SEC Comment About Affiliate Stockholders

October 25, 2017
Securities Law Exchange Blog

In monitoring SEC comment letters, we came across this SEC comment letter made public this month. It serves as a reminder to registrants that, when calculating a company’s public float, there is an informal presumption that a 10% or greater stockholder is an affiliate of the company; however, this presumption is rebuttable by the registrant.

The letter stated that “[t]he Staff has consistently taken the position that the determination of ‘control’ status is dependent in large part on the facts and circumstances involved and, therefore, has declined to state definitively what circumstances will result in a person being deemed to be in ‘control’ of an issuer. While the Company recognizes that, as a rule of thumb, more than 10% ownership has become an informal benchmark at which control should be evaluated, such ownership, standing alone, is not dispositive.”

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