Reserse Merger = Private into a Public Company
The private company shareholders receive a substantial majority of the shares of the public company (normally 90% or more) and the Board of Directors.
The transaction does not go through a review process with state and federal regulators because the public company has already completed the process.
At the closing the public shell company issues a substantial majority of its shares and the board control to the shareholders of the private company. The private company shareholders pay for the shell and contribute their private company shares to the shell company and the private company is now public.
Upon completion of the reverse merger, the name of the shell company is usually changed to the name of the private company.
If the shell company has a trading symbol it is changed to reflect the name change. An information statement, called an 8-K, must be filed within 15 days of the closing.
The 8-K describes the newly combined company, stock issued, information of new officers and directors, and financial statements audited to US GAAP, standards. The 8-K -- Securities Exchange Act of 1934 -- SEC Rule 33-8587,
If the shell company is listed on the Bulletin board, the registered or “free trade” shares can continue to trade. The company can do a private placement immediately.
New shares offered by the public the newly combined public company must first register the shares with the SEC. This process takes three to four months and normally requires filing a Registration statement with the SEC under Reg. SB-2 or SB-1.
The application for a symbol requires filing a Form C211 by a market maker that is a member of the NASD.
The Bulletin Board has no financial requirements. A listing will be granted if the affairs of the company are in order and the company answers the questions posed by NASDAQ.
G. Michael Bennett, CEO
AGBA-Global
May, 2009
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