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Recently, the news media has given a lot of attention to initial public offerings using special purpose acquisition companies (SPACs). But there\u2019s another major transaction that\u2019s gaining momentum amid the economic chaos caused by the COVID-19 pandemic: privatizations. Going private (also known as delisting) has many benefits, including:<\/p>\n
Should your company go private? To answer this question, it\u2019s important to understand how these transactions work and how they must be reported to the Securities and Exchange Commission (SEC).<\/p>\n
SEC requirements<\/strong><\/p>\n Under SEC rules, a company can elect to deregister its equity securities when they\u2019re held by fewer than 300\u00a0shareholders of record, or fewer than 500\u00a0shareholders of record if the company doesn\u2019t have significant assets. Depending on the facts and circumstances, a company may no longer be required to file periodic reports with the SEC once the number of shareholders of record drops below those thresholds.<\/p>\n In going-private transactions, a tender offer is typically used to purchase the shares of minority shareholders. However, the transaction can also take the form of a merger, a reverse stock split or a private equity buyout. The goal is to reduce the shareholder base to a level where the company may elect to terminate its status as a public company.<\/p>\n The SEC scrutinizes going-private transactions to ensure that unaffiliated shareholders are treated fairly. A company that\u2019s going private \u2014 together with its controlling shareholders and other affiliates \u2014 must, among other requirements, file detailed disclosures pursuant to SEC Rule\u00a013e-3.<\/p>\n Detailed disclosures<\/strong><\/p>\n To comply with SEC Rule\u00a013e-3, companies executing a going-private transaction must disclose:<\/p>\n The SEC\u2019s rules are intended to protect shareholders. Some states also have takeover statutes to provide shareholders with dissenters\u2019 rights. Such a transition results in a limited trading market to be able to sell the stock.<\/p>\n Failure to act with the utmost fairness and transparency can bring harsh consequences. SEC scrutiny can lead to costly damage awards and penalties if your company is guilty of treating minority shareholders unfairly or making misleading disclosures.<\/p>\n What\u2019s right?<\/strong><\/p>\n With interest rates low and market volatility high, now may be a good time for struggling public companies to consider delisting. Contact us to discuss the pros and cons of going private. We can help you comply with the SEC rules and structure your transaction in a manner that ensures transparency, procedural fairness and a fair price.<\/p>\n \u00a9 2022<\/em><\/p>\n <\/body> Recently, the news media has given a lot of attention to initial public offerings using special purpose acquisition companies (SPACs). But there\u2019s another major transaction that\u2019s gaining momentum amid the economic chaos caused by the COVID-19 pandemic: privatizations. Going private (also known as delisting) has many benefits, including: Reduced accounting, regulatory and governance costs, Fewer […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13,7,10],"tags":[8,11,12],"class_list":["post-15938","post","type-post","status-publish","format-standard","hentry","category-aa","category-articles","category-news","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/15938","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=15938"}],"version-history":[{"count":0,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/15938\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=15938"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=15938"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=15938"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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