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TOPIC: SEC "Evergreen Requirement" may get reversed...

SEC "Evergreen Requirement" may get reversed... 10 years 1 month ago #1437

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[SEC "Evergreen Requirement" may get reversed...]
SEC Official Calls Evergreen Requirement 'Unfortunate'
Posted November 21, 2008 3:28PM PST

Brian Breheny, deputy director of the Securities and Exchange Commission's division of corporate finance, referred to the so-called evergreen requirement in Rule 144(i) of the Securities Act, as an "unfortunate result" and said that it was "probably not something that the commission intended."

The "evergreen requirement" refers to language that the SEC added to rule Rule 144 in February. It says that every stock issuer that was ever in its history a shell company is subject to additional restrictions when investors use Rule 144 to sell unregistered stock.

The remarks came at the SEC Government-Business Forum on Small Business Capital Formation in Washington yesterday. The issue was broached by attorney Jack Hogoboom with the law firm of Lowenstein Sandler.

Hogoboom said the rule "has the impact of punishing a company that was ever a shell in perpetuity and more importantly, its investors."

Breheny responded that the SEC is likely to take action to address concerns about the rule.

"We've already started to move on that," he said. "I think you could see something sooner rather than later."

Under the evergreen requirement, if a company was ever a shell it must be current in its filings for 12 months before investors can sell unregistered shares. As a result, the restrictive legend can never be removed from its stock certificates in advance of a sale. The rule affects any company going public through a shell merger or SPAC.
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