Release No. 33-8732A Release No. 34-54302A Release No. IC-27444A

Securities and Exchange Commission

Executive Compensation and Related Person Disclosure
Section V.C.

V. Certain Relationships and Related Transactions Disclosure

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C. Promoters and Control Persons

As proposed and adopted, the amendments require a company to provide disclosure regarding the identity of promoters and its transactions with those promoters if the company had a promoter at any time during the last five fiscal years.⁴⁶⁸ The disclosure will be required in Securities Act registration statements on Form S-1 or on Form SB-2 and Exchange Act Form 10 or Form 10-SB. The disclosure includes:

• The names of the promoters;
• The nature and amount of anything of value received by each promoter from the company and the nature and amount of any consideration received by the company; and
• Additional information regarding any assets acquired by the company from a promoter.

The amendments are consistent with the previous disclosure requirements regarding promoters. However, prior to these amendments this disclosure was not required if the company had been organized more than five years ago, even if the company otherwise had a promoter within the last five years. Our staffs experience in reviewing registration statements, especially of smaller companies, suggests that the more appropriate five-year test for which the disclosure should be provided relates to the period of time during which the company had a promoter, as our revision provides, rather than the date of organization of the company.⁴⁶⁹ We are also requiring the same disclosure that is required for promoters for any person who acquired control, or is part of a group that acquired control, of an issuer that is a shell company.⁴⁷⁰ We are revising the title of this item to include the term control persons in order to clarify the scope of the disclosure requirement.

⁴⁶⁸ Item 404(c).

⁴⁶⁹ We also adopt as proposed similar revisions to the disclosure requirement referencing promoters in Item 401(g)(1) of Regulation S-K. In addition, as proposed our revisions add Form SB-2 to the list of registration statement forms in Item 404 for which promoter disclosure is required. While this revision updates the registration statement forms listed in Item 404, it does not change the promoter disclosure requirement of Form SB-2.

⁴⁷⁰ Item 404(c)(2). The term group has the same meaning as in Exchange Act Rule 13d-5(b)(1) [17 CFR 240.13d-5(b)(1)], that is, any two or more persons that agree to act together for the purpose of acquiring, holding, voting or disposing of equity securities of an issuer. The term shell company is defined in Securities Act Rule 405 and Exchange Act Rule 12b-2.