Securities Lawyer 101 l Brenda Hamilton

Securities Lawyer 101 l Brenda Hamilton

Tuesday, November 26, 2013

Section 16 Requirements In Going Public Transactions

Once a private company completes its going public transaction if it becomes a reporting company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Section 16 imposes certain filing requirements on its officers, directors and certain shareholders holding more than 10% of the issuer’s equity securities.  The purpose of the Section 16(a) reporting requirements is to provide investors and shareholders of securities sales by Company insiders. In going public tranactions, companies become subject to Section 16 if they file a registration statement on Form 10. Additionally, companies can become subject to Section 16 if they file a Form 8A after effectiveness of Form S-1 or other Securities Act registration statement.
Section 16(a) requires the directors, officers and large shareholders of the Company to publicly file reports that identify their ownership of the Company’s securities and report any transactions they make in those securities.   Section 16 reports are filed All Section 16(a) reports must be filed electronically. These reports can be filed electronically directly through the SEC’s EDGAR database.
The obligations imposed by Section 16(a) apply to individuals and not the issuer though the issuer must disclose if management failed to file or timely file Section 16 filers reports in its annual report on Form 10-K and provide the transactions not properly disclosed.
Section 16 Initial Ownership Reports
Initial ownership reports on Form 3 must be made no later than the date the Company’s Exchange Act registration statement on Form 10 or Form 8-A becomes effective or 10 days after the appointment of the relevant officer or director.  The Form 3 equity securities purchased in the open market and any equity securities granted or awarded as compensation.
Any changes in ownership that occur after the filing of the Form 3 must be reported on Form 4 within two business days after the transaction that caused a change. The Form 4 is due by the end of the second business day after the trade or transaction date.
In addition to filing a Form 3 and any Form 4s, officers, directors and large shareholders must file a Form 5 to disclose beneficial ownership of equity securities at year-end. Additionally, any transactions that required disclosure on Form 4 but were not must be reported on Form 5. Form 5 reports are due no later than 45 days after the end of the issuer’s fiscal year.
This blog post about Form 10 and Form S-1 registration statements is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information concerning the rules and regulations affecting the use of Rule 144, Form 8K, FINRA Rule 6490, Rule 506 private placement offerings, Regulation A, Rule 504 offerings, SEC reporting requirements, SEC registration on Form S-1 and Form 10, Pink Sheet listing, OTCBB and OTCMarkets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, go public direct transactions and direct public offerings please contact Hamilton and Associates at (561) 416-8956 or Please note that the prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 N
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855

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