SEC Form 25

SEC Form 25 is the form issuers of listed securities have to file with the SEC when they are delisting their securities – under Rule 12d2-2 of the Securities Exchange Act of 1934. The issuer must give notice of its intention to file the Form 25 and issue a press release announcing that intention ten days prior to filing the Form 25. The delisting will become effective 10 days after filing the Form 25 and most SEC reporting obligations are suspended on that date. However, the actual termination of registration under Section 12(b) does not occur until 90 days after effectiveness of the delisting.

Securities may be delisted from an exchange for various reasons. Bonds may have matured or been called and redeemed by a company. A company might want to go private by paying cash for all or a substantial portion of its public shares, or perhaps its outstanding securities have been exchanged for cash or another security as part of a takeover. It might just want to voluntarily delist from a national securities exchange or inter-dealer quotation system, in order to suspend or reduce the company’s public reporting obligations under the Exchange Act.

Compliance costs are burdensome for public companies with a market capitalization of less than $50 million and revenues under $100 million – amounting to millions of dollars annually. Naturally, many small companies delist during business downturns.

The lack of a stock exchange listing may substantially diminish the benefits of remaining a public company. But some companies prefer to go dark rather than go private. By going dark, the company’s shares generally continue trading in the Pink Sheets, without subjecting the company to any Exchange Act reporting requirement.