When a Company Goes Dark

When a company goes dark, it refers to the process of voluntarily delisting the shares of a public company from a national securities exchange or inter-dealer quotation system and subsequently deregistering the shares under the Exchange Act. This process entails suspending or terminating the company’s public reporting obligations under the Exchange Act.

Delisting alone does not eliminate public reporting requirements. Many non-listed companies are also reporting issuers. However, for such an unlisted public reporting company, the lack of a stock exchange listing may substantially diminish the benefits of remaining a public company.

Reasons for Going Dark

Publicly traded companies are required to comply with certain Exchange Act reporting requirements. These obligations can be triggered in any of three ways:

  • under Section 12(b) if it has shares listed on a national securities exchange;
  • under Section 12(g) based on having over 500 record holders of a class of securities and total assets exceeding $10 million; and
  • under Section 15(d) by having a registration statement declared effective under the Securities Act.