SEC Special JOBS Act Report on Issuer Registration under Section 12(g) of the Exchange Act (with Lofchie Comment)

Section 12(g) of the Exchange Act requires an issuer to register with the SEC, even if the issuer is not listed on a national securities exchange, if the issuer is of a certain size and has a certain number of owners. Under the JOBS Act, registration of an unlisted issuer is not required if an issuer has less than 2,000 holders of record and, of those, less than 500 are not accredited investors.

The SEC Division of Corporation Finance conducted the attached study, as obligated bySection 504 of the JOBS Act to examine current Exchange Act Rule 12g5-1(b)(3) (Definition of Securities "Held of Record"), its history, and the past record of SEC and court actions relating to the rule. Although the report analyzes whether any new enforcement tools would assist the Commission in enforcing the rule as written, no recommendations were made.

Lofchie Comment: The report provides some really interesting history on the relevant section and rules, the various attempts to get around the rule (both by issuers and shareholders) and the somewhat coincidental interaction between the registration requirements of the Exchange Act and the common usage of "book entry" securities, which had the effect of reducing the number of registered holders of securities and thereby reducing the number of companies caught by Section 12(g).

See: Report on Authority to Enforce Exchange Act Rule 12g5-1 and Subsection (b)(3) (links externally to SEC website).