Guest Post by Laura Anthony, Esq – Legal & Compliance, LLC
When a publicly traded company “goes dark” and becomes delinquent in its filing requirements, it generally becomes a public shell and is no longer quoted on the Over the Counter Bulletin Board Exchange (OTCBB). However, with the assistance of an experienced securities attorney, the shell company can be restored so that a merger candidate can be introduced.
Some of the specific details that constitute the clean-up process include:
- Reinstating the Company’s corporate charter and paying franchise taxes to the Company’s state of domicile, if necessary
- Working with a PCOAB (Public Company Oversight Accounting Board) auditor to update all necessary financial statements and audits
- Holding a shareholder meeting for purposes of electing directors and amending articles of incorporation and bylaws as necessary
- Updating the Company’s articles of incorporation and bylaws to ensure they suit the needs of the successor Company
- Conducting reverse splits of the Company’s outstanding shares of common stock in order to decrease the size of the outstanding common stock and increase the stock price.
- Updating the Company’s SEC filings and/or drafting and filing a Registration Statement
- Answering any outstanding SEC comments that were never satisfied by the Company’s former Officers and Directors
- Installing a qualified Board of Directors and/or a skilled management team
- Updating the Company’s corporate minute books and drafting any necessary board resolutions depending on the circumstance
- The preparation and distribution of shareholder proxies and certain notices should a shareholder meeting be necessary to satisfy disclosure requirements and ensure the furtherance of the successor Company
- Updating compliance procedures by drafting corporate compliance standards and implementing a code of ethics.
- Educating the board of directors regarding the legal responsibilities of being control persons of a public company, including the duty of loyalty, conflict of interest and self dealing obligations, prohibitions against short-swing profits and reporting requirements under sections 13 and 16 of the Securities Exchange Act.
- Drafting or updating an applicable business plan.
- Filing a new 15c2-11 application or applying for an exemption thereto