SEC Amends Rule 12d2-2 to Simplify Delisting Process

Strategic Insights -

The Securities and Exchange Commission has amended Rule 12d2-2 under the Securities Exchange Act of 1934 to streamline the delisting and deregistration process for securities listed on a stock exchange. On July 15, 2005, the SEC announced the amendment, which will become effective on April 24, 2006. The revised rule simplifies the process by making delisting automatic upon the passage of time, eliminating the need for issuer orders approving delisting applications.

Key Takeaways:

  • The SEC has revised Rule 12d2-2 to provide that a stock exchange will strike a security from listing by filing a Form 25 with the SEC, with a copy of the exchange's determination to delist as an attachment.
  • The delisting is effective 10 days after the filing of the Form 25, unless the SEC postpones the effectiveness.
  • The withdrawal from registration under Section 12(b) of the Exchange Act will take effect 90 days after the filing of the Form 25.
  • An issuer's duty to file reports under Section 13(a) of the Exchange Act will generally be suspended at the effective date of the delisting, unless they have a class of securities registered under Section 12(g) or another class of securities registered under Section 12(b).
  • To delist a security, a stock exchange must provide notice to the issuer, offer an opportunity for appeal, public notice of the exchange's final determination, and a copy of the Form 25 to the issuer.
  • Issuers may withdraw a security from listing by filing a Form 25 with the SEC, with the delisting effective 10 days after the filing, unless the SEC postpones the effectiveness.
  • Issuers must comply with the stock exchange's rules for delisting and applicable state laws to delist a security.
  • Form 25 has been revised to be used for all delistings, whether initiated by a stock exchange or an issuer, and must be filed electronically via the SEC's EDGAR filing system.

Statistics:

  • The revised rule becomes effective on April 24, 2006.
  • The delisting will be effective 10 days after the filing of the Form 25, unless the SEC postpones the effectiveness.
  • The withdrawal from registration under Section 12(b) of the Exchange Act will take effect 90 days after the filing of the Form 25.
  • An issuer's duty to file reports under Section 13(a) of the Exchange Act will be suspended for 10 days after the filing of the Form 25.

Sources:

  • Release No. 34-52029
  • Form 25
  • Securities Exchange Act of 1934
  • Rule 12d2-2
  • Section 12(b) of the Exchange Act
  • Section 13(a) of the Exchange Act
  • Section 12(g) of the Exchange Act
  • EDGAR filing system
  • Mayer, Brown, Rowe & Maw LLP
  • Mondaq Ltd.