OTCQB Listing, Eligibility & Quotation – Going Public Lawyers

Posted by Brenda Hamilton, Securities and Going Public Lawyer

OTC Markets Group (“OTC Markets”) requires companies seeking quotation of their securities on the OTCQB® Venture Stage Marketplace (“OTCQB”) have an initial and ongoing $0.01 per share minimum bid price, submit an initial OTCQB application, pay annual fees, and submit annual certifications to the OTC Markets.  Companies that do not meet all of these requirements are demoted to the OTC Markets Pink® Marketplace (“OTC Pink”).  OTCQB companies must also be reporting with the Securities & Exchange Commission (“SEC”).

OTCQB Minimum Bid Test

Requirements for OTCQB listing include that the company: (i) must have a minimum bid price of $0.01 per share as of the close of each business day for each of the previous thirty calendar days prior to its application date and (ii) once quoted on the OTCQB, the company must maintain a minimum bid price of $0.01 per share as of the close of the business day at least one time per thirty (30) consecutive calendar days.

Initial and Annual Certification

The OTC Markets OTCQB requirements include that the issuer must post specific information on the OTC Markets website certified by either the issuer’s chief executive officer or the chief financial officer, stating: (i) the company’s reporting status and briefly describes the SEC registration status of the company and/or its securities; (ii) that the company is current in its reporting obligations and such information has been posted either on the SEC’s EDGAR database or the OTC Markets website; (iii) the identity of the securities lawyer or law firm that assisted the company in the preparation of its annual report on Form 10-K or other disclosures; (iv) that the company’s public profile on the OTC Markets website is current and complete; (v) the total shares outstanding and in the public float as of the most recent fiscal year end; and (vi) the names and shareholdings of all officers, directors and beneficial shareholders who hold more than 5% of the company’s outstanding shares.

Initial and Annual Fees

Companies must pay fees to the OTC Markets for OTCQB quotation as follows: (i) a one-time application fee of $2,500 for issuers up-listing for OTCQB quotation and (ii) an annual fee of $10,000 for all OTCQB listed companies.

To Be Eligible for OTCQB, Companies Must:

• Meet a minimum bid price test of $0.01.  Securities that do not meet the minimum bid price test will be downgraded to OTC Pink
• Submit an application to OTCQB and pay an application and annual fee
• Submit an OTCQB Annual Certification confirming the Company Profile displayed on otcmarkets.com is current and complete and providing additional information on officers, directors, and controlling shareholders

Additional Requirements for OTCQB Quotation:

• International Reporting companies listed on a Qualified Foreign Stock Exchange are now eligible for OTCQB
• Banks that do not file disclosures on EDGAR will be required to post their regulatory filings on otcmarkets.com
• Securities of companies that do not either meet the OTCQB standards or qualify for OTCQX will likely continue to be traded by broker-dealers on OTC Pink

SEC Reporting Companies

Initial Requirements

• Meet an initial bid price test of $0.01 as of the close of business for each of the previous 30 calendar days
• Complete and submit OTCQB Application and applicable fees
• Be current in all periodic reporting requirements on EDGAR (or for companies not required to file on EDGAR, post SEC disclosure on the OTC Markets website)
• Post on the OTC Markets website

Ongoing Requirements

• Meet an ongoing minimum bid price test of $0.01 as of the close of business for at least one of every 30 calendar days
• Post current SEC disclosure on EDGAR, or for companies that do not file on EDGAR, post current SEC disclosure on the OTC Markets website
• Post on the OTC Markets website

Bank Reporting Companies 

Initial Requirements

• Meet an initial bid price test of $0.01 as of the close of business for each of the previous 30 calendar days
• Complete and submit OTCQB Application and applicable fees
• Post on the OTC Markets website:

Previous two years’ disclosure that was filed with the company’s bank regulator (except that information deemed non-public does not need to be posted).

Ongoing Requirements

• Meet an ongoing minimum bid price test of $0.01 as of the close of business for at least one of every 30 calendar days
• Post on the OTC Markets website

Disclosure that is filed with the company’s bank regulator (except that information deemed non-public does not need to be posted)

International OTCQB Reporting Companies – Initial Requirements

• Meet an initial bid price test of $0.01 as of the close of business for each of the previous 30 calendar days
• Complete and submit OTCQB Application and applicable fees
• Be compliant with SEC Rule 12g3-2(b) and be listed on a Qualified Foreign exchange
• Submit a “Letter of Introduction” from a qualified PAL which states the PAL has a reasonable belief that the Company is in compliance with 12g3-2(b), is listed on a Qualified Foreign Exchange, and has posted required disclosure on the OTC Markets website
• Post on the OTC Markets website

Previous two years’ of disclosure required under 12g3-2(b) in English (except press releases)

Ongoing Requirements

• Meet an ongoing minimum bid price test of $0.01 as of the close of business for at least one of every 30 calendar days
• Post on the OTC Markets website: Disclosure required under 12g3-2(b) in English, including Quarterly Reports and audited Annual Reports (except press releases)

 OTCQB Annual Certification

Each OTCQB company must post initial and annual certification on the OTC Markets website, signed by the CEO and/or the CFO which states the following:

• The company’s reporting standard (e.g. SEC Reporting, Bank Reporting, or International Reporting) and briefly describe the registration status of the company
• That the company is current in its reporting obligations to its regulator and such information has been posted either on EDGAR or the OTC Markets website
• Indicates the Law Firm and/or Attorneys involved in helping the company prepare its Annual Report or 10-K
• Confirms that the company profile on the OTC Markets website is current and complete
• Confirms the total shares outstanding and in the public float as of the most recent fiscal year end
• Names and shareholdings of all officers and directors, as well as beneficial shareholders who hold more than 5% of outstanding shares  

Fees

• Application Fee. There is a one-time application fee of $2,500 for new companies upgrading to OTCQB.
• Annual Fee. $10,000 per year
• Introductory Annual Fee. For current OTCQB companies that apply for OTCQB in 2014, the Annual Fee shall be discounted to $7,500 for each of the first two years (a total discount of $5,000 or 25%)

To  speak with an OTC Markets OTCQB lawyer please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, or by email at [email protected].  This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship.  Please note that the prior results discussed herein do not guarantee similar outcomes.

Hamilton & Associates | Securities Attorneys
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.SecuritiesLawyer101.com