Well, I thought I had seen it all, but then . . .
On the cover page of its Form S-1 IPO registration statement filed only a few months ago, Coinbase Global, Inc. indicated as follows with regard to the address and telephone number of its principal executive offices: “Address Not Applicable.” In a footnote, it further explained, “[W]e [are] a remote-first company. Accordingly, we do not maintain a headquarters.” An exhaustive search on EDGAR revealed that this was the first submission of its kind with only one similar filing on July 2 by Talkspace, Inc.
How can it be that a public company has no fixed address and/or phone number?1 Surely there must be some physical presence somewhere, even with the shift to work-from-home arrangements for many workers. Securities Exchange Act Rule 3b-7 defines “executive officer” as the company’s “president, any vice president ... in charge of a principal business unit” or any other “officer” or “person” who “performs similar policy making functions.” Securities law commentators have suggested that the term “principal executive offices” would mean the place where the CEO and most other executive officers work most of the time. Given the SEC’s focus on accountability and enforcement, it seems puzzling that the SEC cleared this “end of the principal executive office” disclosure requirement.
State legislatures that have recently drafted laws applicable to public companies incorporated in their state or whose principal executive offices (according to the cover page of their annual report on Form 10-K filed with the SEC) are located there may take notice.2 For instance, California recently enacted a board gender quota law using this principal executive offices jurisdictional hook. Absent the designation of a location for a company’s principal executive offices, a company could potentially avoid board diversity statutes in California and a dozen other states that have enacted or are considering similar laws.
Another potential concern involves certain SEC procedural rules. Securities Exchange Act Rule 14a-8 requires that a shareholder proposal be received at a company’s principal executive offices not less than 120 calendar days before the date the company’s proxy statement is released to shareholders in connection with the previous year’s annual meeting. Similarly, Rule 14d-3(a)(2)(i) requires a third-party bidder in a tender offer to deliver a copy of its Schedule TO to the target company at its principal executive offices. How will such requirements be met and appropriate proof obtained?
Interestingly, Coinbase’s Form S-1 indicates that the company maintains physical offices in major cities around the world for purposes of “collaboration and team building,” but does not maintain a “corporate headquarters.” At least in one publicly available SEC comment letter, the SEC implied that simply occupying a physical office space in one place was not the test for a registrant’s principal executive offices when it appeared that the registrant’s operations were based elsewhere. In the case of Coinbase’s “principal executive offices,” the SEC appeared to accept the company’s more nuanced view that emphasis on the term should be with the word principal, so that if no one office is more principal to the registrant’s operations than the others, no principal executive office needs to be disclosed. The SEC did not require the company to simply pick one of its many physical offices for designation as its “principal office.” Perhaps the most fundamental question answered here is whether there any longer exists a purpose to disclose a registrant's principal executive offices at all.
Should more public companies find the location of their principal executive offices to be “not applicable,” the SEC may conclude that the once commonplace term, “principal executive offices,” needs to be specifically defined or replaced altogether, almost 90 years after enactment of the 1933 and 1934 federal securities laws.
[1] The Forms S-1 do name a third-party service organization as agent for service and each of the company’s certificate of incorporation lists its registered agent in the State of Delaware.
[2] Under the so-called “internal affairs doctrine,” a corporation’s internal affairs are governed by the state of incorporation, meaning that the location of a firm’s headquarters is generally irrelevant to corporate law.
PartnerArmed with more than three decades of capital market experience, Spencer represents smaller publicly traded companies, and often underwriters and investment funds, in public and private securities offerings. He focuses ...