SEC Registration

SEC Shareholder Registration Changes for Smaller Institutions

GBA was active in supporting legislation signed April 5 by President Obama to update the SEC registration threshold to 2,000 shareholders from 500, something that hasn’t been changed in 40 years, and raising the deregistration threshold from 300 to 1,200 shareholders

In summary, this change in the law really is beneficial to smaller banks without doing any damage to the transparency about the bank’s financial condition to the general public and shareholders. The money the banks can save can be put to better use to support loan growth, other business development or perhaps additional jobs at these banks, all of which are good for the communities they’re in.

Some key notes to keep in mind about the outcome of the legislation are:

Banks that choose to de-register or to avoid registration at all are still required to report their quarterly information to their primary regulators, and these Call Report filings are readily available online to anyone at the end of each reporting period. The information there is not in any way materially different from what is required by the SEC.
Meeting the securities reporting requirements to the SEC, which are in many ways duplicative of information provided to other regulators, cost banks significant amounts of money every year. As we understand it, for a small bank, the actual cost can easily exceed $75,000 annually. That’s not to mention the administrative staff time to compile and file the information. Avoiding that reporting for these small banks helps them save money better used for other purposes.
These institutions all have relatively few shareholders – no more than 1,200 with the change in the law. These are primarily hometown or other people linked closely with these banks, as opposed to broad-based retail or institutional investors. The community banks will certainly continue to provide those shareholders with regular reports as to the condition of the bank.
Most community banks never intended to be public companies or have their stock marketed publicly. It was only because so many people in their community wanted to be shareholders that these the banks were caught by the original unrealistically low number of shareholders that required registration.

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GBA's professional staff represents the membership at the state and federal levels. Contact any of them with questions about issues:

Joe Brannen
President & CEO

Elizabeth Chandler
SVP, Government Relations

David Oliver
SVP, Communications & Marketing