Form 15

Form 15 is the certification a company files with the SEC to terminate the registration of a class of securities under Section 12(g) of the Exchange Act, or to suspend its duty to file reports under Section 13(a) or 15(d). In plain terms, it is how a company stops filing 10-Ks, 10-Qs and 8-Ks, often called "going dark."

How it works

A company is generally eligible when a class of securities is held of record by fewer than 300 persons, or fewer than 500 persons if its total assets have not exceeded $10 million at the end of each of its last three fiscal years. Holders "of record" count brokerage accounts held in street name as a single holder, which is why many companies with thousands of beneficial owners still qualify.

For stocks listed on an exchange, the listing must be removed first, which is done with a Form 25. Filing Form 15 generally suspends periodic reporting obligations immediately, while termination of Section 12(g) registration becomes effective 90 days later. Form 15 is also filed routinely after an acquisition closes, because the target's shares no longer exist as a separately held class.

Why it matters for traders

After a merger, a Form 15 is a formality. For an operating company that is still trading, going dark is usually bad for minority shareholders: the stock moves to OTC markets, information dries up, liquidity falls, and many institutions are no longer allowed to hold it. Companies justify the move by citing compliance costs, but the share price typically drops sharply on the announcement. Going dark is different from a formal going-private transaction, where holders are bought out for cash.

Example

A hypothetical small industrial company, Pinecrest Tool (PNCT), has 280 holders of record and spends about $1.5 million a year on public company costs. It announces it will voluntarily delist from Nasdaq, files a Form 25, and then files a Form 15. Its shares move to the OTC market, and the stock falls 35% over the following week.

FAQ

Does a Form 15 mean the company is going out of business?

No. The company continues operating; it simply stops filing public reports with the SEC.

Can shareholders still trade after a Form 15?

Usually yes, on OTC markets, though liquidity and available information are typically much lower.