Navigating SEC Reporting: Suspension and Voluntary Filer Status Explained
When a public company is registered under Section 12 or subject to Section 15(d) of the Securities Exchange Act of 1934, it must file periodic reports like Forms 10-K, 10-Q, and 8-K with the Securities and Exchange Commission (SEC). These requirements stem from registering securities via a Form S-1 or F-1 under the Securities Act of 1933, as amended (the “Securities Act”), or through the Securities Exchange Act of 1934 (the “Securities Exchange Act”) via Form 10, 20-F, or 8-A.
Understanding how to suspend these obligations or transition to voluntary filer status can save companies time and resources. This guide breaks down the process in a clear, actionable way.
What Triggers SEC Reporting Obligations?
A company becomes subject to Section 15(d) reporting when it files a registration statement under the Securities Act, such as a Form S-1. Meanwhile, Section 12 registration occurs when a company files a registration statement under the Securities Exchange Act. Companies under Section 15(d) face lighter reporting requirements than those under Section 12. They must comply with Section 13 reporting for Form 10-K, Form 10-Q or Form 8-K but are exempt from Section 14 proxy rules, Section 16 officer and director reporting, and Section 13(d), (g), and (f) reporting.
How to Suspend SEC Reporting Obligations
Unlike Section 12 registration with the SEC, which can be terminated, Section 15(d) reporting requirements can only be suspended. However, a suspended Section 15(d) obligation can reactivate if the conditions for suspension change.
Automatic Suspension of Section 15(d) Reporting
Section 15(d) reporting obligations are automatically suspended in two scenarios:
- Section 12 Registration: If a company has securities registered under Section 12, it must follow the Section 12 reporting rules instead.
- Low Shareholder Count: On the first day of any fiscal year (except the year a Securities Act registration statement becomes effective), a company with fewer than 300 shareholders of record is exempt from filing.
Under Rule 15(d)-6, companies with fewer than 300 shareholders must file a Form 15 within 30 days of the fiscal year’s start to notify the SEC of the suspension. However, this filing is not mandatory for the suspension to take effect. Interestingly, many companies choose to continue filing reports voluntarily despite qualifying for suspension.
Voluntary Suspension via SEC Form 15
A company can voluntarily suspend Section 15(d) reporting by filing a Form 15 under Rule 12h-3, provided it meets specific criteria:
- The company must be current with all SEC reports for the shorter of its last three fiscal years or since it became subject to SEC filing requirements.
- It must have fewer than 300 shareholders of record (or fewer than 1,200 for bank holding companies) or fewer than 500 shareholders and less than $10 million in assets at the end of each of the last three fiscal years.
However, a company cannot file SEC Form 15 in the same fiscal year a Securities Act registration statement becomes effective or requires a Section 10(a)(3) prospectus update. This restriction also applies to the two fiscal years following such an event, except in cases of certain holding company restructures with no significant assets and pro rata share issuance. If a Form 15 is withdrawn or denied, the company has 60 days to file any overdue reports.
Key Considerations for Form 15 Eligibility
A company with an active Securities Act registration statement (e.g., Form S-3 or S-8 for continuous offerings) must first deregister unsold shares or withdraw the registration statement to qualify for Form 15 filing. The SEC has clarified through no-action letters and Staff Legal Bulletin No. 18 that Form 15 may be filed in specific cases, such as:
- When a public offering is abandoned, no shares are sold, and a Rule 477 application is filed to withdraw the registration.
- When a company is acquired, it leaves only one record holder (the acquiring entity).
These exceptions apply only if the company has no public shareholders and no ongoing obligation to file reports.
Terminating Section 12 Reporting
For companies with Section 12 registration, filing a Form 15 terminates Section 13 reporting obligations immediately. However, obligations under Sections 14 and 16, as well as certain shareholder reporting requirements, persist for 90 days after filing. Since Section 15(d) companies are exempt from these additional requirements, this distinction primarily affects Section 12 registrants.
What Is a Voluntary Filer?
A company that continues filing SEC reports despite a suspended Section 15(d) obligation is considered a voluntary filer. However, a company registered under Section 12 cannot be a voluntary filer, as its reporting obligations are mandatory.
To determine voluntary filer status:
- Check the SEC File/Film Number:
- Numbers starting with “333” indicate a Section 15(d) filer.
- Numbers starting with “000,” “001,” or “005” indicate a Section 12(g) or 12(b) filer.
- Verify if a Securities Act registration statement became effective in the current fiscal year. If so, the company is not a voluntary filer.
- Confirm the shareholder count. If a Section 15(d) filer has fewer than 300 shareholders at the fiscal year’s start, it qualifies as a voluntary filer.
- Check for a Form 15 filing under Rule 12h-3. A company remains subject to reporting until the Form 15 is filed, even if it meets suspension criteria.
Counting Shareholders of Record
Under Rule 12g5-1, shareholders of record are calculated by counting each entity or custodian as a single shareholder, even if they hold shares for multiple beneficial owners. Shares held by brokers, dealers, banks, or nominees count as one shareholder. Additionally, securities issued under an exempt employee compensation plan are excluded from the count.
Why Companies Choose Voluntary Filing
Many companies opt to continue filing SEC reports voluntarily to maintain transparency, attract investors, or meet contractual obligations. However, suspending reporting can reduce compliance costs, making it an attractive option for companies with limited shareholders or resources.
Conclusion
Navigating SEC reporting requirements under Sections 12 and 15(d) can be complex; however, understanding suspension options and voluntary filer status is crucial for strategic compliance. By leveraging automatic or voluntary suspension through Form 15, companies can reduce reporting burdens while maintaining flexibility. Always consult legal and financial advisors to ensure compliance with SEC rules and regulations.
If you have questions regarding Form 15 or need to hire a securities attorney, Hamilton & Associates Law Group, P.A. is ready to help. Our Founder, Brenda Hamilton, is a nationally known and recognized securities attorney with over two decades of experience assisting issuers worldwide with going public on the Nasdaq, NYSE, and OTC Markets. Since 1998, Ms. Hamilton has been a leading voice in corporate and securities law, representing both domestic and international clients across diverse industries and jurisdictions. Whether you are taking your company public, raising capital, navigating regulatory challenges, or entering new markets, Brenda Hamilton and her team deliver the experience, strategic insight, and results-driven representation you need to succeed.
To speak with a Securities Attorney, please contact Brenda Hamilton at 200 E Palmetto Rd, Suite 103, Boca Raton, Florida, (561) 416-8956, or by email at [email protected].
Hamilton & Associates | Securities Attorneys
Brenda Hamilton, Securities Attorney
200 E Palmetto Rd, Suite 103
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.SecuritiesLawyer101.com
