Three companies last week declared—via Form 15—their intention to delist shares and terminate SEC reporting obligations, each citing the rising costs and risks associated with SEC and Sarbanes-Oxley compliance as their motivation.
$158.8 million Israeli engineering firm Baran Group, which is traded on Nasdaq, said in a press release that it would concentrate the trading of its securities on the Tel-Aviv Stock Exchange.
The company noted that with the low trade volume of its shares on Nasdaq and the “rising costs and demands on management time arising in connection with SEC and Nasdaq compliance requirements,” the listing is no longer justified.
Likewise, $67.4 million industrial manufacturer Gibraltar Packaging Group, based in Hastings, Neb., said it plans to realize significant cost and time savings as a result of deregistration, “particularly in light of the substantial increased risks and expenses of compliance with the Sarbanes-Oxley Act and related SEC rules and regulations.”
Chairman and CEO Walter Rose said the move will allow the company’s management team to devote all of its efforts to enhancing long-term value to benefit stockholders.
Gibraltar will continue to be quoted on the Pink Sheets LLC, and the company will still hold annual stockholder meetings in compliance with Delaware law.
Going one step further, $104.9 million health care services company SafeGuard recently announced that its stockholders approved a "going private" transaction. President and CEO James Buncher said, “By approving the reverse split, our stockholders agreed that it makes more sense for SafeGuard to continue its growth and development as a private company, thus avoiding the significant costs and management distraction of remaining a public company.”
The three announcements follow a recent study by Grant Thornton that noted privatization transaction announcements had increased 30 percent during the 16-month period following the enactment of Sarbanes-Oxley Act, in comparison to the 16-month period preceding the Act’s initiation. Details on that study are available from the box above, right.
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