Legal Bulletins

SEC Issues JOBS Act Guidance To Bank Holding Companies

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Andrew D. Bulgin
April 12, 2012

On April 9, 2012, we issued a legal bulletin regarding certain amendments made to the Securities Exchange Act of 1934, as amended (“Exchange Act”), by the Jumpstart Our Business Startups Act (“JOBS Act”).  That bulletin is available at:  http://www.gfrlaw.com/pubs/xprPubDetail.aspx?xpST=PubDetail&pub=965.  On April 11, 2012, the U.S. Securities and Exchange Commissioner (“SEC”) issued a set of frequently asked questions (http://sec.gov/divisions/corpfin/guidance/cfjjobsactfaq-12g.htm) relating to certain of those amendments. 

In its guidance, the SEC confirmed that it will allow a registered bank holding company whose class of equity security is held of record by more than 300 but less than 1,200 persons to terminate its Section 12(g) registration notwithstanding the fact that the SEC has not yet adopted regulations to implement the JOBS Act.  The SEC noted, however, that the duty to file reports will not be immediately suspended because the SEC has not yet amended Exchange Act Rule 12g-4 to reflect the JOBS Act’s increase to the stockholder threshold from 300 to 1,200.  Thus, during the 90-day period following the filing of the Form 15, the bank holding company and its insiders must continue to file the reports required by Sections 13(a), 14 and 16 of the Exchange Act.  A newly-eligible bank holding company who desires to deregister now should include an explanatory note in its Form 15 to the effect that the company is relying on Section 12(g)(4) of the Exchange Act, as amended by the JOBS Act. 

The SEC’s guidance also addresses the impact of the JOBS Act on initial registration under Section 12(g) of the Exchange Act as well as reporting obligations under Section 15(d) of the Exchange Act.

Prior to the JOBS Act, Section 12(g) required any company with more than $10 million in assets and a class of equity security held of record by more than 500 persons as of the end of its most recently completed fiscal year to register with the SEC.  The JOBS Act increased the stockholder threshold for banks and bank holding companies to 2,000 persons.  In its guidance, the SEC stated that a bank holding company with less than 2,000 stockholders of record need not register on or after April 5, 2012.  If such a bank holding company has already filed an Exchange Act registration statement that has not yet been declared effective, then it may withdraw the registration statement.  If the registration has been declared effective, however, then the bank holding company must file the reports required by the Exchange Act until it is eligible to deregister under Section 12(g). 

Section 15(d) of the Exchange Act imposes Exchange Act reporting obligations on any company who has sold securities pursuant to a registration statement filed under the Securities Act of 1933, as amended (“Securities Act”).  Those obligations are suspended for so long as the company has a class of equity security registered under Section 12(g) of the Exchange Act.  Thus, a bank holding company who maintains an effective Securities Act registration statement and an effective Exchange Act registration statement must consider the impact of Section 15(d) if it deregisters under Section 12(g).  Prior to the JOBS Act, Section 15(d) provided for the automatic suspension of reporting obligations under that section as to any fiscal year, other than the fiscal year in which the registration statement became effective, if, at the beginning of such fiscal year, the securities of each class to which the registration statement relates are held of record by less than 300 persons.  The JOBS Act increased this threshold to 1,200 persons.  In its guidance, the SEC stated that it will recognize the stockholder increase from 300 to 1,200.  The SEC noted, however, that if, during the current fiscal year, a bank holding company has a registration statement that becomes effective or is updated pursuant to Securities Act Section 10(a)(3), then it will have a Section 15(d) reporting obligation for the current fiscal year.  If no sales have been made under the bank holding company’s registration statement during the current fiscal year and the bank holding company has less than 1,200 stockholders of record, then the guidance provides that the bank holding company may be eligible to seek no-action relief to suspend its Section 15(d) reporting obligations.  Interested bank holding companies are directed to contact the SEC’s Office of Chief Counsel of the Division of Corporation Finance for further information.

 It is important to note that the federal banking regulators, rather than the SEC, administer the Exchange Act registration and reporting by banks.  Accordingly, the SEC’s guidance does not apply directly to banks.  As of this writing, we have received informal guidance from the Federal Deposit Insurance Corporation’s Division of Risk Management Supervision, Accounting and Securities Disclosure Section, that the FDIC will permit non-member banks to follow the SEC’s guidance.

If you have any questions about the JOBS Act and/or the SEC’s guidance, or if we can assist you in taking advantage of its changes, please feel free to contact the Gordon Feinblatt attorney with whom you regularly work or Andy Bulgin at or 410-576-4280.

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