I got a lot of questions by Belgian shareholders on the latest Sec Filing and asked help from Jim for explanation as these things are complex and sometimes give the impression that shares have been or are going to be sold in large quantities
hereby the reply from Jim.
Whenever a publicly traded company that is regulated by the U.S. Securities and Exchange Commission (SEC) directly sells shares to investors either through a private placement, a convertible debt financing, or other form of private sale, U.S. law requires that those shares be affixed with a restrictive trading legend that prevents any trading of the shares until certain U. S. hold periods are first met. These hold periods can differ, but in general are six months in length.
In these transactions, a separate Canadian trading legend is restrictive also affixed to these shares, requiring a 121 day holding period. This period starts when the shares are issued and runs concurrently with the U.S. hold period.
U.S. and Canadian restrictive trading legends are also required to be affixed to any shares that are issued in response to the exercise of warrants. The U.S. hold period on these shares starts when the warrants are exercised, and the Canadian 121-day hold period starts when the warrants are originally issued.
When NioCorp sells securities in this manner, those securities are generally kept in electronic form at our transfer agent, Computershare. If an investor wants to transfer his or her shares to their own brokerage account, the legend must be removed, as virtually no brokerage firm will allow the deposit of securities into an investor’s brokerage account if the securities have a restrictive trading legend affixed to them.
The S-3 statement we just filed “registers” those privately issued shares in the eyes of the SEC. After the S-3 registration is reviewed and declared effective by the SEC, investors are more easily able to request that the restrictive trading legend be removed prior to the expiration of the normal U.S. hold period. That way, an investor’s shares can be transferred out of Computershare and into their own brokerage accounts.
Note that an S-3 registration does not change or remove the 121-day Canadian hold period.
Thus, an S-3 filing does not necessarily indicate that any shares are being sold by investors. It allows investors to have more direct control over their shares. We do these filings as a convenience for our investors.
Does this all make sense? U.S. securities laws can be quite complicated, and NioCorp has to follow both U.S. and Canadian securities laws.
AI
