Introduction If the issues caused by Rule
Post# of 40991
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Posted On: 07/27/2018 1:26:48 PM
Introduction
If the issues caused by Rule 6490 were a trade off for FINRA effectively achieving the stated results of the Rule then perhaps the Rule could be justified, but that does not appear to be the case. The primary issues related to the Rule are lack of communication , impossible coordination and lengthy delays. The purpose of this article is to identify these issues i n the hopes of resolving them.
Background
Initially the process appeared to work, albeit a bit slow, however, coordination was problematic. But sometime around late summer 2011 FINRA implemented a “ more detailed legal review” process that it warn ed could significantly delay the process. In many cases this ended up being an understatement. So while the process may now be a more coordinated one, it has not shown to be streamlined in terms of communication, timing or coordination , causing issues an d headaches for over - the - counter companies effecting corporate changes .
These real world examples show the issues with the Rule 6490 process and what needs fixing.
Delay : As noted above, a sim ple name change has taken as long as two months to go effective from the time FINRA received the 6490 application and required supporting documentation. There simply isn’t a justifiable reason for such a delay . ..Considering many companies change their name in connection with either a new business focus or the acquisition of a business that will be the company’s business going forward, delays of two months to effect a name change could be detrimental to the company’s business, potential financing or numerous other issues.
Communication
FINRA was asked for an update and either received no response or a response that “ the file is still being reviewed ” with no further information.
Coordination
Rarely, if ever, will the future effective date listed in the amendment to the Articles of Incorporation match the date FINRA wants to take the action effective (there is some say by the company here – they can delay it going effective with FINRA by a few days , but ma n y times the company are putting 2 - 3 weeks in the future for the effective date in the amendment , but FINRA is taking much longer (up to 2 months for a name change in our experience) ) , which leaves the company in the situation of either having th e action go effective with the state before it goes effective in t he public marketplace,
http://documents.jdsupra.com/34d4cd0b-0cca-49...2f89ae.pdf
If CEO is going after past CEO ( 7 month's in) if he filed lawsuit from Jan 1, this could be the reason or Delaware debt is paid/in process needs to reflect on their accounting debt to clear holding name change. I am just guessing this but name changes can be few weeks to many months.
If the issues caused by Rule 6490 were a trade off for FINRA effectively achieving the stated results of the Rule then perhaps the Rule could be justified, but that does not appear to be the case. The primary issues related to the Rule are lack of communication , impossible coordination and lengthy delays. The purpose of this article is to identify these issues i n the hopes of resolving them.
Background
Initially the process appeared to work, albeit a bit slow, however, coordination was problematic. But sometime around late summer 2011 FINRA implemented a “ more detailed legal review” process that it warn ed could significantly delay the process. In many cases this ended up being an understatement. So while the process may now be a more coordinated one, it has not shown to be streamlined in terms of communication, timing or coordination , causing issues an d headaches for over - the - counter companies effecting corporate changes .
These real world examples show the issues with the Rule 6490 process and what needs fixing.
Delay : As noted above, a sim ple name change has taken as long as two months to go effective from the time FINRA received the 6490 application and required supporting documentation. There simply isn’t a justifiable reason for such a delay . ..Considering many companies change their name in connection with either a new business focus or the acquisition of a business that will be the company’s business going forward, delays of two months to effect a name change could be detrimental to the company’s business, potential financing or numerous other issues.
Communication
FINRA was asked for an update and either received no response or a response that “ the file is still being reviewed ” with no further information.
Coordination
Rarely, if ever, will the future effective date listed in the amendment to the Articles of Incorporation match the date FINRA wants to take the action effective (there is some say by the company here – they can delay it going effective with FINRA by a few days , but ma n y times the company are putting 2 - 3 weeks in the future for the effective date in the amendment , but FINRA is taking much longer (up to 2 months for a name change in our experience) ) , which leaves the company in the situation of either having th e action go effective with the state before it goes effective in t he public marketplace,
http://documents.jdsupra.com/34d4cd0b-0cca-49...2f89ae.pdf
If CEO is going after past CEO ( 7 month's in) if he filed lawsuit from Jan 1, this could be the reason or Delaware debt is paid/in process needs to reflect on their accounting debt to clear holding name change. I am just guessing this but name changes can be few weeks to many months.
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