On February 13, 2012, the staff of the U.S. Securities and Exchange Commission’s Division of Corporation Finance (the “Staff”) issued a global no-action letter that provides relief from the requirement to register under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) upon reaching the holder of record threshold due to the issuance of restricted stock units (“RSUs”).

The Staff’s position is limited to RSUs that meet the conditions specified in the no-action letter and does not apply to a company generally, nor does the Staff’s position cover other securities that the company may issue. The Staff had previously provided no-action relief on the topic to individual companies, including Facebook, Zynga and Twitter.

Generally, under Section 12(g) of the Exchange Act and Exchange Act Rule 12g-1, any company with assets in excess of $10 million and a class of equity securities held of record by five hundred or more persons is required to register that class of equity securities under the Exchange Act. Absent relief from the Staff, a company that issues RSUs to five hundred holders of record or more would be required to file an Exchange Act registration statement and become subject to the Exchange Act’s reporting requirements. The Securities and Exchange Commission (the “Commission”) has previously indicated that the five hundred holders of record threshold correlates to companies that are presumed to have an active trading market in their securities and therefore should be required to provide mandatory disclosure to protect the company’s investors.

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