TARP Capital Purchase Program Extended To Qualifying Nonpublic Financial Institutions

The Treasury announced, late on November 17, its new TARP Capital Purchase Program ("CPP") for qualifying financial institutions that are not publicly traded" (the "Private Company CPP"). For purposes of the TARP CPP, "publicly traded" means that a company is both required to file periodic reports under the Securities Exchange Act of 1934, as amended (the "1934 Act") and whose stock is traded on a national securities exchange, such as Nasdaq, the NYSE, or the AMEX. Thus, nontraded 1934 Act filers are "private," as are those non-1934 Act reporting companies whose securities are traded on the bulletin board or the pink sheets.

Financial institutions need to apply for the Private Company CPP by December 8. The terms are very similar to those provided for public companies, except for the warrants and "Warrant Preferred Shares." The Private Company CPP is not available to Subchapter S corporations and mutual depository institutions or their mutual holding companies.