Understanding Affiliated Persons (Securities) and Their Impact
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.
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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.
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
FAQs
An affiliated person is a specific type of insider who has a significant ownership stake or control over a corporation.
No, affiliated persons are subject to strict regulations to prevent insider trading.
If you hold 10% or more of a corporation's shares or are in a decision-making role, you are likely an affiliated person.
