SLJB - How Do I Go Public on the OTC Pink? Page 1
Many private companies that go public are opting for the listing on the OTC Market’s OTC Pinks due to the increased costs and more stringent regulations associated with Securities and Exchange Commission (“SEC”) reporting. Rule 15c2-11 (“SEC Rule 15c2-11”) of the Securities Exchange Act of 1934 (the “Exchange Act”) can be used by a private company seeking to go public without an SEC registration statement by a sponsoring market maker submitting a Form 211 with the Financial Industry Regulatory Authority (“FINRA”).
In general, a private company can go public if:
The private company has at least 25 non-affiliate shareholders who paid cash consideration for their shares at least 12 months prior to the Form 211 filing date;
The private company must have at least 1 million shares outstanding, of which at least 250,000 are free trading shares;
The private company must never have been a shell company; and
The private company has current public information available.
In order to use Rule 15c-211 to go public, the private company must locate a sponsoring market maker to submit the Form 211 application to FINRA on its behalf. FINRA may render comments to the Form 211 application which the sponsoring market maker and private company must respond to.
Once FINRA is satisfied that the disclosures satisfy the requirements of Rule 15c2-11, it will assign a trading symbol and the Market Maker can quote the company’s securities. Once this occurs, the securities of the private company going public are quoted by the OTC Markets on the OTC Pink Sheets. Once the sponsoring market maker has published quotations for the company’s securities for at least 30 days, other market makers can publish quotations for the security.
