Pursuant to the Exchange Act: Overview, definition, and example
What does pursuant to the Exchange Act mean?
“Pursuant to the Exchange Act” means that a specific action, requirement, or obligation is being done in accordance with the U.S. Securities Exchange Act of 1934. The Exchange Act governs how public companies disclose information, how securities are traded, and how certain market participants—like brokers and insiders—must behave. When a clause or action is said to be “pursuant to the Exchange Act,” it’s grounded in the rules or authority provided by that law.
Why is pursuant to the Exchange Act important?
Referencing the Exchange Act clarifies the legal foundation for disclosure, reporting, or compliance obligations. It signals that a certain process (like filing a report or making a public disclosure) is being done to meet federal securities law requirements. This matters for accuracy, timing, and legal protection. For example, disclosures made under the Exchange Act often carry liability if they’re false or misleading.
Understanding pursuant to the Exchange Act through an example
A company may state that it is filing a Form 8-K “pursuant to the Exchange Act” to disclose a material event—like the resignation of a key executive or the signing of a major contract. This signals to regulators and investors that the disclosure is required under federal law and subject to SEC scrutiny.
Example of a pursuant to the Exchange Act clause
Here’s how a pursuant to the Exchange Act clause may appear in a contract:
"The Company agrees to make all required filings with the Securities and Exchange Commission pursuant to the Exchange Act, including annual and quarterly reports, and shall promptly furnish copies to the Investor upon request."
Conclusion
“Pursuant to the Exchange Act” is a phrase that links actions or obligations to a well-established body of U.S. securities law. For public companies and investors, it provides legal context and reinforces the seriousness of disclosures, filings, and corporate conduct. Contracts that include this language usually involve public company compliance, reporting, or investor protections.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.