15 U.S.C. § 78l — Registration requirements for securities

(a) General requirement of registration A member, broker, or dealer cannot trade any security (except an exempted security) on a national securities exchange unless that security is currently registered on that exchange under this law. This rule does not apply to security futures products traded on an exchange. (b) How to register; what information is required An issuer registers a security on an exchange by filing an application with the exchange (and copies with the SEC if required). The SEC can require information about the issuer and about anyone who controls it, is controlled by it, or is under common control with it, and about anyone guaranteeing the security, including: (A) how the business is organized, financed, and what it does; (B) the terms and rights of its different classes of securities; (C) how its securities have been offered to the public in the last three years; (D) its directors, officers, underwriters, and holders of more than 10% of any class of equity security, their pay, and their financial interests and contracts with the issuer; (E) payments over $20,000 a year to people other than directors and officers; (F) bonus and profit-sharing plans; (G) management and service contracts; (H) options on its securities; (I) material contracts made outside the ordinary course of business that are signed at or after filing, or within the two years before filing (a material patent or patent-right contract always counts as material); (J) balance sheets for up to the last three years, certified by an accounting firm if the SEC requires; (K) profit-and-loss statements for up to the last three years, similarly certified; and (L) any other financial statements the SEC decides investors need. The issuer must also file copies of its organizing documents (articles, bylaws, trust indentures, and similar documents), underwriting agreements, and voting trust agreements — for itself and any controlling, controlled, or commonly controlled entity — and copies of the material contracts described in (b)(1)(I). (c) Different information for different issuers If the SEC decides that information required under subsection (b) doesn't fit a certain type of issuer, it can require different but comparable information instead. (d) When registration takes effect; withdrawing Once the exchange tells the SEC it has approved a security for listing, registration takes effect 30 days later, or sooner if the SEC allows. A security can be withdrawn from listing under exchange rules, with SEC approval, on terms the SEC sets to protect investors — after which the issuer no longer has to follow this section or section 78m for that security. An unissued security can only be registered under SEC rules meant to protect investors. (e) Temporary exemption ending July 1, 1935 The SEC could let securities already listed on an exchange, at the time that exchange first registered as a national securities exchange, be registered — without following this section's normal rules — only until July 1, 1935. (f) Unlisted trading privileges An exchange can let a security trade on it without being formally listed there ("unlisted trading privileges") if the security is already listed on another national exchange, or is otherwise registered (or exempt from registration) under this section — subject to SEC rules. But an exchange cannot extend unlisted trading privileges to a newly, separately-listed security during an initial period after its IPO begins; the SEC had to set that period's length by rule within 180 days of October 22, 1994 (until then, a default interval applied: from the start of trading on the day the security first trades on its home exchange through the end of the next trading day). The SEC can set further procedures or requirements for granting unlisted trading privileges. For a security that is not already listed elsewhere, the exchange needs an SEC rule or order approving the extension. Before approving, the SEC must find the extension fits fair and orderly markets and investor protection, must weigh the security's public trading activity and the impact on existing markets, and must not approve it if any exchange rule would unreasonably block a dealer from trading for itself or unreasonably restrict competition among dealers (including between specialists and non-specialists). An exchange can only keep extending these privileges as long as it and the security still meet the requirements — except securities admitted before July 1, 1964 can keep their privileges even without meeting later requirements. If privileges are dropped, the exchange must stop trading the security unless it requalifies. The SEC can summarily suspend unlisted trading privileges within 60 days after such trading starts on an exchange; that suspension cannot be reviewed in court and isn't a "final agency action." Once suspended, the exchange must stop trading the security by the SEC's deadline, and must apply to the SEC to resume if it wants to keep offering unlisted trading. A suspension lasts until the SEC approves a reinstatement application, and it does not undo unlisted trading privileges that were already valid before the suspension. The SEC can only approve reinstatement after a hearing, again checking the same fairness and competition factors. Beyond that, the SEC can, by rule, suspend unlisted trading privileges for some or all classes of securities for up to 12 months if needed for the public interest, investor protection, or to prevent evasion of the law. And on request from the issuer, a market-making broker or dealer, anyone else with a real interest, or on its own, the SEC can terminate or suspend (up to 12 months) unlisted trading privileges for a specific security, after a hearing, if that's necessary for the public interest or investor protection. In any such hearing, giving 10 days' notice to the applicant, the issuer, and the exchanges involved counts as adequate notice, and interested market participants can ask to be heard. A security with continued or extended unlisted trading privileges counts as registered on a national securities exchange under this law, and the SEC's powers over exchange rules apply to it. The SEC can exempt such securities from sections 78m, 78n, or 78p. (g) Issuers that must register even without listing on an exchange An issuer engaged in interstate commerce (or whose securities are traded through the mail or interstate commerce) must register a class of equity security (other than an exempted security) within 120 days after the end of its first fiscal year in which it has more than $10,000,000 in total assets and that security is held by 2,000 or more people, or by 500 or more people who are not accredited investors. Banks, savings and loan holding companies, and bank holding companies follow a similar rule but the threshold is 2,000 or more holders (no separate 500/non-accredited-investor test). Registration requires filing a statement with the SEC containing information like what's required under subsection (b). It takes effect 60 days after filing, or sooner if the SEC allows; until then it doesn't count as "filed" for section 78r purposes. Any issuer can voluntarily register a class of equity security this way even if not required to. The SEC can extend the deadline for any issuer or class of issuers. This registration duty does not apply to: (A) any security already listed and registered on a national exchange; (B) securities of a registered investment company; (C) certain non-withdrawable capital securities of supervised savings and loan associations, building and loan associations, cooperative banks, homestead associations, or similar institutions; (D) securities of nonprofit religious, educational, benevolent, fraternal, charitable, or reformatory organizations (with no private profit), or securities of certain excluded investment funds; (E) securities of qualifying agricultural cooperative associations or their federations; (F) securities of nonprofit mutual or cooperative organizations that supply goods or services mainly to members, where the securities are only transferable to a successor occupant and pay no dividends; (G) insurance company securities, if the company files annual statements with its home-state insurance regulator that conform to national standards, is regulated by that state on proxies and consents in a way that matches national standards, and (after July 1, 1966) is regulated by that state on insider trading in a way like section 78p; and (H) interests in bank collective trust funds or insurance company separate accounts tied to certain tax-qualified pension, profit-sharing, or annuity plans, or to certain excluded church plans. The SEC can, after notice and a hearing (or by rule), exempt a foreign issuer's securities from this subsection if that's in the public interest and consistent with investor protection. Registration under this subsection ends 90 days (or sooner if the SEC allows) after the issuer certifies that the security is now held by fewer than 300 people (or fewer than 1,200 for banks and certain bank/savings holding companies) — unless the SEC, after a hearing, finds the certification untrue, in which case ending registration is denied and put on hold pending that decision. "Class" means all securities of an issuer that are substantially alike in character and give holders substantially similar rights. The SEC can define "total assets" and "held of record" to prevent people from getting around this subsection. A security futures product doesn't count as a class of equity security of its underlying issuer. And securities that employees got through an exempt compensation plan don't count toward "held of record" for purposes of when registration is required. The SEC must, by rule, exempt securities acquired through certain small offerings under Securities Act section 4(6) from this subsection. (h) Exempting issuers from parts of this law The SEC can, by rule or by order after notice and a hearing, exempt an issuer or class of issuers from subsection (g), or from sections 78m, 78n, or 78o(d) — or exempt an officer, director, or beneficial owner from section 78p — on whatever terms and for however long it decides, if it finds this fits the public interest given the number of public investors, trading interest, the issuer's activities, or its income or assets. The SEC can classify issuers and set different requirements for each class. (i) Bank-issued securities For securities issued by FDIC-insured banks and savings associations, the SEC's power to enforce this section and several related sections is instead given to other regulators: the Comptroller of the Currency handles national banks and federal savings associations; the Federal Reserve Board handles other Federal Reserve member banks; and the FDIC handles all other FDIC-insured banks and state savings associations. Those regulators can make rules needed to carry out this job, and must issue rules substantially similar to the SEC's own rules — unless they find that would not serve the public interest or investor protection, and publish their reasons in the Federal Register. Their rules (or their reasons for not matching the SEC's) had to be published within 120 days of October 28, 1974, and afterward within 60 days of any SEC rule change. (j) Denying, suspending, or revoking registration After notice and a hearing, the SEC can, by order, deny, delay, suspend (up to 12 months), or revoke a security's registration if it finds the issuer failed to comply with this law or its rules. Once registration is suspended or revoked, no exchange member, broker, or dealer may use the mail or interstate commerce to trade or promote trading in that security. (k) Trading suspensions and emergency powers The SEC can, if the public interest and investor protection require it: (1) summarily suspend trading in one security for up to 10 business days, or summarily suspend all trading on an exchange (or otherwise) for up to 90 calendar days — though the 90-day suspension only takes effect if the SEC tells the President and the President doesn't disapprove; and if security futures products are involved, the SEC must consult the CFTC. In an emergency, the SEC can also summarily alter, add, suspend, or impose requirements on anything it or a self-regulatory organization regulates, in order to restore fair markets, ensure safe clearing and settlement, or reduce or prevent a major disruption to markets or to transaction processing. Such an emergency order normally lasts up to 10 business days including extensions, but the SEC can extend it further — up to 30 calendar days total — if it finds the emergency still exists and the extension is needed. If security futures are involved, the SEC must again consult the CFTC. In issuing these emergency orders, the SEC doesn't have to follow the normal notice-and-hearing rulemaking procedures in section 78s(c) or section 553 of title 5. The President can end an SEC emergency action taken under paragraph (1)(B) or paragraph (2) of this subsection. No exchange member, broker, or dealer may trade in violation of one of these orders unless it has been stayed, changed, set aside on review, or ended by the President. Court review of these orders is limited to section 78y(a), based only on the record before the SEC when it issued the order; a court can only block the order if it finds the SEC acted arbitrarily, capriciously, abused its discretion, or otherwise broke the law, after notice and a hearing before a panel. Before suspending all trading under paragraph (1)(B), the SEC must consult the Treasury Secretary, the Federal Reserve Board, and the CFTC, unless that's impractical given the emergency. "Emergency" means either a major market disturbance — sudden, excessive price swings (or a real threat of them) that threaten fair markets, or a real disruption (or threat) to the safety or efficiency of securities clearing and settlement — or a major disturbance that disrupts or threatens to disrupt securities markets, investment companies, or the processing of securities transactions. (l) Issuing securities that don't follow SEC format rules An issuer with a registered class of securities (or one that would have to register except for the exemptions in subsection (g)(2)(B) or (g)(2)(G)) cannot use the mail or interstate commerce to issue or transfer those securities in a form that breaks SEC rules meant to ensure prompt, accurate clearing and settlement. This rule does not apply to variable annuity contracts or variable life insurance policies issued by an insurance company or its separate accounts.