Securities Lawyer's Deskbook
published
by The
University
of Cincinnati College of Law
|
 |
General Rules and Regulations
promulgated
under the
Securities Exchange Act of 1934
Rule 12b-2 -- Definitions
Unless the context otherwise requires, the following terms, when used in the
rules contained in this regulation or in Regulation 13A
or 15D or in the forms for statements and reports
filed pursuant to Sections 12, 13
or 15(d) of the act, shall have the respective
meanings indicated in this rule:
Accelerated filer and large accelerated filer.
- The term "accelerated filer" means an issuer after it first meets the following
conditions as of the end of its fiscal year:
- The issuer had an aggregate
worldwide market value of the voting
and non-voting common equity held by
its non-affiliates of $75 million or more,
but less than $700 million, as of the last
business day of the issuer’s most
recently completed second fiscal
quarter;
- The issuer has been subject to the
requirements of section 13(a) or 15(d) of
the Act for a period of at least twelve calendar
months;
- The issuer has filed at least one
annual report pursuant to section 13(a)
or 15(d) of the Act; and
- The issuer is not eligible to use Forms 10-KSB
and 10-QSB for its annual and
quarterly reports.
- Large accelerated filer. The term
large accelerated filer means an issuer
after it first meets the following
conditions as of the end of its fiscal
year:
- The issuer had an aggregate
worldwide market value of the voting
and non-voting common equity held by
its non-affiliates of $700 million or
more, as of the last business day of the
issuer’s most recently completed second
fiscal quarter;
- The issuer has been subject to the
requirements of section 13(a) or 15(d) of
the Act for a period of at least twelve
calendar months;
- The issuer has filed at least one
annual report pursuant to section 13(a)
or 15(d) of the Act; and
- The issuer is not eligible to use
Forms 10–KSB and 10–QSB for its
annual and quarterly reports.
- Entering and Exiting Accelerated Filer Status.
- The determination at the end of the
issuer’s fiscal year for whether a nonaccelerated
filer becomes an accelerated
filer, or whether a non-accelerated filer
or accelerated filer becomes a large
accelerated filer, governs the deadlines
for the annual report to be filed for that
fiscal year, the quarterly and annual
reports to be filed for the subsequent
fiscal year and all annual and quarterly
reports to be filed thereafter while the
issuer remains an accelerated filer or
large accelerated filer.
- Once an issuer becomes an
accelerated filer, it will remain an
accelerated filer unless the issuer
determines at the end of a fiscal year
that the aggregate worldwide market
value of the voting and non-voting
common equity held by non-affiliates of
the issuer was less than $50 million, as
of the last business day of the issuer’s
most recently completed second fiscal
quarter. An issuer making this
determination becomes a nonaccelerated
filer. The issuer will not
become an accelerated filer again unless
it subsequently meets the conditions in
paragraph (1) of this definition.
- Once an issuer becomes a large
accelerated filer, it will remain a large
accelerated filer unless the issuer
determines at the end of a fiscal year
that the aggregate worldwide market
value of the voting and non-voting
common equity held by non-affiliates of the issuer was less than $500 million, as
of the last business day of the issuer’s
most recently completed second fiscal
quarter. If the issuer’s aggregate
worldwide market value was $50
million or more, but less than $500
million, as of the last business day of
the issuer’s most recently completed
second fiscal quarter, the issuer
becomes an accelerated filer. If the
issuer’s aggregate worldwide market
value was less than $50 million, as of
the last business day of the issuer’s most
recently completed second fiscal
quarter, the issuer becomes a nonaccelerated
filer. An issuer will not
become a large accelerated filer again
unless it subsequently meets the
conditions in paragraph (2) of this
definition.
- The determination at the end of
the issuer’s fiscal year for whether an
accelerated filer becomes a nonaccelerated
filer, or a large accelerated
filer becomes an accelerated filer or a
non-accelerated filer, governs the
deadlines for the annual report to be
filed for that fiscal year, the quarterly
and annual reports to be filed for the
subsequent fiscal year and all annual
and quarterly reports to be filed
thereafter while the issuer remains an
accelerated filer or non-accelerated filer.
Note to paragraphs (1), (2) and (3):
The aggregate worldwide market value
of the issuer’s outstanding voting and
non-voting common equity shall be
computed by use of the price at which
the common equity was last sold, or the
average of the bid and asked prices of
such common equity, in the principal
market for such common equity.
Affiliate. An "affiliate" of, or a person "affiliated"
with, a specified person, is a person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control with,
the person specified.
Amount. The term "amount," when used in regard to securities, means
the principal amount if relating to evidences of indebtedness, the number of shares
if relating to shares, and the number of units if relating to any other kind of security.
Associate. The term "associate" used to indicate a relationship
with any person, means
- any corporation or organization (other than the registrant or a majority-owned
subsidiary of the registrant) of which such person is an officer or partner or is,
directly or indirectly, the beneficial owner of 10 percent or more of any class of
equity securities,
- any trust or other estate in which such person has a substantial beneficial interest
or as to which such person serves as trustee or in a similar fiduciary capacity,
and
- any relative or spouse of such person, or any relative of such spouse, who has
the same home as such person or who is a director or officer of the registrant or
any of its parents or subsidiaries.
Business combination related shell company: The term
business combination related shell company means a
shell company (as defined in Rule 240.12b-2) that is:
- Formed by an entity that is not a shell company solely for the
purpose of changing the corporate domicile of that entity solely
within the United States; or
- Formed by an entity that is not a shell company solely for the purpose of
completing a business combination transaction (as defined in Rule
230.165(f) of this chapter) among one or more entities other than the shell company, none
of which is a shell company.
Certified. The term "certified," when used in regard to financial
statements, means examined and reported upon with an opinion expressed by an
independent
public or certified public accountant.
Charter. The term "charter" includes articles of incorporation,
declarations of trust, articles of association or partnership, or any similar
instrument, as amended, effecting (either with or without filing with any governmental
agency)
the organization or creation of an incorporated or unincorporated person.
Common equity. The term "common equity" means any class of common
stock or an equivalent interest, including but not limited to a unit of beneficial
interest in a trust or a limited partnership interest.
Control. The term "control" (including the terms "controlling,"
"controlled by" and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction
of the management
and policies of a person, whether through the ownership of voting securities,
by
contract, or otherwise.
Depositary share. The term "depositary share" means a security,
evidenced by an American Depositary Receipt, that represents a foreign security
or
a multiple of or fraction thereof deposited with a depositary.
Employee. The term "employee" does not include a director, trustee,
or officer.
Fiscal year. The term "fiscal year" means the annual accounting
period or, if no closing date has been adopted, the calendar year ending on December
31.
Majority-owned subsidiary. The term "majority-owned subsidiary" means
a subsidiary more than 50 percent of whose outstanding securities representing
the right, other than as affected by events of default, to vote for the election
of directors, is owned by the subsidiary's parent and/or one or more of the parent's
other majority-owned subsidiaries.
Managing underwriter. The term "managing underwriter" includes
an underwriter (or underwriters) who, by contract or otherwise, deals with the
registrant; organizes the selling effort; receives some benefit directly or indirectly
in which all other underwriters similarly situated do not share in proportion
to
their respective interests in the underwriting; or represents any other underwriters
in such matters as maintaining the records of the distribution, arranging the
allotments of securities offered or arranging for appropriate stabilization activities,
if any.
Material. The term "material," when used to qualify a
requirement for the furnishing of information as to any subject, limits the information
required
to those matters to which there is a substantial likelihood that a reasonable
investor would attach importance in determining whether to buy or sell the securities
registered.
Material weakness. The term material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrant's annual or interim financial statements will not be prevented or detected on a timely basis.
Parent. A "parent" of a specified person is an affiliate
controlling such person directly, or indirectly through one or more intermediaries.
Predecessor. The term "predecessor" means a person the
major portion of the business and assets of which another person acquired in
a single succession
or in a series of related successions in each of which the acquiring person acquired
the major portion of the business and assets of the acquired person.
Previously filed or reported. The terms "previously
filed" and "previously reported" mean previously filed with, or
reported
in, a statement under Section 12, a report under
Section 13 or 15(d),
a definitive proxy statement or information statement under Section
14 of the act, or a registration statement under the Securities Act of 1933:
Provided, That information contained in any such document shall be deemed
to have been previously filed with, or reported to, an exchange only if such document
is filed with such exchange.
Principal underwriter. The term "principal underwriter" means
an underwriter in privity of contract with the issuer of the securities as to
which he is underwriter.
Promoter.
- The term "promoter" includes:
- Any person who, acting alone or in conjunction with one or more other
persons, directly or indirectly takes initiative in founding and organizing the business
or enterprise of an issuer; or
- Any person who, in connection with the founding and organizing of the
business or enterprise of an issuer, directly or indirectly receives in consideration
of services or property, or both services and property, 10 percent or more of any
class of securities of the issuer or 10 percent or more of the proceeds from the
sale of any class of such securities. However, a person who receives such securities
or proceeds either solely as underwriting commissions or solely in consideration
of property shall not be deemed a promoter within the meaning of this paragraph if
such person does not otherwise take part in founding and organizing the enterprise.
- All persons coming within the definition of "promoter" in paragraph
1 of this definition may be referred to as "founders" or "organizers"
or by another term provided that such term is reasonably descriptive of those persons'
activities with respect to the issuer.
Prospectus. Unless otherwise specified or the context otherwise
requires, the term "prospectus" means a prospectus meeting the requirements
of Section 10(a) of the Securities Act of 1933
as amended.
Registrant. The term "registrant" means an issuer of securities
with respect to which a registration statement or report is to be filed.
Registration statement. The term "registration statement"
or "statement", when used with reference to registration pursuant
to Section 12 of the act, includes both an application
for registration of securities on a national securities exchange pursuant to
Section 12(b) of the act and a registration statement filed pursuant to Section
12(g) of the act.
Share. The term "share" means a share of stock in a corporation
or unit of interest in an unincorporated person.
Shell Company: Shell company: The term shell company means a
registrant, other than an asset-backed issuer as defined in Item
1101(b) of Regulation AB, that has:
- No or nominal operations; and
- Either:
- No or nominal assets;
- Assets consisting solely of cash and cash equivalents; or
- Assets consisting of any amount of cash and cash equivalents and
nominal
other assets.
Note: For purposes of this definition, the determination of a registrant's assets (including cash and cash equivalents) is based solely on the amount of assets that would be reflected on the registrant's balance sheet prepared in accordance with generally accepted accounting principles on the date of that determination.
Significant deficiency. The term significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the registrant's financial reporting.
Significant subsidiary. The term "significant subsidiary"
means a subsidiary, including its subsidiaries, which meets any of the following
conditions:
- The registrant's and its other subsidiaries' investments in and advances
to the subsidiary exceed 10 percent of the total assets of the registrant and its
subsidiaries consolidated as of the end of the most recently completed fiscal year
(for a proposed business combination to be accounted for as a pooling of interests,
this condition is also met when the number of common shares exchanged or to be exchanged
by the registrant exceeds 10 percent of its total common shares outstanding at the
date the combination is initiated); or
- The registrant's and its other subsidiaries' proportionate share of
the total assets (after intercompany eliminations) of the subsidiary exceeds 10 percent
of the total assets of the registrants and its subsidiaries consolidated as of the
end of the most recently completed fiscal year; or
- The registrant's and its other subsidiaries' equity in the income from
continuing operations before income taxes, extraordinary items and cumulative effect
of a change in accounting principle of the subsidiary exceeds 10 percent of such
income of the registrant and its subsidiaries consolidated for the most recently
completed fiscal year.
Computational note: For purposes of making the prescribed income
test the following guidance should be applied:
1. When a loss has been incurred by either the parent and its subsidiaries consolidated
or the tested subsidiary, but not both, the equity in the income or loss of the tested
subsidiary should be excluded from the income of the registrant and its subsidiaries
consolidated for purposes of the computation.
2. If income of the registrant and its subsidiaries consolidated for the most recent
fiscal year is at least 10 percent lower than the average of the income for the last
five fiscal years, such average income should be substituted for purposes of the
computation. Any loss years should be omitted for purposes of computing average income.
Small Business Issuer. The term "small business
issuer" means an entity that meets the following criteria:
- has revenues of less than $25,000,000;
- is a U.S. or Canadian issuer;
- (3) Is not an investment company and
is not an asset-backed issuer (as defined in Rule 229.1101 of this chapter);
and
- if a majority owned subsidiary, the parent corporation is also a small
business issuer.
Provided however, that an entity is not a small business issuer
if it has a public float (the aggregate market value of the issuer's outstanding
voting and non-voting common equity held by non-affiliates) of $25,000,000 or more.
Note: The public float of a reporting company shall be computed by use of the price
at which the stock was last sold, or the average of the bid and asked prices of such
stock, on a date within 60 days prior to the end of its most recent fiscal year.
The public float of a company filing an initial registration statement under the
Exchange Act shall be determined as of a date within 60 days of the date the registration
statement is filed. In the case of an initial public offering of securities, public
float shall be computed on the basis of the number of shares outstanding prior to
the offering and the estimated public offering price of the securities.
Subsidiary. A "subsidiary" of a specified person is an affiliate
controlled by such person directly, or indirectly through one or more intermediaries.
(See also "majority-owned subsidiary," "significant subsidiary,"
and "totally-held subsidiary.")
Succession. The term "succession" means the direct acquisition of
the assets comprising a going business, whether by merger, consolidation, purchase,
or other direct transfer. The term does not include the acquisition of control of
a business unless followed by the direct acquisition of its assets. The terms "succeed"
and "successor" have meanings correlative to the foregoing.
Totally held subsidiary. The term "totally held subsidiary" means
a subsidiary 1 substantially all of whose outstanding securities are owned by its
parent and/or the parent's other totally held subsidiaries, and 2 which is not indebted
to any person other than its parent and/or the parent's other totally held subsidiaries
in an amount which is material in relation to the particular subsidiary, excepting
indebtedness incurred in the ordinary course of business which is not overdue and
which matures within one year from the date of its creation, whether evidenced by
securities or not.
Voting securities. The term "voting securities" means securities
the holders of which are presently entitled to vote for the election of directors.
Wholly-owned subsidiary. The term "wholly-owned subsidiary" means
a subsidiary substantially all of whose outstanding voting securities are owned by
its parent and/or the parent's other wholly-owned subsidiaries.
<
13 FR 9321, Dec. 31, 1948, as amended at 19 FR 6730, Oct. 30, 1954; 20 FR 8285,
Nov. 4, 1955; 30 FR 2022, Feb. 13, 1965; 47 FR 11464, Mar. 16, 1982; 47 FR 29841,
July 9, 1982; 47 FR 54780, Dec. 6, 1982; 48 FR 12350, Mar. 24, 1983; 50 FR 25216,
June 18, 1985, 57 FR 36494, Aug. 13, 1992; 62 FR 26386, 26389, May 14, 1997;
67
FR 58480, 58505, Sept. 16, 2002; 70 FR 1506, 1620, Jan. 7, 2005; 70 FR 42234,
42247, July 21, 2005; 70 FR 76626, 76641, Dec. 27, 2005; 72 FR 35310, 35321, June 27, 2007; 72 FR 44924, 44927, Aug. 9, 2007.
Return to top
