섹션 16 스톡 옵션

최종 섹션 16보고 및 짧은 스윙 이익 규칙 : 최종 섹션 16 규칙은 사용자 친화적입니다.

이 기사는 임원 및 이사에 대한 임원 보상 계획에 대한 새로운 섹션 16 규정의 실질적인 영향을 분석합니다. 새로운 규정은 경영진 보상 플래너에게 과도한 시간을 소비하는 많은 요구 사항과 불확실성을 제거합니다. 아마도 새로운 규정의 가장 큰 이점은 제 16 항의보고 및 단기적 이익 회수 규칙과 같은 경영진 보상 결정과 관련된 주요 규제 고려 사항 중 하나를 사실상 없앨 수 있다는 것입니다.

이전 요구 사항이 제거되었습니다.

새 규칙은 현재 규칙 16b-3의 많은보고 요구 사항 및 면제 조건을 제거합니다.

다음 트랜잭션은보고 요구 사항에서 제외됩니다.

401 (k) 플랜, 초과 수당 플랜 및 종업원 주식 매입 플랜과 같은 조세 플랜에 대한 면제에 따른 거래; 배당 또는이자 재투자 계획 및 국내 관계 명령에 따른 거래; 예를 들어, 신탁이나 종업원 급여 계획으로부터 주식을 분배하는 것과 같이 실질 소유 형태만을 변경하는 거래; 가치없는 주식 옵션의 취소 또는 만료; 내부자가 아니었던 사람이 거래를 면제합니다.

새로운 규칙에 따라, 파생 증권의 행사 및 전환, 즉 스톡 옵션 및 주식 시세 확인 권리 ( "SARs")를 양식 4에보고해야합니다. 비 면제 거래도 양식 4에보고해야합니다. 선물, 스톡 옵션 교부금 및 고용주 주식 펀드 전환 거래는 양식 5에보고 될 수 있으며, 양식 4에 대한 이전보고는 허용됩니다.

새로운보고 규정은 1996 년 8 월 15 일 이후 시행 된 거래에 대해서만 유효합니다. 그러나 조세 감면 계획에 대한보고 면제는 회사가 새로운 규칙 16b-3을 준수하기로 선택한 경우에만 적용됩니다. 1996 년 11 월 1 일 끝나는

팬텀 주식이나 주식 단위, 즉 "현금 전용 수단" 그러나 1996 년 8 월 15 일에보고 될 새로운 규칙에 따라 파생 상품 증권이됩니다. 그러나 1996 년 8 월 15 일 이전에 승인 된 유령 증권 및 재고 단위는 새로운보고 규정에서 면제됩니다.

현재 규칙 16b-3의 다음 요구 사항이 제거되었습니다.

작성된 계획 조건. 새로운 면제는 임원과 이사 및 발급자 간의 거래에 중점을두고 있으며 더 이상 서면 계획이 필요하지 않습니다. 규칙 16b-3의 서면 계획 요구 사항은 제거되었지만 다음과 같은 상황에서 내부 수익 코드 또는 ERISA에 의해 계획이 여전히 필요합니다. 섹션 423 종업원 주식 구매 계획; 401 (k) 계획, ESOP 및 이익 분배 계획; 초과 수당 계획 스톡 옵션 양도 금지. 거의 모든 주식 계획은 자격있는 국내 관계 명령 ( "QDRO")에 의거하는 경우를 제외하고 스톡 옵션의 이전을 금지합니다. 이 금지는 인센티브 스톡 옵션 규칙 및 현 규칙 16b-3에 의해 요구됩니다. 새로운 규칙에 따라, 이 금지는 완전 양도성 비재무 적 주식 선택권의 부여를 허용하고 "국내 관계 명령"에 따라 양도를 허용하기 위해 자유화 될 수 있습니다. QDRO 자격이없는 내부 수익 코드 또는 ERISA에 정의 된대로.

주식 옵션의 선물은 점점 더 대중적인 소득, 부동산 및 선물 세 계획 도구가되었으며, 이러한 변화는 그러한 선물을 용이하게합니다. 예를 들어, 자선 단체에 대한 선물은 증가 할 수 있습니다. 소득세 목적 상, 양도가 가능하고 완전 보조금을받을 수있는 옵션은 "쉽게 확인할 수있는 가치"를 가져야합니다. 옵션이 기존 시장에서 적극적으로 거래되지 않는 경우에도 마찬가지입니다. 양도 가능한 옵션의 보조금의 과세 대상 가치는 Black Scholes 또는 기타 허용 된 평가 모델에 따라 결정될 것입니다. 국세청 (IRS)이 완전히 양도 할 수있는 옵션이 "쉽게 확인할 수있는 값"을 갖는다는 것에 동의하는 경우, 그 가치는 임원에게 과세 소득으로서 부여 일에 결정되며, 고용주 - 발행자는 동등한 공제를 받게됩니다. 매수인이 주식을 매도하고 매수 가격이 경영진의 주식 기준을 초과 할 때까지는 더 이상의 과세가 없어야합니다. 즉, 임원이 부여 시점에 소득에 포함시킨 금액은 수감자. 경영진은 기부자가 1 인당 1 만 달러의 배제를 최대로 활용할 수 있도록 선물을 지급함으로써 자신들의 재산에서 옵션을 이전하기를 원할 것입니다.

양도 가능한 옵션의 승인은 아래에 설명 된 승인 면제에 따라 면제 된 거래이며 Form5에보고 할 수 있습니다. 현재 양식 S-8은 기부자에게 제공되지 않습니다. 따라서 발행인은 완전히 양도 할 수있는 스톡 옵션을 부여하기 전에 Form S-8 등록 및 가능한 프록시 공개 문제 (예 : 주주 또는 가족 구성원 이외의 사람이 행사할 수있는 옵션에 주주가 반응하는 방식)를 고려해야합니다.

주주 승인. 계획에 따라 주식을 늘리거나, (ii) 자격있는 임원의 등급을 변경하거나, (iii) 실질적으로 혜택을 증가시키는 계획 또는 계획 수정안의 주주 승인은 새 규칙의 조건으로 더 이상 필요하지 않습니다 16b-3 면제. 이 요건의 삭제는 세금 공제 계획 및 혜택을 증가시키는 주식 계획의 수정에 대한 주요 이점입니다. 그러나 스톡홀름 요구 사항, 인센티브 스톡 옵션 및 자격있는 종업원 주식 매입 계획에 따라 주식 계획을 수립 할 때 플랜의 채택에 대한 주주의 승인과 주식 매입 또는 인계 계층의 변경에 대한 계획 수정이 여전히 일반적으로 필요합니다. 또한, 내국세 법 제 162 (m) 항은 개별 상계 제한의 채택 또는 개정 또는 성과 목표의 중요한 조건의 설정 또는 수정에 대한 주주의 승인을 요구합니다. 결과적으로 주주 승인은 여전히 ​​일반적으로 추구되지만, 이전에 주요한 동기 부여 이유였던 규칙 16b-3 면제를 얻기위한 목적이 아닙니다. 무관심한 행정. 현행 규칙 16b-3은 최소한 두 개의 "무관심한 이사"로 구성된위원회가 계획 또는 약정을 시행 할 것을 요구합니다. 이사회가위원회의 근무일 이전 12 개월 동안 파생 상품이나 지분 증권의 임의 교부금을받지 못하면 이사는 무관심하다. 새로운 규칙은 무관심한 감독 요구를 "비 직원 감독 (Non-Employee Director)"으로 대체한다. 아래에서 논의되는 요구 사항으로 임의의 보상금 수령을 금지하지 않습니다. 이것은 "공식 계획"을 렌더링한다. 사외 이사, 제 16 항 목적으로 사용되지 않는 임원 보상에 익숙한 고정 장치. 그러나 편의상, 기업 지배 구조가 아니라면 이러한 계획이 곧 사라질 것 같지 않습니다. 수식 계획은 각 외부 위원장이 얼마나 많은 자본을받을 자격이 있는지에 대한 다소 어려운 문제를 쉽게 해결합니다. 그러나 수식위원회가 수정되어위원회 위원들 (필요에 따라 모든 사외 이사들)이 자유 재량권을받을 수 있도록 할 것입니다. 사전 6 개월 및 창구 기간 선출 요건. 현재의 규칙 16b-3에 의거하여 특정 거래가 면제되기 위해서는 최소한 거래 개시 6 개월 전에 또는 거래 후 10 일간의 창 기간 동안 진행되는 취소 불능 선거에 따라야합니다 발행자의 분기 별 수익 발표. 이러한 선거 요건은 현금, 세금 공제 계획의 투자 펀드 전환 및 세금에 대한 원천 징수 권한 또는 보너스 행사의 행사 가격에 대한 사세 수행에 적용됩니다. 사전 선거 요건은 이해하고 관리하기가 매우 어려웠습니다. 새로운 규칙에 따라 원천 징수 권리는 별도의 파생 상품 보안을 구성하지 않으며, SAR 및 펀드 전환은 훨씬 덜 복잡한 규정 하에서 면제됩니다. 그러나 SAR의 경우, 많은 내부자 거래 정책은 현금 창출을 위해 창구 기간 내에 SAR의 행사를 요구할 것이다. 6 개월 보유 기간 요건. 현행 규칙 16b-3은 지분 증권이 부여 일로부터 6 개월 동안 임원 또는 이사가 보유하고있는 경우 또는 스톡 옵션과 같은 파생적 증권의 경우에만 면제 될 것을 요구합니다 , 기본 보안 판매 전에 6 개월이 경과해야합니다. 새로운 규칙은 인수를 면제하기위한 방법으로 6 개월간의 보유 기간을 유지하지만 보유 기간이 필요하지 않은 두 가지 조건을 추가합니다. 새로운 규칙에 따라, 지분 증권 또는 파생 상품 보안의 승인은 단순히 사전 승인되거나 비준 된 경우 ( "승인 면제"참조) 면제됩니다.

6 개월간의 보유 기간에 대한 승인 면제 조항의 대체는 다음과 같은 사항에 대해 더 이상 걱정할 필요가없는 임원 보상 기획자가 가장 환영합니다.

내부 수익법 조항 83 (b) 옵션이 부여 일로부터 6 개월 이내에 행사되는 경우 선거; 현재 규칙에 따라 상을 취소하고 재승 인하는 결과를 초래하는 상 (그리고 새로운 6 개월의 보류 기간의 개시)에 대한 개정; 보너스가 기본 보안의 가격에 근거하지 않은 행사 또는 전환 기능을 보유하고있는 경우 6 개월의 규칙의 적용을 위해 파생 상품 증권이되는 시점. 취소 / 재교부 문제는 취업 종료 후 3 개월 이내에 새로운 상 또는 옵션을 행사해야하는 합병의 경우 특히 문제가있었습니다.

새로운 면제.

새로운 규칙에 따라 거래가 다음의 간단하고 직접적인 면제 중 하나를 충족하면 면제됩니다.

조세 플랜.

현행 규정 하에서, 제 16 조 (a)와 (b)의보고 및 책임 규정은 401 (k) 플랜, 주식 보너스 플랜 및 ESOPs 및 적격 섹션 423 주식 구매 플랜과 같은 세금 공제 플랜의 악몽이었습니다. 섹션 16 (a)와 (b)는 일반적으로 현금 전용 "초과 수당 계획"에 적용되지 않습니다. 세금 공제 계획과 함께 운영되었습니다.

새로운 규칙은보고 및 단거리 스윙 수익 면제에서 & quot; Tax Conditioned Plans & quot;하에 거의 모든 거래를 면제합니다. 세금 조건부 플랜은 다음과 같이 정의됩니다 :

공인 계획; 초과 혜택 계획; 또는 주식 구매 계획.

& quot; 공인 플랜 & quot; 자격을 갖춘 것이 든 아니든 자격이있는 계획에 대한 내국세 법상의 보상 규칙을 충족시키는 계획입니다. "초과 수당 계획" 은 공인 플랜과 함께 운영되는 직원 복리 후생 제도이며 "공인 401 (k) 플랜"과 같은 공인 플랜 하에서 허용되는 금액을 초과하는 혜택을 제공합니다. & quot; 주식 구매 계획 & quot; 은 공인 계획의 보상 요건을 충족시키는 자격을 갖춘 주식 구매 계획 또는 비 자격있는 주식 구매 계획 중 하나입니다. 요구 사항에 관계없이 완전히 면제되는 일반적인 거래에는 다음이 포함됩니다.

계획 기부금으로 주식 또는 파생 상품을 구매; 국내 관계 명령에 따른 처분; 사망, 장애, 퇴직 또는 고용 종료시 배포판; 401 (k) 또는 401 (m) 하의 초과 기여금과 같은 내국세 법에서 요구하는 투자 다각화 또는 분배; 종업원 주식 매입 계획 주식의 매입

세금 공제 플랜 면제에 따라 면제되지 않는 공인 플랜 및 초과 수당 플랜의 유일한 거래는 고용주 주식 펀드 안팎으로의 투자 자금 이체, 고용주 현금 인출 및 고용주 주식 펀드로부터의 참가자 주도 대출입니다.

많은 근로자 복지 플랜은 자격있는 플랜이든 아니든 과잉 수당 플랜이든 상관없이 참가자들이 고용주 주식 펀드를 송금하고 송금하거나 자금을 대출받을 수 있도록 허용합니다. 새로운 규칙에 따라, 그러한 거래는 가장 최근의 "반대 방향"의 날짜로부터 적어도 6 개월 후에 이루어진 선거에 따라 영향을받는 경우, 제 16 조 (b) 항에서 면제됩니다. 선거는 회사의 모든 계획하에 있습니다. 예를 들어, 참가자가 지난 6 개월 이내에 고용주 기금으로 이체 한 것을 선택하지 않은 한 현금 인출은 새로운 규정에 따라 면제됩니다. 발행자는이 새로운 요구 사항을 반영하여 Section16 내부자 거래 정책을 수정하고자합니다.

승인 면제 :위원회 규칙.

마지막 면제는 이전 두 가지 면제가 적용되지 않는 임원과 이사 및 발행인 간의 기타 모든 임원 보상 거래를 포함합니다. 주로 사전 승인이나 비준에 의존하는이 면제는 주식 계획과 현금 전용 계획 거래의 중추적 인 역할을합니다. 다행히도 사전 승인 요구 사항은 매우 쉽게 구현됩니다.

승인 면제. 승인 면제는 다음과 같은 경우에 발행자로부터 임원 또는 이사의 지분 또는 파생 상품을 취득하는 것을 면제합니다 :

인수는 사전에 이사회 또는 두 명 이상의 "비 직원 이사로 구성된 이사회의위원회"에 의해 승인됩니다. 인수는 주주의 승인을 받거나 다음 주주 회의에서 비준됩니다. 지분 증권 또는 처분 보안은 지분의 처분 이전 6 개월 동안 유지됩니다.

발행자에 대한 처분은 상기 (i) 또는 (ii)의 요건이 충족되면 면제됩니다.

승인 면제는 다음을 포함하여 가장 일반적인 주식 계획 또는 현금 전용 계획 거래를 면제합니다.

옵션 (양도 가능 옵션 포함), 보조 약 (SARs) 및 팬텀 스톡 (phantom stock); 옵션, SAR 및 유령 주식의 행사 및 원천 징수 권리의 행사; 옵션, SAR 및 팬텀 주식의 취소, 만료 또는 인도; 유예 선거 및 현금 전용 계획의 배포.

"무 현금 연습" 브로커가 일반 대중에게 주식을 매각하는 행위는 여전히 비약적인 판매입니다.

새로운 규칙은 또한 사전 승인의 범위가 상당히 넓을 수 있다고 명시합니다. 예를 들어, 보너스 행사가 참가자 보조 거래 (예 : 보너스 행사, 보조금, 항복 또는 연기 등)를 포함한 후속 거래를 고려하는 경우, 후속 거래에는 추가 승인이 필요하지 않습니다. 이 규칙은 결의안 승인에 대한보다 사려 깊고 포괄적 인 초안을 만들어야합니다. 그러나 거래의 조건이 승인 된 수식 계획에 명시되어있는 경우 특정 거래의 승인은 필요하지 않습니다.

비 직원위원회. 실질적으로, 상기 거래의 거의 모든 것이 새로운 "비 직원 (Non-Employee) 디렉터"에 의해 사전에 승인 될 것이다. 위원회. 두 사람이 아닌 비 직원 감독위원회는 최소한 두 개의 "무관심한 이사"로 구성된위원회를 대체 할 것입니다. 비 종업원 감독의 정의는 "외부 이사"의 정의와 매우 유사하다. (Internal Revenue Code) 제 162 (m) 항의 1 백만 달러의 공제 제한하에 거래를 면제하기 위해 이러한 유사성으로 인해위원회의 임명이 훨씬 쉬워 질 것입니다.

비 직원 이사는 다음과 같은 관리자입니다.

(이전의 임원 및 일부 전직 원이 162 (m) 항에 의거하여 금지 된 경우를 제외하고는 162 (m) 항과 동일), 또는 발행인 또는 모회사 나 자회사에 고용 된 임원이 아니거나 컨설턴트 또는 대리인이 아닌 다른 권한으로 서비스에 대한 발행자 또는 모회사 나 자회사로부터 직접 또는 간접적으로 대리인 공개를 요구하는 금액을 초과하지 않는 금액을 제외하고는 직접 또는 간접적으로 보상을받지 못합니다. 6 만 달러 초과 (162 (m) 항은 직접 또는 간접 보상을 금합니다); 거래에 대한 관심이 없거나 프록시 공개가 요구되는 비즈니스 관계에 종사하지 않았 음을 의미합니다 (이는 섹션 162 (m) 요구 사항이 아님).

주식 계획 및 가상 주식 및 기타 현금 전용 계획에 대한 임원 보상 계획은 승인 면제 조항에 따라 훨씬 쉬울 것입니다. 발행자와의 거래는위원회가 항상 수행 한대로 면제되며 사전에 거래를 승인합니다. 위원회의 승인 범위가 매우 광범위 할 수 있기 때문에, 많은 상거래는 최초 상금 부여 시점에 승인 될 수 있습니다.

새로운 규칙이 간소화되고 경영진 보상 계획을 흐리게 한 많은 불확실성을 제거합니다. 조세형 평국 조정 계획, 임의 거래, 사전 승인 및보고 면제는 SEC의 현행 규정이 부재 한 경우에도 집행 보상 거래가 실행되는 방식에 많은 변경을 요구하지 않는 한 환영합니다.

섹션 16.

'섹션 16'이란 무엇입니까?

섹션 16은 이사, 임원 및 주요 주주가 반드시 충족해야하는 다양한 규제 파일링 책임을 설명하는 데 사용되는 1934 년 증권 거래법 (Securities Exchange Act)의 섹션입니다. 제 16 항에 따르면, 직접 또는 간접적으로 회사의 10 % 이상의 수익 적 소유자이거나 그러한 증권의 발행인의 이사 또는 임원 인 모든 사람은이 항에 요구되는 진술을 증권 거래위원회 (SEC).

절벽 '제 16 절'

유익한 소유권.

제 16 항에 따르면, 사람은 회사에 대한 지분을 직접 소유하지 않더라도 수익 적 소유자로 간주됩니다. 해당 가족을 이익을 소유 한 다른 회원과 공유하는 직계 가족도 혜택 소유자로 간주됩니다. 또한 회사의 재정적 이해 관계는 피고용인의 지분 증권을 취득, 보유 및 판매하는 그룹의 역할을하는 다수의 사람들의 결과로 간접적으로 발생할 수 있습니다. 또한, 운동으로 지분을 제공하는 주식 파생 상품을 소유하고있는 경우, 그는 또한 수익 적 소유자로 간주됩니다. 또한 임원과 이사는 그들의 실질적인 소유권이 얼마나 작은 지 또는 큰 지에 관계없이 제 16 조 요구 사항에 해당됩니다.

제출 요건.

섹션 16은 적용 회사의 내부자에게 양식 3, 4 및 5를 전자적으로 제출하도록 요구합니다. SEC는 주식 또는 채무 증권의 최초 공개가있는 경우 양식의 소유권을 주장하는 양식 3을 제출해야하며, 임원 또는 회사의 10 % 소유자가됩니다. 신규 이사와 임원, 새로운 중요한 주주는 10 일 이내에 Form 3을 제출해야합니다. 회사 내부자의 보유에 중대한 변경 사항이있는 경우 SEC에 양식 4를 제출해야합니다. 또한, 양식 4에 이전에보고되지 않았다면, 양식 5는 해당 연도에 지분 거래를 한 내부자에 의해 제출되어야합니다.

다른.

최종 업데이트 : 2010 년 8 월 11 일.

이러한 해석은 1997 년 7 월 공개 된 전화 통역 매뉴얼, 1999 년 3 월 공개 전화 통역 매뉴얼 보충 자료, 16 절 전자 신고 자주 묻는 질문 및 2002 년 11 월 Sarbanes-Oxley 법에 대한 16 항 해석을 대체합니다. . 여기에 포함 된 해석 중 일부는 원래 위에 언급 된 출처에 처음 게시되었으며 경우에 따라 개정되었습니다. 각 해석 다음에 괄호로 묶은 날짜는 가장 최근에 발표 또는 개정 된 날짜입니다.

일반적인 적용 가능성에 대한 질문 및 답변.

섹션 101. 섹션 16 - 일반 지침.

질문 101.01.

질문 : 캐나다에서 델라웨어로 재 설립되어 "외국 개인 발행인"지위를 상실한 회사 (Exchange Act Rule 3b-4 참조). Reincorporation 전에, 회사의 장교는 회사의 보통주를 구입했는데, 그는 reincorporation 후에 그의 구매로부터 6 개월 이내에 판매했습니다. 임원의 구매가 제 16 조의 적용을 받습니까?

답변 : 예. 임원의 구매는 제 16 조에 의거하며, 임원은 재배치 후 10 일 이내에 Form 3을 제출해야하며 Form 4는 해당 주식 매각에 따른 보통주의 매매를보고해야합니다. 직원이 일반적으로 볼 때, "외국 개인 발행자"자격 상실 전에 외국 회사의 임원과 이사가 수행 한 거래는 제 16 조 (질문 110.03 참조)의 대상이 아니며, "외국 개인 발행자"신분의 상실로 최고조에 달했던 사건은 또한 거래법 제 12 조 (질문 110.04 참조)에 따라 회사가 주식을 최초로 등록하는 것을 포함했습니다. 그러한 경우 규칙 제 16a-2 (a) 조가 적용될 수 있으며, 제 12 조 등록일로부터 6 개월 이내에 이사 또는 임원에 의해 영향을받는 제 16 조 거래를 조건으로한다. 직원의 관점에서, 제 16 조의 목적 상 외국 회사가 "외국 개인 발행자"지위를 상실하게 만드는 재계약은 회사가 제 12 조에 따라 지분 증권을 최초로 등록하는 것과 유사합니다. 왜냐하면 각 사건마다, 회사의 "외국 개인 발행자"상태가 회사의 통제하에 있었고 내부자는 회사 지분 증권을 매매 할 때 잠재적 인 제 16 조 책임을 고려하기에 앞서 충분히 변경 사실을 알고 있어야했습니다. [8 월 11, 2010]

질문 101.02.

질문 : Exchange Act Rule 3b-4 (c)는 외국 발행 기관이 가장 최근에 완료 한 2 분기 회계 연도 ( "결정 일자")의 마지막 영업일 현재 외국 민간 발행 기관인지 여부를 결정합니다. 규칙 3b-4 (e)에 의거, 증권 거래법 제 12 조에 따라 등록 된 증권을 보유한 외국 발행 기관이 결정일 현재 외국 민간 발행 기관의 자격 요건을 충족하지 못하면 국내 기업에 대해 규정 된 양식을 사용하고 제 16 조 결정 일 이후 회계 연도의 첫 번째 날부터 시작됩니다. 이 경우, 언제 양식 3을 제출해야합니까?

답변 : 양식 3은 결정 날짜 이후 회계 연도의 첫 번째 날 또는 그 전에 제출해야합니다. [8 월 11, 2010]

섹션 102. 섹션 16 (a)

질문 102.01.

질문 : 내부자가 내부자 회사의 보통주와 사채로 구성된 단위를 구매하는 경우 내부자에게 주식 취득에 관한 섹션 16 (a) 보고서를 제출해야합니까?

답변 : 예. 내부자 회사의 보통주와 사채로 구성된 단위를 구매하는 내부자는 주식 취득을 다루는 제 16 (a) 항의 보고서를 제출해야합니다. 회사채가 보통주로 전환 될 수있는 경우와 마찬가지로, 회사채는 지분 증권으로 간주되지 않는 한보고 할 필요가 없습니다. [2007 년 5 월 23 일]

질문 102.02.

질문 : 2002 년 사베 인 - 옥 슬리 법 (Sarbanes-Oxley Act of 2002)에 의해 개정 된 Exchange Act의 섹션 16 (a) (3) (B)는 부분적으로 양식 4와 5는 " 서류 정리의. " 내부자가 양식 4 또는 5를 제출할 때마다 내부자가 발급자의 모든 종류의 지분 증권에 대한 소유권을보고해야한다는 것을 의미합니까?

답변 : 내부자가 양식 4 또는 5를 제출할 때 내부자는 내부자가보고 한 발행인의 지분 증권 클래스의 거래 또는 회계 연도 말일 때 소유권만을보고하면됩니다 거래. 제 16 항은 법정 개정 이전에 동일한 언어를 포함했기 때문에, 수정안은 거래 후 소유권을보고하는 내부자의 의무를 확대하지는 못했습니다. [2007 년 5 월 23 일]

질문 102.03.

질문 : 발행자가 양식을 PDF로만 직접 게시하는 경우 웹 사이트 게시 의무를 충족시킬 수 있습니까?

답변 : 발급자가 웹 사이트 게시 요구 사항을 만족한다고 가정하면 웹 사이트에서 Adobe Acrobat을 사용하여 양식에 액세스해야하는 필요성을 분명하게 설명하고 양식을 쉽게 다운로드하는 방법에 대한 명확한 지침을 제공하는 경우에만 PDF로 양식을 직접 게시 할 수 있습니다. 발급자의 웹 사이트에서 쉽게 액세스 할 수있는 링크를 사용하여 비용을 들이지 않아도됩니다. [2007 년 5 월 23 일]

제 103 조 제 16 항 (b)

질문 103.01.

질문 : 본부 직원이 특정 거래가 제 16 조 (b) 항의 목적을 위해 "매입"또는 "매각"을 포함하는지 여부에 대한 견해를 표명 할 것인가?

답 : 아니요. 제 16 조 (b) 항의 시행은 사적인 당사자와 법원에 맡겨져 있기 때문에 본부 직원은 일반적으로 특정 거래가이 목적을 위해 "매입"또는 "매각"을 포함하는지 여부에 대한 견해를 표명하지 않을 것입니다 섹션. [2007 년 5 월 23 일]

제 104 조 제 16 항 (c)

제 105 조 제 16 항 (d)

섹션 106. 섹션 16 (e)

질문 106.01.

질문 : 섹션 16 (e)는 외국 및 국내 재정 거래를 섹션 16의 다른 조항에서 면제합니다. 규칙 16e-1은 섹션 16 (e) 면제 조항이 임원 및 이사의 그러한 재정 거래에 적용되지 않는다고 규정합니다. Division 직원이 특정 거래가 섹션 16 (e) 면제 대상이되는지 여부에 대해 의견을 표명합니까?

응답 : 아니오. 제 34-26333 호 (1988 년 12 월 2 일)에서 연방 통신위원회는 제 16 조 (e) 항이 "선의의 재정 거래를 규정 할 권한을 부여하는 권한을위원회에 부여하지만 집행위원회는이 권한을 행사하지 않았다 대신에 그러한 해석을 법원에 남겨두기로했다. 제 34-26333 호에서위원회는 제 16 조 (e) 항을 추가로 제안하지 않고 "이 분야에 대한 추가 지침이 필요한지"에 대한 의견을 요구했다. 연방 통신위원회는 "선의의 재정 차용"을 규정하거나 법령을 달리 언급하지 않았기 때문에 그러한 해석을 법원에 남겨 두는 것에 관한 발표 번호 34-26333은 진술서의 의도에 관한위원회의 진술서로 남아있다. 따라서 직원은 특정 거래가 제 16 (e) 항 면제를받을 자격이 있는지에 대한 견해를 밝히지 않고 관련 법례 (예 : Falco v. Donner, 208 F.2d 600 (2d) Cir., 1953). [2007 년 5 월 23 일]

섹션 107. 섹션 16 (f)

섹션 108. 섹션 16 (g)

섹션 109. 규칙 16a-1 - 약관의 정의.

질문 109.01.

질문 : 차관보는 일반적으로 제 16 조 (a) 항에 의거 한 회사의 장교로 간주됩니까?

답변 : 아니요. 제 16 조 (a) 항에 정의 된 임원이 될 수있는 기능을 수행하지 않는 한, 보좌관은 통상적으로 제 16 조 (a) 항에 의거 한 회사의 장교로 간주되지 않습니다. [2007 년 5 월 23 일]

제 110 조. 규칙 16a-2 - 제 16 조가 적용되는 자.

질문 110.01.

질문 : 규칙 16a-2 (a) 항이 16 절을 발급자의 12 조 등록 전에 발생하는 거래에 적용하는 경우, 16 절의 다른 규칙에 의해 제공되는 면제는 Section 16?

답변 : 예. 제 16 조에 의거 한 다른 규칙에 의해 제공되는 면제는 제 16 조에 의거 한 다른 모든 거래와 동일한 정도로 이용 가능해야합니다. [2007 년 5 월 23 일]

질문 110.02.

질문 : 규칙 16a-2 (c)는 "법 제 16 조의 적용을받지 않는 10 % 수익 소유자는 발행자의 지분 증권의 10 % 이상의 수익 적 소유자가 수행 한 거래 만보고해야합니다 "제 13 조 (d) 항 (3) 호 및 그 하위 13d - 5 (b) 항에 기술 된 바와 같이, 이익을 지닌 사람이 소유하고있는 그룹의 구성원으로 만 제 16 항의 적용을 받는다. 그러한 주식 보안 등급의 10 % 이상을 차지합니다. 더 이상 발행인의 지분 증권을 취득, 보유, 투표 또는 처분 할 목적으로 다른 그룹 구성원과 함께 행동하는 데 동의하지 않습니다. 규칙 16a-2 (c)는 해당 개인이 그룹의 구성원으로 행동하지 않게 된 후에 발생하는 발행자 지분 증권에 대한 거래를보고하도록 요구합니까?

답변 : 아니요. 그룹 회원은 섹션 13 (d)의 목적과 같이 섹션 16 (a) 및 규칙 16a-2 (c)와 동일한 방식으로 해석됩니다. 그룹 회원은 발행자의 지분 증권을 취득, 보유, 투표 또는 처분 할 목적으로 더 이상 다른 그룹 회원과 함께 행동하는 것에 동의하지 않을 때 종료됩니다. 그룹의 구성원으로서의 행동을 중지 한 후, 해당 개인의 실질 소유권이 제 12 조에 따라 등록 된 발행자 지분 증권의 10 %를 초과하지 않으며 그 사람이 발행자와 관련하여 제 16 조의 적용을받지 않는 경우, 규칙 16a-2 (c)는 그 사람이 그 그룹의 구성원으로서 행동을 그만 둔 후에 발생하는 발행자 지분 증권에서 그 또는 그녀의 거래를보고 할 것을 요구하지 않습니다. [Apr. 24, 2009]

질문 110.03.

질문 : 거래법 제 12 조에 따라 등록 된 증권을 보유한 외국 발행사가 질문 101.02에 설명 된 것과 같이 외국 개인 발행자 지위를 상실한 경우, 양식 3이 만기가되기 전에 규칙 16a-2 (a)를 적용하여 임원과 이사가 수행 한 거래가 이루어 지도록하십시오 제 16 항에 신고하고 양식 4에 신고 할 수 있습니까?

답변 : 아니요. [8 월. 11, 2010]

질문 110.04.

질문 : 외국 개인 발행자가 아닌 외국 발행 기관이 Exchange Act 제 12 조에 따라 지분 증권을 등록하기위한 초기 등록 명세서를 제출합니다. 규칙 16a-2 (a)가 그 유효 기간이 만료되기 6 개월 이내에 임원 및 이사의 거래를하기 위해 적용됩니까? 제 16 조에 따라 등록 진술서를 제출하고 양식 4에 신고 할 수 있습니까?

답변 : 예. [8 월 11, 2010]

섹션 111. 규칙 16a-3 - 보고 거래 및 보유.

질문 111.01.

질문 : 회사가 달리 규칙 16a-11의 면제 조건을 충족시키는 배당 재투자 계획을 유지하는 경우, 규칙 16a-11 면제를받을 자격이없는 비례 지연 보상 계획에 따라 자동 배당 재투자가 이루어 지므로 이러한 재투자 거래는 신고 할 필요가 없으므로 양식 4의 수를 줄일 수 있습니까?

답변 : 규정 16b-3 (c)에 의해 거래가 면제되는 Exchange Act에 따라 규칙 16b-3 (b) (2)에 정의 된 바와 같이 비 규정 연기 보상 계획은 초과 혜택 플랜이 아닙니다. 미국 변호사 협회의 해석문 (1999 년 2 월 10 일, 2 (c)) 참조. 제 34-46421 호 (2002 년 8 월 27 일)에서 개정 된 규칙 16a-3 (g) (1)에 따라, 비 적격 지연 보상 플랜의 각 거래는 반드시 Form 4에보고되어야하며, 트랜잭션이 실행 된 날의 다음 영업일 종료일. 그러나 회사가 규칙 16a-11의 면제 조건을 충족시키는 배당 재투자 계획을 유지하는 경우, 자격 미포득 연금 보상 계획에 따른 자동 배당 재투자는 규칙 16a-11 면제 대상입니다. American Home Products에 대한 해석문 (1992 년 12 월 15 일)을 참조하십시오. [2007 년 5 월 23 일]

질문 111.02.

Question: For purposes of satisfying the affirmative defense conditions of Rule 10b5-1(c), an insider adopts a written plan for the purchase or sale of issuer equity securities. In the plan, which was drafted by a broker-dealer, the broker-dealer specified the dates on which plan transactions will be executed. Can the insider rely on Rule 16a-3(g)(2) to compute the Form 4 due date for plan transactions based on a deemed execution date?

Answer: No. By adopting a written plan that specifies the dates on which plan transactions will be executed, the insider will have selected the date of execution for plan transactions. Consequently, the insider will not be able to rely on Rule 16a-3(g)(2) to compute the Form 4 due date for plan transactions based on a deemed execution date. [May 23, 2007]

Question 111.03.

Question: Where a new beneficial owner joins an existing set of beneficial owners who file as a group, does the new beneficial owner have to file a new Form 3, even if the new owner is not adding any new securities to the group holdings?

Answer: Yes. Under Rule 16a-3(j), the new beneficial owner must file a new Form 3 even if the new owner is not adding any new securities to the group holdings. [May 23, 2007]

Question 111.04.

Question: In order to reduce the number of Forms 4 due annually, an insider makes the following choices: In connection with the annual year-end election to defer some of the following year's salary into a non-qualified deferred compensation plan, the insider elects to have payroll deductions invested in the plan's interest-only account. The insider also elects for the deferred salary so invested to be "swept" on a quarterly basis into the plan's stock fund account. How should these "sweep" transactions be reported?

Answer: Each "sweep" transaction would be reportable separately on Form 4. If the "sweep" election satisfies the Rule 16b-3(f ) exemptive conditions for Discretionary Transactions (as defined in Rule 16b-3(b)(1)), the "sweep" transactions would be reported using Code I. Further, if the reporting person does not select the date of execution for a "sweep" that is a Discretionary Transaction, Rules 16a-3(g)(3) and (4) would apply to determine the deemed execution date. [May 23, 2007]

Section 112. Rule 16a-4 – Derivative Securities.

Section 113. Rule 16a-5 – Odd-Lot Dealers.

Section 114. Rule 16a-6 – Small Acquisitions.

Section 115. Rule 16a-7 – Transactions Effected in Connection with a Distribution.

Section 116. Rule 16a-8 – Trusts.

Section 117. Rule 16a-9 – Splits, Stock Dividends, and Pro Rata Rights.

Question 117.01.

Question: Does Rule 16a-9(a) exempt a stock dividend payable where there is only one shareholder of the class on which the dividend is paid?

Answer: No. This position reflects the staff's concern that such a transaction would represent a manipulative use of the rule for the purpose of benefiting one shareholder. For purposes of this interpretation, a single group required to file a Schedule 13D is treated the same way as a single shareholder. [May 23, 2007]

Question 117.02.

Question: Does Rule 16a-9(b) exempt from Section 16 the pro rata acquisition of rights by a shareholder who is a stand-by purchaser?

Answer: Rule 16a-9(b) exempts from Section 16 the acquisition of rights, such as shareholder or preemptive rights, pursuant to a pro rata grant to all holders of the same class of equity securities registered under Section 12. Where the distribution of rights is pro rata, the acquisition of rights so distributed is exempt, including a pro rata acquisition by a shareholder who is a stand-by purchaser. However, such stand-by purchaser's acquisition of underlying shares pursuant to the exercise of rights not exercised by other shareholders is not exempted by Rule 16a-9(b) because such acquisition is the result of an independently negotiated contract with the issuer that is not available to all shareholders on a pro rata basis. [May 23, 2007]

Question 117.03.

Question: A company will effect a 1-for-4 reverse stock split for all of its outstanding common stock. Rather than issue fractional shares, the company will pay cash for the value of the fractional shares. Is this transaction exempt from Section 16?

Answer: Yes. Rule 16a-9(a) exempts from Section 16 "the increase or decrease in the number of securities held as a result of a stock split or stock dividend applying equally to all securities of a class, including a stock dividend in which equity securities of a different issuer are distributed." This rule is available to exempt the disposition of fractional shares incidental to the reverse stock split where the cash-out of fractional shares, like the reverse split itself, applies equally to all securities of the class, and there is no choice to receive fractional shares instead of cash. [Aug. 14, 2009]

Section 118. Rule 16a-10 – Exemptions under Section 16(a)

Section 119. Rule 16a-11 – Dividend or Interest Reinvestment Plans.

Question 119.01.

Question: Rule 16a-11 exempts from Sections 16(a) and 16(b) of the Exchange Act the acquisition of securities by insiders through the reinvestment of dividends pursuant to dividend reinvestment plans that satisfy the conditions of the rule. Is the disposition of such securities also exempted by Rule 16a-11?

Answer: No. Dispositions of securities acquired by insiders through the reinvestment of dividends pursuant to dividend reinvestment plans that satisfy the conditions of the rule is not exempted by Rule 16a-11. Further, Rule 16a-11 does not exempt from the liability provisions of Section 16(b) the acquisition of additional securities through voluntary additional investments permitted by such plans. [May 23, 2007]

Question 119.02.

Question: When a dividend reinvestment plan meeting the requirements of Rule 16a-11 is terminated and the stock held by the plan is distributed to participants, does the distribution of the shares of stock to persons covered by Section 16 need to be reported?

Answer: No. In this situation there is no effective change in beneficial ownership, and therefore, pursuant to Rule 16a-13, the distribution of shares to persons covered by Section 16 need not be reported as an acquisition of securities, assuming that those shares previously had been reported as indirectly beneficially owned. [May 23, 2007]

Section 120. Rule 16a-12 – Domestic Relations Orders.

Section 121. Rule 16a-13 – Change in Form of Beneficial Ownership.

Section 122. Rule 16b-1 – Transaction Approved by a Regulatory Authority.

Section 123. Rule 16b-3 – Transactions Between an Issuer and Its Officers or Directors.

Question 123.01.

Question: Does Rule 16b-3 exempt issuer equity securities transactions between the issuer and persons who are subject to Section 16 solely because they are more than 10 percent beneficial owners?

Answer: No. Rule 16b-3 exempts issuer equity securities transactions between the issuer (including an employee benefit plan sponsored by the issuer) and an officer or director of the issuer. The rule, however, does not exempt similar transactions by persons who are subject to Section 16 solely because they are more than 10 percent beneficial owners. Rule 16b-3 is available to a more than 10 percent beneficial owner who is also subject to Section 16 by virtue of being an officer or director of the issuer ( see Release No 34-37260 (May 31, 1996) at n. 42 (Part 1 and Part 2)), including a "deputized" director (see Brief of the Securities and Exchange Commission, Amicus Curiae in Roth v. Perseus, L. L.C.) [May 23, 2007]

Question 123.02.

Question: Does Rule 16b-3 exempt a transaction between the issuer and (1) an officer's charitable remainder trust, or (2) an investment advisor of which a director is a principal?

Answer: No. Rule 16b-3 exempts issuer equity securities transactions between the issuer (including an employee benefit plan sponsored by the issuer) and an officer or director of the issuer. Rule 16b-3 will not exempt a transaction between the issuer and (1) an officer's charitable remainder trust, or (2) an investment advisor of which a director is a principal. However, in its interpretive letter to American Bar Association (Feb. 10, 1999), Q. 4, the Division staff has stated that Rule 16b-3 is available to exempt an officer's or director's indirect pecuniary interest in certain specific transactions. [May 23, 2007]

Question 123.03.

Question: For purposes of determining whether a plan is a "Stock Purchase Plan," as defined by Rule 16b-3(b)(5), how are satisfaction of the coverage and participation requirements of Internal Revenue Code Section 410 measured?

Answer: Satisfaction of the coverage and participation requirements of Internal Revenue Code Section 410 are measured by reference to employees eligible to participate, rather than employees actually participating. [May 23, 2007]

Question 123.04.

Question: Does the definition of a "Stock Purchase Plan" in Rule 16b-3(b)(5), which includes employee benefit plans that satisfy the coverage and participation requirements of Sections 423(b)(3) and (b)(5) of the Internal Revenue Code, contemplate that such plans are broad-based?

Answer: Yes. While Rule 16b-3(b)(5) does not specifically indicate that such plans must also meet the broad-based plan requirements in Section 423(b)(4) of the Internal Revenue Code (because these requirements may be more restrictive than was intended for purposes of Rule 16b-3(b)(5)), Rule 16b-3(b)(5) contemplates that Stock Purchase Plans are broad-based. See footnote 50 to Release No. 34-37260 (May 31, 1996) (Part 1 and Part 2). Accordingly, a director-only or senior-executive only plan would not be a Stock Purchase Plan within the meaning of Rule 16b-3(b)(5) or Rule 16b-3(c). [May 23, 2007]

Question 123.05.

Question: A Stock Purchase Plan, as defined in Rule 16b-3(b)(5), includes a dividend reinvestment feature. Would dividend acquisitions pursuant to this plan be exempted by Rule 16b-3(c)?

Answer: Yes. Dividend acquisitions pursuant to the Stock Purchase Plan are exempted by Rule 16b-3(c), because any acquisition pursuant to a Stock Purchase Plan is exempted by Rule 16b-3(c). [May 23, 2007]

Question 123.06.

Question: Would a stand-alone top hat plan that qualifies for an exemption under Section 201(2) of ERISA be an Excess Benefit Plan eligible for exemption under Rule 16b-3(c)?

Answer: No. A stand-alone top hat plan that qualifies for an exemption under Section 201(2) of ERISA would not be an Excess Benefit Plan eligible for exemption under Rule 16b-3(c), because such plan would not be operated in conjunction with a Qualified Plan, as defined in Rule 16b-3(b)(4). [May 23, 2007]

Question 123.07.

Question: Are the Non-Employee Director standards of Rule 16b-3(b)(3) independent of the "outside director" standards of Internal Revenue Code Section 162(m)?

Answer: Yes. Accordingly, satisfaction of the Non-Employee Director standards cannot be presumed based on satisfaction of the Section 162(m) "outside director" standards. [May 23, 2007]

Question 123.08.

Question: What is the relevant date for determining Non-Employee Director status under Rule 16b-3?

Answer: The relevant date for determining Non-Employee Director status is the date such director proposes to act as a Non-Employee Director. This would be the date on which approval is obtained, even where an award is not deemed to occur until a later date, for example, upon the satisfaction of conditions (other than the passage of time and continued employment) that are not tied to the market price of an equity security of the issuer. Cf. Bioject Medical Technologies Inc. (Nov. 24, 1993). [May 23, 2007]

Question 123.09.

Question: Rule 16b-3(b)(3)(i)(A) disqualifies for service as a Non-Employee Director any director who currently is an officer of or otherwise currently employed by the issuer, its parent or subsidiary. How is the term "subsidiary" defined for the purposes of this rule?

Answer: For the purposes of Rule 16b-3(b)(3)(i)(A), "subsidiary" would be defined pursuant to the broad standards of Rule 12b-2, i. e. , as an affiliate controlled directly or indirectly through one or more intermediaries. [May 23, 2007]

Question 123.10.

Question: Will a sale into the open market from a Stock Purchase Plan or other Tax-Conditioned Plan be exempt pursuant to Rule 16b-3(c)? Will such a sale be a Discretionary Transaction (as defined in Rule 16b-3(b)(1)) eligible for exemption pursuant to Rule 16b-3(f)?

Answer: No to both questions. Such transactions will not be eligible for exemption from Section 16(b) pursuant to Rule 16b-3. [May 23, 2007]

Question 123.11.

Question: Would stock acquisitions through an open market purchase plan that is not a Rule 16b-3(b) Stock Purchase Plan (and hence ineligible for Rule 16b-3(c) exemption) but is "sponsored by the issuer" as interpreted in the interpretive letter to American Bar Association (Oct. 15, 1999) be considered "acquisitions from the issuer" eligible for the Rule 16b-3(d) exemption?

Answer: No. [May 23, 2007]

Question 123.12.

Question: Is a diversification transaction permitted by Section 401(a)(35) of the Internal Revenue Code a "Discretionary Transaction," as defined in Rule 16b-3(b)(1), subject to the exemptive conditions of Rule 16b-3(f)?

Answer: Yes. Section 401(a)(35) of the Internal Revenue Code provides diversification rights to qualifying participants in defined contribution plans that hold publicly-traded employer securities. Specifically, Section 401(a)(35) makes intra-plan transfers out of and back into the plan's issuer securities fund available no less frequently than quarterly. As explained in Release No. 34-37260 (May 31, 1996) (Part 1 and Part 2), periodic fund-switching transactions involving an issuer equity securities fund may present opportunities for abuse, because the investment decision is similar to that involved in a market transaction. Moreover, the plan may buy and sell issuer equity securities in the market in order to effect these transactions, so that the actual counterparty to the transaction is not the issuer, but instead is a market participant.

Rule 16b-3(b)(1)(iii) excludes from the definition of "Discretionary Transaction" a transaction "required to be made available to a plan participant pursuant to a provision of the Internal Revenue Code." This provision was adopted in 1996 to exclude:

the diversification elections and distributions that Section 401(a)(28) of the Internal Revenue Code makes available t 10-year plan participants wh have reached age 55, and.

The basis for the Rule 16b-3(b)(1)(iii) exclusion was that the insider's opportunity to speculate in the context of the specified events was well circumscribed. In contrast, Section 401(a)(35) of the Internal Revenue Code, which was added by Section 901 of the Pension Protection Act of 2006, makes available the periodic fund-switching transactions for which the exemptive conditions of Rule 16b-3(f) were designed to apply. Because the Commission did not consider the later-enacted Section 401(a)(35) of the Internal Revenue Code when it adopted Rule 16b-3(b)(1)(iii), this rule should not be construed to exclude Section 401(a)(35) transactions from the exemptive conditions of Rule 16b-3(f). [May 23, 2007]

Question 123.13.

Question: May a plan be bifurcated so that it is eligible in part for exemption under Rule 16b-3(c)?

Answer: A plan may be bifurcated so that it is eligible in part for exemption under Rule 16b-3(c) only if it works entirely as a Tax-Conditioned Plan with respect to a segregable class of participants and entirely as a non-Tax-Conditioned Plan as to a different class of participants. [May 23, 2007]

Question 123.14.

Question: Would an amendment to a material term of a security acquired pursuant to the full board, Non-Employee Director or shareholder approval conditions of Rule 16b-3(d) require further approval pursuant to any one of those approval conditions?

Answer: Yes, an amendment to a material term of a security acquired pursuant to the full board, Non-Employee Director or shareholder approval conditions of Rule 16b-3(d) would require further approval pursuant to any one of those approval conditions in order for the specific approval conditions of Note 3 to the rule to be satisfied. This is required because allowing a material term to be changed without subsequent approval would vitiate the specific approval requirement of the rule. Such further approval is required whether or not the amendment would result in the cancellation and regrant of the security. For example, an amendment to accelerate vesting (which, pursuant to the interpretive letter to Foster Pepper & Shefelman (Dec. 20, 1991), does not effect a cancellation and regrant) would require further approval. [May 23, 2007]

Question 123.15.

Question: Will initial approval of a plan satisfy the specificity requirement where the specific terms and conditions of each acquisition are fixed in advance, such as a formula plan?

Answer: Yes. [May 23, 2007]

Question 123.16.

Question: Would approval of a grant that by its terms provides for automatic reloads satisfy the specificity of approval requirements under Rule 16b-3(d) for the reload grants?

Answer: Yes. Approval of a grant that by its terms provides for automatic reloads would satisfy the specificity of approval requirements under Rule 16b-3(d) for the reload grants, unless the automatic reload feature permitted the reload grants to be withheld by the issuer on a discretionary basis. The same result applies under Rule 16b-3(e) where the automatic feature is a tax - or exercise-withholding right. [May 23, 2007]

Question 123.17.

Question: Could the six-month holding period of Rule 16b-3(d)(3) be used to exempt an officer's or director's purchase of the issuer's stock in an underwritten public offering?

Answer: No. Rule 16b-3 would not exempt this transaction, because the rule was not intended to cover a situation where someone other than the issuer controls to whom the sales are made and on what terms. For the same reasons, Rule 16b-3 would not exempt an officer's or director's purchase of the issuer's stock in a public offering pursuant to a "friends and family" allocation. [May 23, 2007]

Question 123.18.

Question: Are the dispositions of issuer securities that take place in cashless exercises through a broker eligible for exemption pursuant to Rule 16b-3(e)?

Answer: No. The dispositions that take place pursuant to these transactions are not eligible for exemption pursuant to Rule 16b-3(e) because cashless exercises through a broker do not involve a transaction with the issuer or the issuer's employee benefit plan. [May 23, 2007]

Question 123.19.

Question: Is the disclosure regarding loans by a bank, savings and loan association, or broker-dealer contemplated by Instruction 4.c to Item 404(a) (loan made in ordinary course of business, on substantially same terms as for unrelated persons, no more than normal risk of collectibility, etc.) Item 404(a) disclosure that would disqualify a director from being a Non-Employee Director, as defined in Rule 16b-3(b)(3)?

Answer: No. Statements disclosed pursuant to Instruction 4.c to Item 404(a) will not be considered Item 404(a) disclosure that would disqualify a director from being a Non-Employee Director. Release No. 33-8732A, in the Item 404 discussion at Section V. A.3, characterizes this instruction as addressing a situation that "do[es] not raise the potential issues underlying our principle for disclosure."

Section 124. Rule 16b-5 – Bona Fide Gifts and Inheritance.

Section 125. Rule 16b-6 – Derivative Securities.

Question 125.01.

Question: Would Rule 16b-6(b) be available to exempt the cash settlement of phantom stock?

Answer: No. Rule 16b-6(b) would not be available to exempt the cash settlement of phantom stock, because the deemed sale of the underlying stock following exercise of the phantom stock is outside the exemptive scope of Rule 16b-6(b). In contrast, Rule 16b-6(b) would be available to exempt the stock settlement of phantom stock because such transaction involves only the exercise of a derivative security. [May 23, 2007]

Section 126. Rule 16b-7 – Mergers, Reclassifications and Consolidations.

Section 127. Rule 16b-8 – Voting Trusts.

Section 128. Rule 16c-1 – Brokers.

Section 129. Rule 16c-2 – Transactions Effected in Connection with a Distribution.

Section 130. Rule 16c-3 – Exemption of Sales of Securities to be Acquired.

Section 131. Rule 16c-4 – Derivative Securities.

Section 132. Rule 16e-1 – Arbitrage.

Section 133. Forms 3, 4 and 5 – General.

Question 133.01.

Question: What information does an insider report for the issuer's ticker or trading symbol (Item 3 of Form 3, and Item 2 of Forms 4 and 5) if there is none?

Answer : The insider should enter "NONE." [May 23, 2007]

Question 133.02.

Question: Does an insider need to file a power of attorney with the filing?

Answer: If the Form is signed on behalf of an individual by another person, the power of attorney establishing the authority of such person to sign the Form must be filed in an exhibit to the Form or as soon as practicable in an amendment to the Form, unless a previously filed paper or electronic power of attorney is still in effect. The power of attorney need only indicate that the reporting person authorizes and designates the named person or persons to sign and file the Form on the reporting person's behalf and state its duration. [May 23, 2007]

Question 133.03.

Question: How should an insider sign the document when it uses a power of attorney?

Answer: The staff recommends that the document signature be the typed signature of the person holding the power of attorney. The remainder of the signature line would then indicate that the person is signing on behalf of the named officer, director or more than 10 percent shareholder under a power of attorney. For example, "John Jones, by power of attorney," where John Jones holds power of attorney for insider Susan Smith. [May 23, 2007]

Question 133.04.

Question: How can a filer indicate the title of the person filing the Form?

Answer: The title of the person may be included on the same line as the signature. [May 23, 2007]

Question 133.05.

Question: Do all officers and directors need filing codes?

Answer: Yes. Each officer, director and more than 10 percent shareholder will need his/her own CIK, CCC and Password codes. The codes are needed whether the insider is filing as an individual or as part of a group. It is very important to use the insider's CIK rather than, for example, the issuer's CIK, so that users can readily identify the insider filing the form (if the wrong CIK has been used, file a new form with the correct CIK). Only one set of codes is permitted even if the filer is an officer, director, or more than 10 percent shareholder of more than one company. We strongly recommend that companies applying for codes on behalf of their insiders verify that the persons do not already have codes assigned to them. [May 23, 2007]

Question 133.06.

Question: When reporting derivative securities on Table II of Form 4 or Form 5, are options that have different economic characteristics (such as exercise price and expiration date) considered different classes of securities?

Answer: Yes. General Instruction 4(a)(i) to Form 4 requires an insider to "report total beneficial ownership following the reported transaction(s) for each class of securities in which a transaction was reported." In reporting derivative securities on Table II, options that have different economic characteristics (such as exercise price and expiration date) are considered different classes of options. For example, in reporting the grant of options with an exercise price of $10 per share and an expiration date of March 1, 2014, the holdings column should show the total number of options with the same terms, and should not include the insider's holdings of options with an exercise price of $8 per share and an expiration date of November 1, 2012. On a voluntary basis, the insider may report on a separate line(s) holdings of options that are of a different class(es) than the options transaction reported. General Instruction 4(a)(iii) to Form 5, which requires an insider to "report total beneficial ownership as of the end of the issuer's fiscal year for all classes of securities in which a transaction was reported," is construed the same way. [May 23, 2007]

Question 133.07.

Question: Column 8 of Table II in Form 4 and Form 5 requires disclosure of the "Price of Derivative Security." Does this column require the exercise price of the derivative security, the fair market value of the underlying security on the date of the reported transaction, or some other price?

Answer: The "Price of Derivative Security" required in Column 8 of Table II is the price, if any , that the insider paid to acquire the derivative security (where an acquisition is reported) or received when disposing of the derivative security (where a disposition is reported). It is not the exercise price of the derivative security (which is reportable in Column 2) or the fair market value of the underlying security on the date of the reported transaction. [May 23, 2007]

Question 133.08.

Section 134. Form 3.

Question 134.01.

Question: Must an estate that holds more than 10 percent of a class of an issuer's equity securities file a Form 3 to report its holdings?

Answer: Yes. An estate that holds more than 10 percent of a class of an issuer's equity securities must file a Form 3 to report its holdings. Rule 16a-2(d), which permits an executor not to report transactions in securities held by an estate for the first 12 months following appointment as an executor, does not apply to the reporting of holdings on a Form 3. However, if the executor is already an insider (e. g., by virtue of being an officer of the issuer), in accordance with Rule 16a-3(b)(2) the executor need not file an additional Form 3 in the capacity of executor. Rather, when the executor next files a Form 4 (e. g., in the executor's individual capacity or for the estate after the 12 month period has elapsed), the executor would indicate the additional capacity in Box 5. [May 23, 2007]

Section 135. Form 4.

Question 135.01.

Question: May an officer of a company whose securities are registered under Section 12(g) of the Exchange Act file a Form 4 report solely to indicate the officer's resignation?

Answer: Yes. An officer of a company whose securities are registered under Section 12(g) of the Exchange Act may, but is not legally required to, file a Form 4 report, checking the exit box, solely to indicate the officer's resignation. [May 23, 2007]

Question 135.02.

Question: On Form 4, what date should be entered for Item 3 (Date of Earliest Transaction Required to be Reported)?

Answer: The date in Item 3 should be the transaction date of the earliest transaction reported that you are required to report on Form 4. This is the same date you enter in Column 2 of Table I (or Column 3 of Table II), not the Deemed Execution Date you would enter in Column 2A of Table I (or Column 3A of Table II). Where the transactions reported on the Form 4 include a transaction that the insider previously failed to report timely on Form 4, the transaction date for that transaction should be entered in Item 3. [May 23, 2007]

Question 135.03.

Question: What date should be entered for Item 3 on a Form 4 filed solely to report voluntarily a transaction that is eligible for deferred reporting on Form 5, such as a Rule 16b-5 gift or a Rule 16a-6(a) small acquisition?

Answer: Enter the transaction date reported in Column 2 of Table I (or Column 3 of Table II). In reporting the transaction, make sure that "V" is designated in Column 3 of Table I (or Column 4 of Table II). [May 23, 2007]

Section 136. Form 5.

Question 136.01.

Question: Are Discretionary Transactions required to be reported on Form 5 individually, rather than on an aggregate basis, even when they are "same way" rather than "opposite way" transactions?

Answer: Yes. Discretionary Transactions are required to be reported individually, rather than on an aggregate basis, even when they are "same way" rather than "opposite way" transactions. [May 23, 2007]

INTERPRETIVE RESPONSES REGARDING PARTICULAR SITUATIONS.

Section 201. Section 16 – General Guidance.

Section 202. Section 16(a)

202.01 In connection with a bank holding company formation, in which jurisdiction over a Section 12(g) entity passes from a banking agency to the Commission, officers, directors and more than 10 percent shareholders are not required to file either a Form 3 or Form 4 with the Commission to reflect the transaction establishing the holding company. However, in the interest of ownership reporting continuity, the next filing on Form 4 or Form 5 by an insider reporting a change in his or her ownership of equity securities should reflect that the holding company is the issuer for purposes of filing under Section 16(a). [May 23, 2007]

Section 203. Section 16(b)

Section 204. Section 16(c)

Section 205. Section 16(d)

205.01 A broker-dealer that had ceased making a market in a public company's securities cannot rely upon the Section 16(d) exemption with respect to sales of securities remaining in its inventory. Furthermore, even if the cessation was only temporary, the broker-dealer would not regain eligibility for the exemption unless it resumed market-making activities on a bona fide basis, i. e. , the broker-dealer cannot re-register as a market maker simply to liquidate its inventory. [May 23, 2007]

Section 206. Section 16(e)

Section 207. Section 16(f)

Section 208. Section 16(g)

Section 209. Rule 16a-1 – Definition of Terms.

209.01 For purposes of the various ownership tests of Rule 16a-1, a limited liability company should be treated consistently as a general partnership, limited partnership or a corporation, depending on which form of organization it more closely resembles. [May 23, 2007]

209.02 Following a company's buy-back of its stock, a person who previously owned less than 10 percent of the company's stock may own more than 10 percent of the stock without having purchased additional shares. If, before the buy-back, the person is aware that the buy-back will occur and will have this result on his or her holdings, the person should file a Form 3 within 10 days after the buy-back. If the person does not have advance awareness of the buy-back and/or its consequences, he or she would need to determine whether he or she is a more than 10 percent beneficial owner and satisfy any obligation to file a Form 3 within ten days after information in the company's most recent quarterly, annual or current report indicates the amount of securities outstanding following the buy-back. [May 23, 2007]

209.03 In connection with termination of employment, an officer was awarded options that would become exercisable (in installments) when the issuer's stock reached and maintained specified price levels for a period of 30 days, conditioned on the terminated officer's continued provision of services as a consultant. These options would be derivative securities under Rule 16a-1(c) and thereby subject to Section 16 upon grant because their exercisability would not be subject to conditions (other than the passage of time and continued employment) that are not tied to the market price of an equity security of the issuer. Cf. Certilman Balin Adler & Hyman (April 20, 1992). [May 23, 2007]

209.04 Rule 16a-1(c)(3) excludes from "derivative security" rights or obligations to surrender a security, or have a security withheld, upon the receipt or exercise of a derivative security or the receipt or vesting of equity securities, in order to satisfy the exercise price or tax withholding consequences of receipt, exercise or vesting. The federal state, local and foreign taxes that may be paid through the withholding, tendering back or delivery of previously owned shares may exceed minimum withholding requirements as along as the amount withheld does not exceed the participant's estimated federal state, local and foreign tax obligations attributable to the underlying transaction. Such amount may include capital gains tax on the shares that were surrendered or withheld in settlement of the tax-withholding right or exercising the derivative security. [May 23, 2007]

209.05 A caller contemplated writing a short put option, whereby the counterparty would have the right to put the security to the writer at any point after execution of the contract. Provided that the counterparty who is "long" the put option retains its discretion as to whether and when to exercise the put option, then the writer of the put option is not deemed to beneficially own the securities underlying the put option because the right to receive the underlying securities is dependent upon factors that are not within the control of the writer of the put option. Thus, in calculating its beneficial ownership for purposes of Section 16, the party that is short the put option should not count the underlying securities. [May 23, 2007]

Section 210. Rule 16a-2 – Persons Subject to Section 16.

Section 211. Rule 16a-3 – Reporting Transactions and Holdings.

211.01 A Discretionary Transaction in a phantom stock account that is exempt pursuant to Rule 16b-3(f) is reportable under Rule 16a-3(f)(1) on Table II of Form 4 on a single line using Code "I." [May 23, 2007]

211.02 Any issuer that maintains a corporate Web site must post on that Web site by the end of the business day after filing any Form 3, 4 or 5 under Section 16(a) as to the equity securities of that issuer, and must keep each such form accessible on that website for at least a 12-month period in accordance with Section 16(a)(4)(C) and Rule 16a-3(k). In a bank holding company, the bank subsidiary maintains a corporate Web site, but the bank holding company does not. The staff advised that the subsidiary Web site should be considered a corporate Web site for purposes of these posting requirements. [May 23, 2007]

211.03 One public company will acquire another public company. After the merger, the acquiring company will shut down the Web site of the acquired company. Under Rule 16a-3(k), any issuer that maintains a Web site is required to post Section 16 forms on its Web site. Because the acquired company will no longer exist, and its Web site will be shut down, the staff would not object if the acquiring company stopped posting the pre-acquisition Section 16 reports of the acquired company. [May 23, 2007]

Section 212. Rule 16a-4 – Derivative Securities.

Section 213. Rule 16a-5 – Odd-Lot Dealers.

Section 214. Rule 16a-6 – Small Acquisitions.

Section 215. Rule 16a-7 – Transactions Effected in Connection with a Distribution.

Section 216. Rule 16a-8 – Trusts.

Section 217. Rule 16a-9 – Splits, Stock Dividends, and Pro Rata Rights.

217.01 Rule 16a-9(a) exempts from Section 16 "the increase or decrease in the number of securities held as a result of a stock split or stock dividend applying equally to all securities of a class, including a stock dividend in which equity securities of a different issuer are distributed." This rule is available to exempt payment of a "pay-in-kind" dividend where there is no choice to receive the dividend in cash rather than stock. [May 23, 2007]

217.02 A limited partnership will make a pro rata distribution to its limited partners of portfolio securities that it holds. The limited partnership is subject to Section 16 with respect to the securities that will be distributed. The Division staff was asked whether Rule 16a-9(a) would exempt this distribution for the limited partnership as the distributing party. The Division staff expressed the view that Rule 16a-9(a), which exempts from Sections 16(a) and (b) "the increase or decrease in the number of securities held as a result of a stock split or stock dividend applying equally to all securities of a class, including a stock dividend in which equity securities of a different issuer are distributed," would not provide the limited partnership an exemption. Instead, the scope of Rule 16a-9(a) is limited to persons subject to Section 16 who experience an increase or decrease in the number of securities held as a result of a stock distribution or reverse stock split effected by the distributing party, and is not available to the distributing party. [May 23, 2007]

Section 218. Rule 16a-10 – Exemptions under Section 16(a)

Section 219. Rule 16a-11 – Dividend or Interest Reinvestment Plans.

219.01 A dividend reinvestment plan that is sponsored by a broker-dealer and available only to customers of that broker-dealer does not provide for "broad-based participation" within the meaning of Rule 16a-11. Accordingly, Rule 16a-11 is not available to exempt dividend or interest reinvestment transactions pursuant to such a plan. However, if a dividend reinvestment plan sponsored by a broker-dealer essentially mirrors a dividend reinvestment plan sponsored by the issuer that satisfies the conditions of Rule 16a-11, acquisitions pursuant to dividend reinvestment under the broker-dealer sponsored plan would be exempted by Rule 16a-11. See interpretive letter to Merrill, Lynch, Pierce, Fenner & Smith (Mar. 16, 1994). [May 23, 2007]

Section 220. Rule 16a-12 – Domestic Relations Orders.

Section 221. Rule 16a-13 – Change in Form of Beneficial Ownership.

221.01 A limited liability company ("LLC") makes a distribution of portfolio securities to its members. If the members have been relying upon Rule 16a-1(a)(2)(iii) to exclude the portfolio securities from their individual pecuniary interest (where the members do not control the LLC and do not exercise voting or investment control over the portfolio securities), Rule 16a-13 cannot be relied on to exempt (from reporting and profit liability) the distribution of the portfolio securities. [May 23, 2007]

221.02 For estate planning purposes, a director of an issuer transfers shares of that issuer to a newly created foreign domiciled mutual fund in exchange for shares of the mutual fund. The mutual fund's equity investments would be limited to the issuer's shares. While significant restrictions would likely make the mutual fund an unattractive investment to the general public, the fund would have one shareholder other than the director and would be open to investment by the general public. Rule 16a-13 would not be available for the director's transfer of the issuer's shares to the mutual fund. [May 23, 2007]

221.03 An insider is a partner in a partnership that owns securities of the issuer. The insider's Section 16 reports reported all of the issuer shares owned by the partnership, which exceeded the insider's individual pecuniary interest, and did not disclaim an interest in the excess. The insider planned to "recapitalize" the partnership by contributing cash and withdrawing more issuer shares than his individual pecuniary interest. The insider cannot rely on Rule 16a-13 with respect to the amount that he withdraws in excess of his individual pecuniary interest. [May 23, 2007]

Section 222. Rule 16b-1 – Transaction Approved by a Regulatory Authority.

Section 223. Rule 16b-3 – Transactions Between an Issuer and its Officers or Directors.

223.01 If, pursuant to the terms of a plan, a transaction to re-balance holdings among accounts other than the issuer equity securities account results in a transfer of assets into or out of an issuer equity securities account, the transaction will be a Discretionary Transaction, subject to Rule 16b-3(f). [May 23, 2007]

223.02 A rollover of funds into the issuer equity securities fund from a plan maintained by the insider's former employer will not be a Discretionary Transaction subject to Rule 16b-3(f) because it does not involve a reallocation of funds already invested in a plan of the issuer. An automatic rollover of a phantom stock account upon the issuer's abolition of the plan in which it is maintained into a restricted stock account in another plan of the issuer would not be a Discretionary Transaction. However, other rollovers or transfers between different plans sponsored by the same issuer may be Discretionary Transactions, and need to be analyzed on a case-by-case basis as to the character of the funds involved and whether the transaction is volitional to the insider. [May 23, 2007]

223.03 Where there are two issuer equity securities funds (one containing 100 percent issuer equity securities and the other 50 percent issuer equity securities), a transfer from the 100 percent fund to the 50 percent fund would be a transfer out of an issuer equity securities fund for purposes of measuring the six-month period before the next Discretionary Transaction. Conversely, a transfer from the 50 percent fund to the 100 percent fund would be a transfer into an issuer equity securities fund for the same purpose. But a transfer out of either fund into a non-issuer equity securities fund would be a transfer out, and a transfer into either fund from a non-issuer equity securities fund would be a transfer into an issuer equity securities fund.

223.04 Under Rule 16b-3(b)(3)(i)(B), a director will not be disqualified for service as a Non-Employee Director by virtue of receiving compensation from the issuer for services rendered "in any capacity other than as a director" where the director receives a higher director's fee in consideration for service as chairman of the board or on a committee of the board. [May 23, 2007]

223.05 Rule 16b-3(b)(3)(i)(B) provides that a Non-Employee Director may not receive compensation from the issuer, its parent or subsidiary, for services in any capacity other than as a director, except for an amount that does not exceed the dollar amount for which disclosure is required under Item 404(a) of Regulation S-K. The "services" in question refer to current services or services recently provided. Accordingly, a director's receipt from the issuer of a pension that is paid as a result of the director's prior service as an employee of the issuer would not trigger disqualification under paragraph (B), without regard to amount. In contrast, a director's receipt of a severance payment, in excess of the referenced amount, would trigger disqualification to the extent it relates to recent service. [May 23, 2007]

223.06 An Internal Revenue Code Section 423 plan permits a lump sum purchase at the end of the purchase period as an alternative to payroll deductions. However, a participant must enroll at the beginning of a purchase period and elect at that time whether to use payroll deductions or the lump sum payment. Such a plan would be a Stock Purchase Plan, as defined by Rule 16b-3(b)(5) and purchases under either form of payment would be exempt under Rule 16b-3(c). [May 23, 2007]

223.07 A routine disposition of shares to fund an administrative fee assessment under a Tax-Conditioned Plan would be exempt without further condition. However, the staff is of the view that dispositions that are not similarly incidental to plan administration are outside the purview of the plan and thus not exempted by Rule 16b-3(c). See the staff interpretive letter to American Bar Association (Oct. 15, 1999). [May 23, 2007]

223.08 Under a plan that is otherwise a formula plan, following a change in control (as objectively defined in the plan) participants will receive benefits in the form of cash or stock. The decision as to whether payment is made in cash or stock is made by the issuer's compensation committee. Although issuer discretion is limited to the form of payment (rather than the amount) this issuer discretion must be exercised by the full board, the committee of Non-Employee Directors, or shareholders. Alternatively, any securities received by insiders must be held for six months for the Rule 16b-3(d)(3) exemption to apply. [May 23, 2007]

223.09 The six-month holding period Rule 16b-3(d)(3) will remain satisfied if, during the six months, the insider transfers the securities to a family trust, provided that the insider retains a pecuniary interest in the securities so transferred. In contrast, an outright transfer to a family member during the six months (either by gift or for consideration) will result in failure to satisfy the six-month holding period. [May 23, 2007]

223.10 A company grants options in reliance on the six-month holding period of Rule 16b-3(d)(3). Shortly thereafter, the company authorizes tax-withholding rights with respect to the same options pursuant to Non-Employee Director approval under Rule 16b-3(e). This bifurcated procedure should not alter the availability of Rule 16b-3(d)(3), provided that the withholding rights are not exercised before the conclusion of the six-month holding period for the related option grant. [May 23, 2007]

223.11 Board approval of a buy-back plan providing for the issuer to buy back option shares at any time at fair market value would not satisfy the approval requirement of Rule 16b-3(e), because the resultant open-ended buy-back transactions would not have been approved with sufficient specificity. [May 23, 2007]

223.12 Consistent with the staff interpretive letter to American Bar Association (Dec. 20, 1996), an insider elects to defer salary into a phantom stock account in a single fund plan, and at the same time makes an election to receive the ultimate cash payout at a fixed date more than six months following the election. The payout election will not be subject to the conditions applicable to Discretionary Transactions under Rule 16b-3(f). [May 23, 2007]

223.13 A deferred compensation plan allows deferrals to either a phantom stock account or a cash account. Transfers between the phantom stock account and cash account are permitted. At the time a participant elects to defer compensation, the participant determines that the balance of both accounts will be paid in cash at a fixed date more than six months following the election. Because of the transfer feature, the plan is treated as a multi-fund deferral plan under Q. 4(c) of the staff interpretive letter to American Bar Association (Dec. 20, 1996), rather than a single-fund deferral plan under Q. 4(b) of that interpretive letter. A cash-out from the phantom stock account pursuant to the election described above would be a Discretionary Transaction, eligible for exemption under Rule 16b-3(f). Because the transfer feature permits assets to be transferred between the accounts, the balance of assets that will be in the phantom stock account at the fixed date payout cannot be determined until the fixed date occurs. Therefore, for purposes of Rule 16b-3(f) the fixed date payout election will be deemed to occur on the fixed date. The fixed date payout is not eligible for exemption under Rule 16b-3(e). [May 23, 2007]

223.14 A deferred compensation plan allows deferrals to either a phantom stock account or a cash account (which is credited with interest at the market rate). No transfers between the phantom stock account and the cash account are permitted, except that if a participant elects a payout in installments, the participant may make a one-time election (effective simultaneously with commencement of payouts) to transfer all or part of the phantom stock account balance to the cash account. Because of this transfer feature, pursuant to the staff interpretive letter to American Bar Association (Dec. 20, 1996) Q. 4(c), the plan is treated as a multi-fund deferral plan, rather than as a single-fund deferral plan. Generally, a transfer pursuant to this feature would be a Discretionary Transaction, eligible for exemption under Rule 16b-3(f). However, where such a transaction is not a Discretionary Transaction (for example, where it is in connection with the participant's death, disability or retirement, as provided by Rule 16b-3(b)(1)), it is eligible for exemption under Rule 16b-3(e). In that case, if the participant irrevocably elects to make such a transfer at the time he or she elects to defer funds, the approval requirement of Rule 16b-3(e) and Note 3 may be satisfied by approval of the plan. Cf. staff interpretive letter to American Bar Association (Dec. 20, 1996) Q. 4(b). However, if the election is made at a later point, approval of the individual transaction is necessary. [May 23, 2007]

223.15 If an election to effect a Discretionary Transaction is revocable until a specified date, such specified date should be used as the date of the election for purposes of measuring the six-month period before election of the next "opposite way" Discretionary Transaction eligible for exemption under Rule 16b-3(f). [May 23, 2007]

Section 224. Rule 16b-5 – Bona Fide Gifts and Inheritance.

Section 225. Rule 16b-6 – Derivative Securities.

Section 226. Rule 16b-7 – Mergers, Reclassifications and Consolidations.

Section 227. Rule 16b-8 – Voting Trusts.

Section 228. Rule 16c-1 – Brokers.

Section 229. Rule 16c-2 – Transactions Effected in Connection with a Distribution.

Section 230. Rule 16c-3 – Exemption of Sales of Securities to be Acquired.

Section 231. Rule 16c-4 – Derivative Securities.

231.01 Rule 16c-4 provides that establishing or increasing a put equivalent position will be exempt from the Section 16(c) prohibition against short sales so long as the amount of securities underlying the put equivalent position does not exceed the amount of underlying securities otherwise owned. The insider had issued DECS (put equivalents) backed by issuer common stock. The insider proposed to sell all its issuer common stock in excess of the minimum amount deliverable in settlement of the DECS at maturity, and asked the Division staff to concur that the insider would continue to satisfy Rule 16c-4 following such sale. The Division staff did not agree because if a price decline occurred prior to maturity the insider would need to deliver a greater number of shares, at which point the insider would be short (in violation of Section 16(c)) and would be benefited by a stock decline so that it could go into the market and cover. Rule 16c-4 is construed to apply during the entire lifetime of the put equivalent so that at any such time the insider would have no net benefit resulting from a price decline in the issuer's shares. [May 23, 2007]

Section 232. Rule 16e-1 – Arbitrage.

Section 233. Forms 3, 4 and 5 – General.

233.01 Phantom stock is a derivative security reportable on Table II of Forms 4 and 5. Accordingly, in reporting an open market purchase of common stock, an insider would not need to update phantom stock holdings. The exception to this position is where phantom stock units that settle automatically on a one-for-one basis in common stock have been reported on Table I as common stock, in reliance on the staff interpretive letters to Lincoln National Corporation (Mar. 20, 1992), Q. 3 and American Bar Association (Dec. 20, 1996), Q. 4(d)(3). [May 23, 2007]

233.02 An insider may rely in good faith on the last plan statement in reporting holdings pursuant to 401(k) plans and other plans eligible for the Rule 16b-3(c) exemption on Forms 4 and 5, unless the insider is aware of subsequent plan transactions. [May 23, 2007]

233.03 When reporting a transaction on Form 4 or Form 5, care should be taken that the characterization of securities as "Acquired (A)" or "Disposed (D)" in Table I Column 4 or Table II Column 5 is consistent with the transaction code reported in Table I Column 3 or Table II Column 4. For example, a transaction coded "P" should not report "D" in Table I Column 4 or Table II Column 5, because a purchase is not a disposition. [May 23, 2007]

Section 234. Form 3.

Section 235. Form 4.

235.01 An insider planned to file a Form 4 to report the sale of securities of a closed-end investment company. Each shareholder in the investment company owns one share of stock, but a shareholder's voting interest is tied to its economic interest, rather than the number of shares of stock held. The staff advised that the insider must include information that would convey the amount of equity sold or purchased in the transaction. Specifically, while the insider may report on the Form 4 that one share was involved in the transaction, the insider should also include a footnote to explain the amount of equity involved in the transaction, stating: (1) the percentage held before transaction; (2) the percentage sold/purchased in the transaction; and (3) the percentage held after the transaction. [May 23, 2007]

Stock options and SEC Section 16(b).

M also adopted an insider trading compliance program under which insiders could trade M shares only between November 5 and November 30 of that year (trading window). Failure to abide by these rules would result in termination. The exercise of the NQSOs was not prohibited.

In 1991, Section 16(b) was changed to give options (and other derivatives) the same status as stock; the SEC recognized "that holding derivative securities is functionally equivalent to holding the underlying equity securities for purposes of Section 16(b), since the value of the derivative securities is a function of or related to the value of the underlying equity security." Thus, after 1991, the six-month holding period under Section 16(b) begins when the options are granted, rather than when they are exercised.

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Final Section 16 Reporting and Short Swing Profit Rules: Final Section 16 Rules Are User Friendly.

This article analyzes the practical impact of the new Section 16 rules on the planning of executive compensation for officers and directors. The new rules eliminate many of the requirements and uncertainties that consumed an inordinate amount of time for the executive compensation planner. Perhaps the greatest benefit of the new rules is that they virtually eliminate one of the major regulatory considerations involved in any executive compensation decision, the Section 16 reporting and short-swing profit recovery rules.

Old Requirements Eliminated.

The new rules eliminate many of the reporting requirements and exemption conditions of current Rule 16b-3.

The following transactions are exempt from reporting requirements:

transactions pursuant to the exemption for Tax Conditioned Plans, such as 401(k) plans, excess benefit plans and employee stock purchase plans; transactions pursuant to dividend or interest reinvestment plans and domestic relations orders; transactions that change only the form of beneficial ownership, e. g., distributions of stock from a trust or an employee benefit plan; cancellations or expirations of stock options without value; and exempt transactions by a person who has ceased to be an insider.

Under the new rules, exercises and conversions of derivative securities, i. e., stock options and stock appreciation rights ("SARs") must be reported on Form 4. Non-exempt transactions must also be reported on Form 4. Gifts, stock option grants and employer stock fund switching transactions are reportable on Form 5, with earlier reporting on Form 4 permitted.

The new reporting rules are effective for transactions effected on and after August15, 1996. However, the reporting exemption for Tax Conditioned Plans only applies if the company has elected to comply with new Rule 16b-3, which has a phase-in period for compliance ending on November 1, 1996.

Phantom stock or stock units, i. e., "cash only instruments," become derivative securities under the new rules subject to reporting on August 15, 1996. However, phantom stock and stock units granted before August 15, 1996 are generally exempt from the new reporting rules.

The following requirements of current Rule 16b-3 have been eliminated:

Written Plan Condition. The new exemption focuses on transactions between officers and directors and the issuer and there is no longer a need for a written plan. Although the written plan requirement of Rule 16b-3 has been eliminated, a plan is still required by the Internal Revenue Code or ERISA in the following circumstances: incentive stock options; section 423 employee stock purchase plans; 401(k) plans, ESOPs and profit sharing plans; and excess benefit plans The Prohibition on Transfer of Stock Options. Almost all stock plans prohibit the transfer of stock options except pursuant to a qualified domestic relations order ("QDRO"). This prohibition is required by the incentive stock option rules and current Rule 16b-3. Under the new rules, this prohibition may be liberalized to permit the grant of fully transferable nonstatutory stock options, and to permit transfers pursuant to "domestic relations orders," as defined under the Internal Revenue Code or ERISA, that do not qualify as QDROs.

The gift of stock options has become an increasingly popular income, estate and gift tax planning tool, and this change will facilitate such gifts, e. g., gifts to charities may increase. For income tax purposes, an option that is fully transferable and fully exercisable on the date of grant should have a "readily ascertainable value" even if the option is not actively traded on an established market. The taxable value of the grant of a transferable option will likely be determined under a Black Scholes or other accepted valuation model. If the IRS agrees that a fully transferable option has a "readily ascertainable value," that value is taxable income to the executive, to be determined on the date of grant, and the employer-issuer will have an equivalent deduction. There should be no further taxation until the donee sells the shares and then the excess of the sale price over the executive's basis in the shares, i. e., the amount the executive included in income at the time of the grant, should qualify as capital gain for the donee. Executives will want to transfer options out of their estates by timing their gifts to take maximum advantage of the $10,000 per donee exclusion.

The grant of a transferable option is an exempt transaction under the Approval Exemption, described below, and is reportable on Form5. Currently, Form S-8 is unavailable for donees. Therefore, an issuer should consider Form S-8 registration and possible proxy disclosure issues (e. g., how stockholders will react to options that may be exercised by persons other than the executive or his or her family members) before granting fully transferable stock options.

Stockholder Approval. Stockholder approval of a plan or a plan amendment that (i)increases shares subject to the plan, (ii)changes the class of eligible executives, or (iii)materially increases benefits, will no longer be required as a condition of the new Rule 16b-3 exemption. The deletion of this requirement is a major benefit for tax qualified plans and for amendments to stock plans that increase benefits. However, stockholder approval of the adoption of a plan and plan amendments to increase available shares or change the class of covered individuals is still generally required for stock plans subject to stock exchange requirements, incentive stock options and qualified employee stock purchase plans. In addition, Section 162(m) of the Internal Revenue Code requires stockholder approval of the adoption or amendment of individual award limits or the establishment or amendment of the material terms of a performance goal. As a result, stockholder approval will still generally be sought, but not for the purpose of obtaining a Rule 16b-3 exemption which previously was the major motivating reason. Disinterested Administration. Current Rule 16b-3 requires that a plan or arrangement be administered by a committee of at least two "disinterested directors." A director is disinterested if the director has not received a discretionary grant of a derivative or equity security during the 12 months preceding the date of service on the committee. The new rules replace the disinterested director requirement with a "Non-Employee Director" requirement, discussed below, that does not prohibit the receipt of discretionary awards. This renders the "formula plan" for outside directors, a familiar fixture of executive compensation, obsolete for Section16 purposes. However, as a matter of convenience, if not corporate governance, it is unlikely that these plans will soon disappear. Formula plans readily solve the somewhat thorny question of how much equity each outside director deserves. It is likely, however, that formula plans will be amended to permit committee members (and if necessary, all outside directors) to receive discretionary grants. Advance Six-Month and Window Period Election Requirements. Under current Rule 16b-3, in order for certain transactions to be exempt, they must be made pursuant to an irrevocable election made at least six months in advance of the transaction or in advance of the transaction during a 10-day window period following the issuer's quarterly earnings release. These advance election requirements applied to the exercise of SARs for cash, investment fund switching in tax qualified plans and withholding rights for taxes or the exercise price of an award. The advance election requirements were very difficult to understand and administer. Under the new rules, withholding rights do not constitute a separate derivative security, and SARs and fund switching are exempted under much less complicated provisions. However, for SARs, many insider trading policies will still require that the exercise of the SAR for cash occur in a window period. The Six-Month Holding Period Requirement. Current Rule 16b-3 requires that the grant of an equity security will only be exempt if the security is held by the officer or director for six months from the date of grant, or in the case of a derivative security, e. g., a stock option, six months must pass before the sale of the underlying security. Although the new rules preserve the six-month holding period as a way to exempt an acquisition, they also add two alternative conditions that do not require the holding period. Under the new rules, the grant of an equity security or derivative security will also be exempt if it is simply approved in advance or ratified (see "Approval Exemption" below).

The substitution of the Approval Exemption for the nettlesome six-month holding period requirement is most welcomed by executive compensation planners, who will no longer need to spend time worrying about such things as:

Internal Revenue Code section 83(b) elections when options are exercised within six months of the date of grant; amendments to awards that under the current rules would result in the cancellation and re-grant of the award (and the commencement of a new six-month holding period); and when awards become derivative securities for purposes of the six month rule if they have an exercise or conversion feature that is not based on the price of the underlying security. The cancellation/re-grant issue was especially problematic in the case of mergers where the new award or option must be exercised within three months of termination of employment.

The New Exemptions.

Under the new rules, transactions will be exempt if they satisfy one of the following simple and straightforward exemptions:

Tax Conditioned Plans.

Under the current rules, the reporting and liability provisions of Sections 16(a) and (b) were a nightmare for tax qualified plans, such as 401(k) plans, stock bonus plans and ESOPs and qualified section 423 stock purchase plans. Sections 16(a) and (b) generally did not apply to a cash-only "excess benefit plan" that was operated in conjunction with a tax qualified plan.

The new rules exempt from reporting and short-swing profit liability almost all transactions under "Tax Conditioned Plans." A Tax Conditioned Plan is defined as a:

Qualified Plan; Excess Benefit Plan; or Stock Purchase Plan.

A "Qualified Plan" is any plan, whether or not tax qualified, that satisfies the coverage rules under the Internal Revenue Code for qualified plans. An "Excess Benefit Plan" is an employee benefit plan that is operated in conjunction with a Qualified Plan and provides benefits in excess of those permissible under the Qualified Plan, e. g., a "supplemental 401(k) plan." A "Stock Purchase Plan" is either a section423 qualified stock purchase plan or a nonqualified stock purchase plan that satisfies the coverage requirements for Qualified Plans. Typical transactions which will be completely exempt without regard to any requirements include:

purchases of stock or derivative securities with plan contributions; dispositions pursuant to domestic relations orders; distributions in the event of death, disability, retirement or termination of employment; investment diversification or distributions required by the Internal Revenue Code, e. g., excess contributions under 401(k) or 401(m); and purchases of employee stock purchase plan stock.

The only transactions in Qualified Plans and Excess Benefit Plans that will not be exempt pursuant to the exemption for Tax Conditioned Plans are investment fund transfers in and out of employer stock funds, in-service cash withdrawals and participant directed loans from employer stock funds.

Many employee benefit plans, whether or not they are Qualified Plans or Excess Benefit Plans, permit participants to transfer in and out of employer stock funds and elect to receive cash withdrawals or loans from such funds. Under the new rules, any such transaction will be exempt from Section 16(b) if it is effected pursuant to an election made at least six months following the date of the most recent "opposite-way" election under any plan of the company. For example, a cash withdrawal would be exempt under the new rules as long as a participant had not elected a transfer into an employer fund within the preceding six months. Issuers will want to revise their Section16 insider trading policies to reflect this new requirement.

The Approval Exemption: The Committee Rules.

The last exemption covers all other executive compensation transactions between officers and directors and issuers that are not covered by the previous two exemptions. This exemption, which principally relies on advance approval or ratification, will be the workhorse for stock plans and cash-only plan transactions. Fortunately, the advance approval requirement is quite easily implemented.

The Approval Exemption. The Approval Exemption exempts an officer's or director's acquisition of equity or derivative securities from the issuer if:

the acquisition is approved in advance by the board of directors or a committee of the board comprised of two or more "Non-Employee Directors;" the acquisition is approved by stockholders in advance or ratified at the next stockholders' meeting; or the equity security or derivative security is held for six months before the disposition of the equity security.

Dispositions to the issuer are exempt if the requirements of paragraphs (i) or (ii) above are satisfied.

The Approval Exemption will exempt most typical stock plan or cash-only plan transactions including:

the grant of options (including transferable options), SARs and phantom stock; the exercise of options, SARs and phantom stock and the exercise of withholding rights; the cancellation, expiration or surrender of options, SARs and phantom stock; and deferral elections and distributions from cash-only plans.

A "cashless exercise" involving a broker's sale of shares to the public is still a nonexempt sale.

The new rules also state that the scope of advance approval can be quite broad. For example, if the grant of an award contemplates subsequent transactions, including participant directed transactions, e. g., award exercises, re-load grants, surrenders or deferrals, etc., the subsequent transactions will not require additional approval. This rule should result in the more thoughtful and comprehensive drafting of approving resolutions. Approval of specific transactions is not, however, required if the terms and conditions of such transactions are set forth in a formula plan that has been approved.

The Non-Employee Director Committee. In practice, almost all of the above transactions will be approved in advance by the new "Non-Employee Director" Committee. The two-person non-employee director committee will replace the committee of at least two "disinterested directors." The definition of non-employee director is very similar to the definition of "outside director" for purposes of exempting transactions under the $1 million deduction limitation of section 162(m) of the Internal Revenue Code. This similarity will make the appointment of the committee much easier.

A non-employee director is a director who:

is not an officer or otherwise employed by the issuer or a parent or a subsidiary (same as section 162(m) except that former officers and certain former employees are barred under section 162(m)); does not receive compensation, directly or indirectly, from the issuer or a parent or subsidiary for services as a consultant or in any capacity other than as a director, except for an amount that does not exceed the amount which requires proxy disclosure, i. e., in excess of $60,000 (section 162(m) prohibits any direct or indirect remuneration); and does not have an interest in any transaction or has not engaged in a business relationship for which proxy disclosure is required (these are not section 162(m) requirements).

The planning of executive compensation in stock plans, and in phantom stock and other cash-only plans, will be much easier under the Approval Exemption. Transactions with issuers will be exempt as long as the committee does what it has always done, approve the transaction in advance. Because the scope of the committee's approval can be very broad, many transactions can simply be approved at the time of the initial grant of the award.

The new rules are streamlined and will eliminate much of the uncertainty that has clouded executive compensation planning. The Tax Conditioned Plan, Discretionary Transaction, Advance Approval and Reporting Exemptions are welcomed insofar as they do not require many changes in the manner in which executive compensation transactions would be executed even in the absence of the SEC's current rules.