Zigr is Both a Private Equity and M&A Advisory Firm.
SEC Section 15(b)(13) Exemption
DEFINITION: SEC Section 15(b)(13) provides a statutory exemption from SEC registration for certain M&A brokers facilitating the transfer of ownership of eligible small, privately held companies, effective March 29, 2023.
Zigr Inc operates in the United States under the SEC’s M&A broker exemption in Section 15(b)(13) of the Securities Exchange Act.
– The information and services provided on this website may not be available in all jurisdictions and are not intended for use where their provision or use would violate applicable laws, rules, or regulations. You should contact Zigr Inc to confirm the availability of specific services in your jurisdiction before proceeding.
M&A Broker. The term “M&A broker” for purposes of the Exemption means a broker, and any person associated with a broker, engaged in the business of effecting securities transactions solely in connection with the transfer of ownership of an “eligible privately held company” (defined below) through the purchase, sale, exchange, issuance, repurchase or redemption of, or a business combination involving, securities or assets of the eligible privately held company, if the M&A broker reasonably believes that:
1. Upon consummation of the transaction, any person acquiring securities or assets of the eligible privately held company, acting alone or in concert will both:
- Control the eligible privately held company or the business conducted with the assets of the eligible privately held company; and
- Directly or indirectly, be active in the management of the eligible privately held company or the business conducted with the assets of the eligible privately held company, including without limitation, for example, by: electing executive officers; approving the annual budget; serving as an executive or other executive manager; or carrying out such other activities as the SEC may, by rule, determine to be in the public interest; and
2. If any person is offered securities in exchange for securities or assets of the eligible privately held company, such person will, prior to becoming legally bound to consummate the transaction, receive or have reasonable access to the most recent fiscal year-end financial statements of the issuer of the securities as customarily prepared by the management of the issuer in the normal course of operations and, if the financial statements of the issuer are audited, reviewed, or compiled, any related statement by the independent accountant, a balance sheet dated not more than 120 days before the date of the offer, and information pertaining to the management, business, results of operations for the period covered by the foregoing financial statements, and material loss contingencies of the issuer.
Eligible Privately Held Company. The term “eligible privately held company” means a privately held company that: (i) has no class of securities registered (or required to be registered) under Section 12 of the Exchange Act or with respect to which the company files (or is required to file) periodic information, documents and reports under Section 15(d) of the Exchange Act; and (ii) in the fiscal year ending immediately before the fiscal year in which the services of the M&A broker are initially engaged with respect to the transaction, the company meets either or both of the following conditions (determined in accordance with the historical financial accounting records of the company):
(a) earnings before interest, taxes, depreciation and amortization (“EBITDA”) less than $25 million; or
(b) gross revenues less than $250 million (together, the “EBITDA/Gross Revenue Limitation”). The Exemption provides for an inflation adjustment of the dollar amounts of the EBITDA/Gross Revenue Limitation five years after the date of enactment and every five years thereafter.
Control. The term “control” means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise. There is a presumption of control if, upon completion of a transaction, the buyer or group of buyers has the right to vote, sell or direct the sale of 25% or more of a class of voting securities, or, in the case of a partnership or limited liability company, has contributed or has the right to receive upon dissolution 25% or more of the capital.
Shell Company. The term “shell company” includes any company that, at the time of a transaction with an eligible privately held company, has: (i) no or nominal operations; and (ii) either no or nominal assets, assets consisting solely of cash and cash equivalents, or assets consisting of any amount of cash and cash equivalents and nominal other assets.
Business Combination Related Shell Company. The term “business combination related shell company” means a shell company that is formed by an entity that is not a shell company: (i) solely for the purpose of changing the corporate domicile of that entity solely within the U.S.; or (ii) solely for the purpose of completing a business combination transaction (as defined under 17 C.F.R. § 230.165(f)) among one or more entities other than the company itself, none of which is a shell company.
(a) earnings before interest, taxes, depreciation and amortization (“EBITDA”) less than $25 million; or
(b) gross revenues less than $250 million (together, the “EBITDA/Gross Revenue Limitation”). The Exemption provides for an inflation adjustment of the dollar amounts of the EBITDA/Gross Revenue Limitation five years after the date of enactment and every five years thereafter.
EXCLUDED ACTIVITIES: The following activities are excluded from the scope the Exemption, and, therefore, an M&A broker who engages in any such activities cannot rely on the Exemption.
- Directly or indirectly receiving, holding, transmitting, or having custody of the funds or securities to be exchanged by the parties in connection with a transaction for the transfer of ownership of an eligible privately held company.
- Engaging on behalf of an issuer in a public offering of any class of securities registered (or required to be registered) under Section 12 of the Exchange Act or with respect to which the issuer files (or is required to file) periodic information, documents and reports under Section 15(d) of the Exchange Act.
- Engaging on behalf of any party in a transaction involving a shell company, other than a business combination related shell company.
- Directly, or indirectly through any of its affiliates, providing financing related to the transfer of ownership of an eligible privately held company.
- Assisting any party to obtain financing from an unaffiliated third party without (i) complying with all other applicable laws in connection with such assistance, including, if applicable, Regulation T, and (ii) disclosing any compensation in writing to the party.
- Representing both the buyer and the seller in the same transaction without providing clear written disclosure as to the parties the M&A broker represents and obtaining written consent from both parties to the joint representation.