If you`re involved in the Oil and Gas industry, you may have heard of a `SEC Tolling Agreement`. It`s a term that`s commonly used in the industry, but for those who are new to the business, it can be confusing. In this article, we`ll explain what a SEC Tolling Agreement is and how it works.
What is a SEC Tolling Agreement?
First, let`s break down the term. SEC stands for the Securities and Exchange Commission, which is a U.S. government agency that works to protect investors, maintain fair and efficient markets, and facilitate capital formation. A Tolling Agreement is a legal agreement between two parties that suspends the statute of limitations on a legal claim for a certain period of time.
When you put these two terms together, a SEC Tolling Agreement is an agreement between a company and the SEC that suspends the statute of limitations on any potential violations of the U.S. securities laws.
How does a SEC Tolling Agreement work?
A SEC Tolling Agreement is typically used when a company believes it may have violated securities laws and wants to cooperate with the SEC`s investigation. The company may sign a Tolling Agreement in order to give the SEC more time to investigate and potentially bring charges against the company.
By signing a Tolling Agreement, the company is essentially agreeing to waive its right to a statute of limitations defense for any potential charges brought by the SEC. This means that even if the statute of limitations would have expired on a potential charge, the company has given the SEC more time to investigate and potentially bring charges.
Why would a company choose to sign a SEC Tolling Agreement?
There are several reasons why a company might choose to sign a SEC Tolling Agreement. First, it allows the company to cooperate with the SEC`s investigation without fear of an imminent legal action. Second, it can give the company more time to gather information and possibly avoid or mitigate potential charges. Third, it can provide some certainty for the company that the SEC will not suddenly bring charges against it after the statute of limitations has expired.
In summary, a SEC Tolling Agreement is an agreement between a company and the SEC that suspends the statute of limitations on any potential violations of the U.S. securities laws. Companies may choose to sign a Tolling Agreement in order to cooperate with the SEC`s investigation, gain more time to gather information, and provide some certainty that the SEC will not bring charges after the statute of limitations has expired.