Understanding Affiliated Persons (Securities) and Their Impact

Q: Do affiliated persons have special trading privileges?

No, affiliated persons are subject to strict regulations to prevent insider trading.

Q: How can I determine if I am an affiliated person?

If you hold 10% or more of a corporation&#039;s shares or are in a decision-making role, you are likely an affiliated person.

Definition & Meaning

Affiliated persons in the context of securities are individuals or entities that hold a significant influence over a corporation's decisions. This group typically includes officers, directors, and principal stockholders who own ten percent or more of the corporation's shares. Immediate family members of these individuals are also considered affiliated persons. They are often referred to as insiders or control persons due to their access to sensitive information about the corporation.

Table of content

Legal Use & context

The term "affiliated persons" is commonly used in securities law, particularly in regulations surrounding insider trading and corporate governance. Legal practitioners often encounter this term when dealing with compliance issues, disclosures, and reporting requirements related to securities transactions. Understanding who qualifies as an affiliated person is crucial for ensuring adherence to laws that prevent unfair trading practices. Users can manage related forms and procedures using resources like US Legal Forms, which provide templates drafted by attorneys.

Key legal elements

Real-world examples

Here are a couple of examples of abatement:

Example 1: A corporation has a CEO who owns 15% of the company's shares. As the CEO, they are considered an affiliated person and have access to confidential information regarding the company's financial performance.

Example 2: A director of a corporation has a spouse who owns 12% of the shares. Both the director and their spouse are classified as affiliated persons due to their ownership stakes and relationship (hypothetical example).

State-by-state differences

Examples of state differences (not exhaustive):

State	Key Differences
California	Strict regulations on insider trading; affiliated persons must disclose trades within two business days.
New York	Similar disclosure requirements, but with additional penalties for non-compliance.
Texas	Less stringent rules on disclosure compared to California and New York, but still requires adherence to federal laws.

This is not a complete list. State laws vary, and users should consult local rules for specific guidance.

Comparison with related terms

Term	Definition	Differences
Insider	Individuals with access to non-public information about a company.	All affiliated persons are insiders, but not all insiders are affiliated persons.
Control Person	Any person who has the power to influence the decisions of a corporation.	Control persons may not necessarily own shares, while affiliated persons typically do.

Common misunderstandings

What to do if this term applies to you

If you believe you are an affiliated person, it's important to understand your responsibilities regarding disclosure and trading. You should:

Review your ownership stake and position within the corporation.
Consult with a legal professional to ensure compliance with relevant laws.
Explore US Legal Forms for templates that can assist you in managing your legal obligations effectively.

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Quick facts

Attribute	Details
Ownership Threshold	10% of shares
Typical Roles	Officers, directors, principal stockholders
Disclosure Requirement	Varies by state; generally requires timely reporting

Key takeaways

Frequently asked questions

What is the difference between an affiliated person and an insider?

An affiliated person is a specific type of insider who has a significant ownership stake or control over a corporation.