AimRite Holdings Corp (AIMH)

[TORPEDO]

SEC tightens rules on reverse mergers

The Securities and Exchange Commission has approved new rules proposed by stock exchanges to make it harder for private companies to go public by merging with a shell company, a response to concerns that Chinese groups were using such deals to skirt accounting rules.

The exchanges proposed new rules on such mergers earlier this year, which the SEC adopted on 11/9/2011 despite some investor concern that the scrutiny should be on the companies themselves, rather than the reverse merger structure, as that could hurt capital formation for some small companies.

Reverse mergers will now require a “seasoning period” of one year during which companies will only be able to trade in over-the-counter markets but will still have to file financial statements according to listed-company standards.

They will also have to meet a minimum share price requirement of a $4 closing price for 30 of the 60 days before applying to list with an exchange.

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