Page 2 - M&A

S2 | MONDAY, OctOber 26, 2015 | Mergers & Acquisitions
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‘Going Dark’ Presents Traps for Unwary Companies Following an Acquisition
By Clyde W. Tinnen, PaTriCia M. lee
and Jeanne r. SoloMon
Days (or weeks) without sleep, long con- ference 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
Clyde W. Tinnen is a partner at Withers Bergman in Greenwich, Conn. PaTriCia M. lee is a partner and Jeanne r. SoloMon is a senior associate at the firm’s New York office. All three authors practice in the U.S. corporate group.
rules for acquired public companies deregis- tering their securities (or “going dark”) with the U.S. Securities and Exchange Commis- sion 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) (com- panies 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 com- panies and not foreign entities. To effectively terminate its Exchange Act reporting obliga- tions, 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 suspen- sion 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 applica- ble 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.
Delisting and Deregistration. During clos-
ing preparations, the company should advise each relevant exchange of a possible delisting. Upon closing, the company must formally request that the exchange delist the securi- ties, and deregister them under Exchange Act §12(b). The exchange usually can complete this request on a same-day basis and will file a Form 25 (Notification of Removal from List- ing and/or Registration under §12(b)).1 The delisting is subject to a 10-day effectiveness period, and the §12(b) deregistration is sub- ject to a 90-day effectiveness period.
The company would then file a Form 15 to terminate the securities’ registration under §12(g) as provided by Rule 12g-4, and may file the Form 15 as soon as the 10-day delist- ing period ends. The §12(g) deregistration is subject to a 90-day effectiveness period that (assuming the Form 15 is filed promptly) will overlap with any §12(b) deregistration
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