SEC Form 25 – The Securities and Exchange Commission (SEC) is the federal agency that regulates the securities markets in the United States. The SEC requires public companies and other entities that issue securities to file various forms and reports with the agency, disclosing information about their financial condition, business operations, and corporate governance. These forms and reports are available to the public on the SEC’s website and can help investors and analysts make informed decisions.
One of the forms that the SEC requires is Form 25, which is used to notify the SEC of the removal of a class of securities from listing on a national securities exchange or an inter-dealer quotation system or the withdrawal of registration of such securities under Section 12(b) of the Securities Exchange Act of 1934.
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Why would a company delist or deregister its securities?
There are various reasons why a company or an exchange may decide to delist or deregister a class of securities. Some of the common reasons are:
- The securities have matured, been redeemed, or exchanged for another security or cash as part of a merger, acquisition, or other corporate transaction.
- The company wants to go private by buying back all or most of its public shares, reducing its number of shareholders below the threshold for SEC reporting obligations.
- The company wants to go dark by moving its securities from a major exchange to a less regulated market, such as the OTC Bulletin Board or the Pink Sheets, where it can suspend or reduce its SEC reporting obligations.
- The company fails to meet the listing standards or requirements of the exchange, such as minimum share price, market capitalization, number of shareholders, or financial performance.
- The company voluntarily withdraws from listing or registration to save costs, avoid regulatory scrutiny, or pursue other strategic goals.
How does Form 25 work?
Form 25 is a short and simple form that contains basic information about the issuer, the exchange, and the class of securities that are being delisted or deregistered. The form must be filed electronically on the SEC’s EDGAR database by either the issuer or the exchange, depending on who initiates the removal or withdrawal.
The form must also indicate which rule provision under Rule 12d2-2 (17 CFR 240.12d2-2) is relied upon to strike the class of securities from listing and registration. There are four possible rule provisions:
- 17 CFR 240.12d2-2(a)(1): The exchange has suspended trading in the security permanently or has removed it from listing pursuant to its rules.
- 17 CFR 240.12d2-2(a)(2): The exchange has suspended trading in the security due to an emergency or extraordinary event.
- 17 CFR 240.12d2-2(a)(3): The issuer has succeeded another issuer in a merger, consolidation, reclassification, or other similar transaction and has registered a new class of securities under Section 12(b).
- 17 CFR 240.12d2-2(a)(4): The issuer has voluntarily withdrawn from listing and registration by complying with the rules of the exchange and filing Form 25 at least 10 days before the removal becomes effective.
In addition to filing Form 25, the issuer or the exchange must also issue a press release and post notice on the website of its intention to delist or deregister at least 10 days before the removal becomes effective.
What are the effects of filing Form 25?
The filing of Form 25 has two main effects: it removes the class of securities from listing on the exchange and it terminates the registration of such securities under Section 12(b) of the Exchange Act. However, these effects do not occur simultaneously.
The removal of the class of securities from listing on the exchange becomes effective 10 days after filing Form 25. With respect to any amendment to Form 25, the removal becomes effective 10 days after filing the amended Form 25.
The withdrawal of registration of a class of securities under Section 12(b) becomes effective 90 days after filing Form 25, or such shorter period as the SEC may determine.
The filing of Form 25 also suspends most reporting obligations under Section 13(a) and Section 15(d) of the Exchange Act as of the date that delisting becomes effective. However, some reporting obligations may continue until deregistration becomes effective, such as filing annual reports on Form 10-K and current reports on Form 8-K.
In conclusion, Form 25 is an important form that notifies the SEC of the removal of a class of securities from listing on an exchange or the withdrawal of registration of such securities under Section 12(b) of the Exchange Act. The form must be filed by the issuer or the exchange, depending on who initiates the action, and must indicate the rule provision under Rule 12d2-2 that is relied upon. The form must also be accompanied by a press release and a website notice at least 10 days before the removal becomes effective. The filing of Form 25 has two main effects: it removes the securities from listing on the exchange and it terminates their registration under Section 12(b). However, these effects do not occur simultaneously. The removal becomes effective 10 days after filing Form 25, while the deregistration becomes effective 90 days after filing Form 25, or such shorter period as the SEC may determine. The filing of Form 25 also suspends most reporting obligations under Section 13(a) and Section 15(d) of the Exchange Act as of the date that delisting becomes effective, but some reporting obligations may continue until deregistration becomes effective.
Frequently Asked Questions (F&Qs)
Why did Pfizer file SEC form 25?
Pfizer filed SEC Form 25 on June 16, 2023, to delist its 0.250% notes due 2022 from the New York Stock Exchange (NYSE). The company said that the delisting was necessary because the notes had been repaid in full.
What is SEC forms?
SEC forms are regulatory documents that companies and issuers of securities must submit to the Securities and Exchange Commission (SEC) on a regular basis. The purpose of SEC forms is to provide transparency and information to investors, analysts, and regulators.
Can the SEC delist a company?
Yes, the SEC can delist a company if it believes that the company is not meeting the listing standards of the exchange on which it is listed. The SEC can also delist a company if it has violated securities laws or regulations.
What happens to a company when it is delisted?
When a company is delisted, it means that its shares will no longer be traded on a national securities exchange. This can happen for a number of reasons, such as the company failing to meet the listing standards of the exchange, violating securities laws, or going bankrupt.
There are a few things that happen to a company when it is delisted:
- The company’s shares will no longer be traded on a national securities exchange. This means that investors will have to find other ways to buy and sell the company’s shares, such as through the over-the-counter market.
- The company will no longer be required to file periodic reports with the SEC. This means that investors will have less access to information about the company’s financial performance and other important matters.
- The company’s stock price may decline. This is because the delisting of a company is often seen as a sign that the company is struggling financially.
Can the SEC ban you from trading?
Yes, the SEC can ban you from trading if you violate securities laws or regulations. The SEC has the authority to ban individuals from trading securities for a variety of reasons, including:
- Insider trading: This is the illegal use of material nonpublic information to trade securities.
- Market manipulation: This is the illegal attempt to artificially affect the price of a security.
- Fraud: This is the intentional misrepresentation of material information to investors.
- Failure to register securities: This is the failure to file the required paperwork with the SEC before selling securities to the public.
How long does it take for a company to delist?
The delisting process can take anywhere from a few months to a few years.
Here are some of the factors that can affect the delisting process:
- The reason for the delisting: If the company is delisted for failing to meet the listing standards of the exchange, the delisting process will likely be relatively quick. However, if the company is delisted for violating securities laws or regulations, the delisting process may take longer.
- The company’s financial health: If the company is financially healthy, it may be able to work with the exchange to avoid delisting. However, if the company is financially struggling, the delisting process may be more likely to proceed.
- The company’s willingness to cooperate: If the company is cooperative with the exchange, the delisting process may be smoother. However, if the company is not cooperative, the delisting process may be more difficult.
What is an SEC form 2?
SEC Form 2 is a registration form that must be filed by companies that are offering securities to the public through Regulation A. Regulation A is a simplified registration process that allows companies to raise up to $50 million in capital from the public.