Important Regulatory Developments in 2016 for Issuers

The SEC released an “advance notice of proposed rule-making and concept release” in late December that seeks feedback on potential rule changes to modernize transfer agent rules and support the national clearance and settlement system. Comments are due by February 29, 2016.  

The release addresses a wide variety of topics such as transfer agent annual reporting requirements, written agreements between agents and issuers, safeguarding funds and securities, restricted securities, cybersecurity, recordkeeping for beneficial holders, crowdfunding, administration of issuer plans, outsourcing and how best to update the existing rules. It’s a substantial document, with more than 200 pages, 170 requests for comment and 600-plus total questions. You can read the full text of the concept release on the SEC website. 

Computershare has a team across North America reviewing the release and will be submitting a response. In addition, we are working closely with the Securities Transfer Association (“STA”) who will be submitting a response on behalf of its transfer agent members. 

We encourage issuers to review the concept release and consider providing comment directly to the SEC on relevant items. We will also provide more information after the comments submission deadline and share any further insight we glean through the process. 

For any specific questions regarding the SEC concept release, please contact your relationship manager. 

​Computershare continues to work with our industry counterparts to bring the U.S. to a T+2 (trade date plus two days) settlement cycle for securities. This reduction of the cycle from trade date plus three days will reduce credit and liquidity risk. We expect to see final rule changes published in mid-2016 with testing early in 2017 and full implementation by the end of 2017. For more details on the proposed changes and their importance, visit the U.S. T+2 website.

The Depository Trust and Clearing Corporation proposed greater dematerialization of U.S. securities in July 2012, in the aftermath of damage to certificates in its vault after Hurricane Sandy. An industry working group was formed and proposed rule changes have been under extensive discussion for the past few years. The next step would be for the major US exchange – NYSE, NASDAQ, BATS – to require that all newly listed issues, and shortly thereafter all listed issues, issue shares only in “book-entry” or “statement” form. In the latest update from the working group, we’ve been advised that proposed rule changes will be submitted to the SEC in early 2016. The working group is not advocating for a major recall or mass cancellation of outstanding certificates. Computershare fully supports the move toward dematerialization, which will provide improved security and faster transactions for shareholders and will help reduce costs for our clients. You can find more information on dematerialization on our website. 

At the end of October, the SEC adopted new rules that provide guidance for U.S. companies to raise capital through crowdfunding. The rules define which companies can raise capital via crowdfunding, how much they can raise, what information that must be filed with the SEC, and how much an individual investor can invest based on income and net worth. The rules also require that transactions be facilitated through an SEC registered intermediary, such as a broker-dealer or a funding platform, and that an intermediary have a reasonable basis for believing that an issuer will keep accurate records of investors.  Issuers that use a registered transfer agent, such as Computershare, for recordkeeping are granted safe harbor for compliance. For more detailed information on the new rules, visit the SEC website. 

A committee of the Uniform Law Commission, which recommends legislation to states where uniformity is desirable and practical, has been working for some time on proposed revision to the uniform unclaimed property act, last revised in 1995. The committee plans to have a near-final version ready for the commission’s annual meeting in July 2016, which they hope will then be accepted by most of the states and supported by the American Bar Association. Some of the key areas the revised act will address include: