When we ended the last installment, we had successfully deregistered under Section 12(b). Now is the time to confront Darth Vader, and do something about any lingering Section 12(g) and 15(d) reporting obligations.

How can the company terminate its Section 12(g) registration?Section 12(g) deregistration is not automatic; the issuer has to take affirmative steps to get rid of its Section 12(g) registration.

• A domestic US company will generally do this by using Rule 12g-4, which provides for termination by filing a Form 15 certifying that the company either (i) has fewer than 300 record holders or (ii) has fewer than 500 record holders and less than $10 million in assets as of the last day of each of the company’s last three fiscal years. This is easy to establish in typical M&A scenarios, in which the target company becomes a wholly owned subsidiary of the acquiring company and hence has only one holder.
• Foreign private issuers proceed under Rule 12h-6 and Form 15F. The requirements of Rule 12h-6 and Form 15F are somewhat different than those of Rule 12g-4 and Form 15. We are going to focus on domestic filers for the moment, but if you would like to understand how this works for foreign private issuers, see the Latham FPI Guide.¹
  

Note that the Form 15 does not take effect immediately – under Rule 12g-4, the form takes effect 90 days after filing (or such shorter period as the SEC may determine). But unlike its cousin, Form 25, the act of filing the Form 15 immediately suspends the issuer’s SEC reporting obligation (see Rule 12g-4(b)). So, you do not need to file required periodic or current reports even though the Form 15 has not yet taken effect. See C&DI 144.02.

Hey, I have a good idea – why can’t I just file the Form 15 at the same time I file the Form 25 and knock off both Section 12(b) and 12(g) at the same time?“You are reckless,” as Yoda tells Luke.  The SEC Staff shares his view – see C&DI 111.01, which provides that a Form 15 may not be filed prior to the effectiveness of the related Form 25.OK, the company has terminated its Section 12(b) and 12(g) registration (and thereby disposed of its Section 13(a) reporting obligations). What about Section 15(d)?Section 15(d) has two ways to get out from reporting – one under the statute and one under Rule 12h‑3.² We’ll begin with the statute.

Under Section 15(d), the duty to make SEC filings is automatically suspended as to any fiscal year other than the fiscal year in which its registration statement went effective if, at the beginning of the fiscal year, it had fewer than 300 record holders. A few points to note here:

• The limitation that a company cannot dispose of its Section 15(d) reporting obligation during the year it went public may be important for a debt-only filers. They must make periodic and current filings during the year of effectiveness even if they have fewer than 300 holders of record. In addition, the SEC Staff takes the position than an issuer must file one Form 10-K, covering the fiscal year in which the registration statement went effective, regardless of whether it has fewer than 300 holders of record at the beginning of the next fiscal year. See C&DI 153.03. So, you will have to file one Form 10-K under any circumstance.
• Even though the statute grants the suspension, the issuer should file Form 15 to notify the SEC of the suspension. See Rule 15d-6; C&DI 153.01.

Rule 12h-3 gives you an alternative channel for suspending Section 15(d) reporting. The advantage of Rule 12h-3 is that you are not limited to counting holders of record at the beginning of the fiscal year; instead, Rule 12h-3 is available at any time during the fiscal year (except, of course, the fiscal year during which the company’s registration statement went effective). Bear in mind that the suspension is not automatic – the issuer must file the Form 15 in order to get the benefit of the suspension. See C&DI 153.01. You should also remember that Rule 12h-3 has its own requirements, including that the issuer has been current in its SEC reporting (without regard to Rule 12b-25) for the shorter of its most recent three fiscal years plus the current year in progress, and the period of time it has been subject to SEC reporting. The good news is that the duty to report is suspended as soon as the Form 15 is filed (and before it goes effective). See Rule 12h-3(a) for these requirements.

There is a trap for the unwary here (not connected with the machinations of the Emperor or the initially doubtful status of Lando Calrissian as an ally). Unlike Section 12 registration, a domestic US company can never terminate a Section 15(d) reporting obligation; instead, that obligation can only be suspended.³ This means that, in certain circumstances, your Section 15(d) reporting obligation can come back to life. How? Well, take the case of a calendar year issuer that is below 300 shareholders of record on January 1, 2014 but above 300 shareholders on January 1, 2016. Although its Section 15(d) reporting obligation was suspended for fiscal year 2014, it was revived for fiscal year 2016. On top of this, the SEC Staff takes the position that the issuer has to file a Form 10-K for fiscal year 2015. See C&DI 153.02.

Can I file a joint Form 15 for Section 12(g) registration and Section 15(d) reporting?

Technically, the Section 15(d) reporting obligation does not revive until the issuer has terminated its Section 12 registration (and remember, the actual termination of registration can take as long as 90 days). But general practice is for a company to use Rules 12g-4 and 12h-3 together on the same Form 15 to dispense with its filing obligations even though it still remains registered under Section 12(g) and subject to Section 15(d). See C&DI 144.02.

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¹   Bear in mind that FPIs have their own version of R2D2 – in other words, Rule 12g3-2(b). That Rule provides an exemption from Section 12(g) registration for FPIs.
²   Foreign private issuers use Rule 12h-6 instead of Rule 12h-3. By contrast, a foreign private issuer can terminate its Section 15(d) reporting obligation. See Rule 12h-6.
³   Release No. 34-55540 at pp. 1-2 and at n.11.