SEC Form 15: An Overview
SEC Form 15 is a voluntary filing with the Securities and Exchange Commission (SEC), also known as the Certification and Notice of Termination of Registration. It is used by companies to revoke their registrations as publicly-traded corporations.
Form 15 is typically used by small companies with a limited number of shareholders who decide that the expense and reporting requirements of remaining a publicly-traded corporation are too onerous. The company's shares will cease trading, while its remaining owners may retain or sell their shares privately.
- Form 15 informs the SEC that a company no longer wants to trade publicly, and therefore won't follow the usual government reporting requirements.
- The form is most often used by small companies with few shareholders who find the SEC reporting regulations burdensome.
- It is sometimes used by companies in deep trouble that face imminent de-listing anyway.
The form also may be used by companies that have fallen on hard times financially and have reason to fear imminent and non-voluntary delisting by an exchange.
Understanding SEC Form 15
SEC Form 15 notifies the SEC that the company filing it does not intend to continue to file the various forms that are required in order to maintain its listing as a public company.
A company must have fewer than 300 shareholders to be eligible to file Form 15.
The reporting requirements are detailed in the Securities Exchange Act of 1934. They are extensive and can be burdensome for small publicly-listed firms. Some of these experience very little trading of their stock on the public exchange. Ownership may be dominated by a single family or by a small group of investors.
The benefits of being a public company are simply not worth the time, money, and effort of preparing and filing periodic reports to the SEC.
As soon as the voluntary Form 15 is filed, the company is no longer required to make the principal filings required by the SEC. These include the annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. (In the case of foreign companies, Form 8-K is replaced with Form 20-F, and Form 6-K).
Certain reporting obligations, such as proxy statements, remain in place for 90 days following the filing.
Example of an SEC Form 15 Filing
Talon International, Inc., a manufacturer of zippers and apparel fasteners, filed a Form 15 on Dec. 28, 2017, "after a detailed analysis and thoughtful deliberation of the advantages and disadvantages of being an SEC reporting company."
Filing Form 15 immediately releases the company from some SEC reporting requirements.
The company's board of directors considered the costs associated with the preparation and filing of reports, including the expenses of outside legal and accounting resources, the amount of management time spent completing the documents, the number of trades of the common stock, and the views of its largest shareholders.
The resources, the company concluded, could be better spent on business operations.