAC to engage in a transaction, provided all conditions of the applicable license are strictly observed. [Dec. 4, 2012]

Question 147.07

Question: If an issuer includes disclosure responsive to Section 13(r) in a periodic report filed with the Commission, will the disclosure become public?

Answer: Yes. All periodic reports filed with the Commission are made public automatically upon filing through the Commission’s EDGAR system. [Dec. 4, 2012]

Sections 148 to 149. [Reserved]

Sections 150 to 169. Exchange Act Section 15

Sections 150 to 152. [Reserved]

Section 153. Section 15(d)

Question 153.01

Question: A registrant with one or more effective Form S-3 and/or Form S-8 registration statements has less than 300 holders of record of the class of securities covered by those effective registration statements at the beginning of its fiscal year. In order to rely on the automatic reporting suspension contained in Section 15(d) of the Exchange Act, must the registrant post-effectively amend the registration statements to deregister any remaining unsold securities prior to filing the Form 10-K for the prior fiscal year?

Answer: Yes. In order to rely on the Section 15(d) automatic reporting suspension, an issuer must post-effectively deregister any remaining unsold securities from all existing Form S-3 and Form S-8 registration statements prior to filing the Form 10-K for the prior fiscal year. Otherwise, the Form 10-K would serve as a post-effective amendment, rendering the automatic suspension in Section 15(d) unavailable. [September 30, 2008]

Question 153.02

Question: May a company subject to Section 15(d) delay the due date, or avoid filing a quarterly or annual report, by filing a Form 8-A at or after the end of the fiscal quarter or fiscal year but prior to the due date of the applicable report?

Answer: No. A company subject to Section 15(d) with respect to a fiscal quarter or fiscal year cannot delay the due date or avoid filing the related quarterly or annual report by filing a Form 8-A at or after the end of the fiscal quarter or fiscal year but prior to the due date of the applicable report. Form 8-A explicitly provides that a company subject to Section 15(d) with respect to a fiscal year cannot do so. [September 30, 2008]

Question 153.03

Question: A limited partnership offers securities on a Form S-11 that goes effective on December 15, but does not commence selling efforts, acquire properties, or admit limited partners until after December 31, the end of its fiscal year. Escrow is not broken until September 30 of its next fiscal year. Should the partnership file a Form 10-K for the fiscal year in which the Form S-11 went effective?

Answer: Yes. The partnership should file the Form 10-K for the fiscal year in which the Form S-11 went effective, regardless of the fact that selling efforts began in the next fiscal year. [September 30, 2008]

Question 153.04

Question: Can a company file periodic and current reports without first registering the offer and sale of securities under the Securities Act or a class of securities under the Exchange Act?

Answer: No. Assuming that the company did not previously have a Section 15(d) or Section 13(a) reporting obligation, it would not be able to file periodic or current reports without first registering an offer and sale of securities under the Securities Act or a class of securities under the Exchange Act. If a company's reporting obligation has been suspended or terminated, our EDGAR system will continue to accept Exchange Act reports that are filed on a voluntary basis, and the company must disclose that it is a voluntary filer on the cover of its Form 10-K or Form 20-F. [October 8, 2008]

Question 153.05

Question: If an issuer files Exchange Act reports on a voluntary basis — for example, because its Section 15(d) filing obligation is suspended — must the issuer comply with the interactive data requirements and, if so, what is the first interactive data submission required?

Answer: Yes. The issuer would be included in the group of filers required to comply with the interactive data requirements beginning with the first Form 10-Q, 20-F or 40-F for a fiscal period ending on or after June 15, 2011. [May 29, 2009]

Sections 154 to 169. [Reserved]

INTERPRETIVE RESPONSES REGARDING PARTICULAR SITUATIONS

Sections 201 to 209. Exchange Act Section 3

Section 201. Section 3(a)

201.01. A registrant that is eligible to use Form S-3 is issuing debentures that will be guaranteed by its parent. Because the guarantee is neither listed on a stock exchange, nor considered to be an “equity security” as defined in Section 3(a)(11) of the Exchange Act, an Exchange Act registration statement is not required to be filed for it. [September 30, 2008]

Sections 202 to 209. [Reserved]

Sections 210 to 229. Exchange Act Section 12

Section 210. Section 12(a)

210.01. The Liability Risk Retention Act of 1986 contains exemptions from the registration provisions of Section 5 of the Securities Act and Section 12 of the Exchange Act for interests in a “risk retention group.” A risk retention group is a corporation the primary activity of which is to assume and spread all or a portion of the liability exposure of its members, if certain conditions are met. In the absence of a formal no-action request, the Division staff declined to express any view as to whether the exemptions for interests in a risk retention group would extend to interests in a holding company for such group. The question has arisen because the exemption written into the statute is silent on that point. Ownership interests in a “risk retention group” are considered to be “securities” for purposes of Section 17 of the Securities Act and Section 10 of the Exchange Act, under the terms of The Liability Risk Retention Act of 1986. [September 30, 2008]

Sections 211 to 215. [Reserved]

Section 216. Section 12(g)

None

Section 217. Section 12(h)

None

Sections 218 to 229. [Reserved]

Sections 230 to 249. Exchange Act Section 13

Section 230. Section 13(a)

None

Sections 231 to 232. [Reserved]

Section 233. Section 13(d)

233.01 Where a limited partnership voluntarily registered its securities under Section 12(g) of the Exchange Act in order to qualify those securities for sale to “direct participant” retirement plans, the Division staff would not provide relief under Sections 13(d), 13(g), and 13(e), since such relief would undermine the Department of Labor’s intent to require the protections of the Exchange Act reporting requirements for pension plan instruments. [September 30, 2008]

Sections 234 to 249. [Reserved]

Sections 250 to 269. Exchange Act Section 15

Sections 250 to 252. [Reserved]

None

Section 253. Section 15(d)

253.01 A registration statement offered limited partnerships in series. A Form 15 was filed for the first partnership after the close of its fiscal year. Subsequently, the offering commenced for the second partnership. Section 15(d) reporting with respect to the second partnership should commence beginning with the quarter in which the offering of the second partnership’s interests starts. [September 30, 2008]

Sections 254 to 269. [Reserved]

 

http://www.sec.gov/divisions/corpfin/guidance/exchangeactsections-interps.htm


Modified: 12/04/12