Days (or weeks) without sleep, long conference calls, endless redlines, issues lists and Board presentations are part and parcel of every M&A lawyer’s existence. Representing a public company target in an acquisition adds layers of complexity and considerations that counsel must consider as early as possible in the process in order to avoid falling into traps for the unwary. The rules for acquired public companies deregistering their securities (or “going dark”) with the U.S. Securities and Exchange Commission are complex, and often require that such companies continue filing periodic reports for months after public reporting would serve the purposes of the U.S. securities laws; and innocent missteps can extend that burden.
Delisting and Deregistration Process
Public companies are required to file reports pursuant to §§12(b) (securities listed on national stock exchanges), 12(g) (companies with more than 2,000 record holders (or 500 non-accredited record holders) and $10 million of assets), and 15(d) (companies with effective registration statements under the Securities Act of 1933) of the Securities Exchange Act of 1934. For purposes of this article, we are focused on U.S. public companies and not foreign entities. To effectively terminate its Exchange Act reporting obligations, a company must delist its securities, then deregister the securities first under Exchange Act §12(b) and second under §12(g), then finally file notice of the suspension of its periodic reporting requirements under Exchange Act §15(d). Until all of its equity is deregistered, the company will need to comply with all Exchange Act rules applicable to registered equity securities (including the proxy rules, §13(d) and §16 rules, §14(d) tender offer rules and going-private rules). Until all securities (including debt securities) are deregistered and reporting obligations are suspended under §15(d), a company must still comply with its Exchange Act periodic reporting requirements.
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