1 Requirements for Admission to OTCQB
1.1 Eligibility Standards
To be considered for admission to OTCQB, a Company shall meet all the following conditions:
1) Audited Financials. Audited annual financial statements must be prepared in accordance
with U.S. GAAP or, for International Reporting Companies or Alternative Reporting
Companies listed on a Qualified Foreign Exchange, IFRS or an IFRS equivalent, as
applicable, containing an audit opinion that is not adverse, disclaimed, or qualified.
Audits must be conducted by an auditor registered with the Public Company Accounting
Oversight Board (PCAOB). International Reporting Companies and Regulation A Reporting
Companies are exempt from the PCAOB requirement.
Note for Regulation A Reporting Companies: The exemption from PCAOB requirements
covers initial eligibility only. Subsequent annual financial statements are required to have a
PCAOB audit.
2) Current Disclosure. Make current disclosure available pursuant to one of the following
reporting standards:
a. SEC Reporting Standard;
b. Regulation A Reporting Standard;
c. Bank Reporting Standard;
d. International Reporting Standard; or
e. Alternative Reporting Standard.
OTC Markets Group Inc.
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3) Bid Price of $0.01. Have a primary class of securities with proprietary priced quotations
published by a Market Maker in OTC Link ATS with a closing bid price of at least $0.01 a) on
each of the 30 consecutive calendar days immediately preceding the Company’s application
for OTCQB and b) as of the date OTC Markets Group approves its application to join
OTCQB.
OTC Markets Group may consider an exemption if there has been no prior public market for
the Company’s securities in the U.S. and FINRA has recently approved a Form 211 relating
to the Company’s securities with a bid price equal or greater to $0.01 or the Company’s
securities are traded on a Qualified Foreign Exchange at a price equal to or greater than
$0.01. An exemption from Section 1.1(3)(a) of these OTCQB Standards may be granted by
OTC Markets Group in its sole and absolute discretion. Any such exemption is conditioned
upon the bid price for such Company’s securities must remain over $0.01 for each of the
Company’s 30 calendar days on OTCQB.
4) Have at least 50 Beneficial Shareholders, each owning at least 100 shares.
5) Have a freely traded Public Float of at least 10% of the total shares issued and outstanding
of the class of security to be traded on OTCQB.
A Company applying to OTCQB with a freely traded Public Float above 5% but below 10%
of the total shares issued and outstanding, and a market value of Public Float of at least $2
million, or that has a separate class of securities traded on a national exchange, may apply
in writing to OTC Markets Group for an exemption from this Section 1.1(5), which exemption
may be granted by OTC Markets Group in its sole and absolute discretion.
6) Not be subject to any Bankruptcy or reorganization proceedings.
7) Be duly organized, validly existing and in good standing under the laws of each jurisdiction
in which the Company is organized or does business.
8) Transfer Agent. A company incorporated in the U.S. or Canada must retain a transfer agent
that participates in the Transfer Agent Verified Shares Program. Additionally, the Company
must authorize such transfer agent to provide to OTC Markets Group, upon its request,
information related to the Company’s securities, including but not limited to shares
authorized, shares issued and outstanding, and share issuance history.
9) Corporate Governance (Required for Alternative Reporting Standard Only). Alternative
Reporting Companies are required to meet the corporate governance standards outlined
below:
a. Have a board of directors that includes at least two Independent Directors1
; and
b. Have an Audit Committee, a majority of the members of which are Independent
Directors.
Trusts, funds, and other similar Companies may be exempted from these corporate
governance requirements. The Company must apply in writing to OTC Markets Group for an
1 Alternative Reporting Companies traded on OTCQB as of January 1, 2020 will not be subject to the Independent Director definition adopted
on January 1, 2020 until January 1, 2021. Prior to January 1, 2021, these Alternative Reporting Companies remain subject to the previous
Independent Director definition, which stated “Independent Director” shall mean a person other than an executive officer or employee of the
Company or any other individual having a relationship which, in the opinion of the Company’s board of directors, would interfere with the
exercise of independent judgment in carrying out the responsibilities of a director.
OTC Markets Group Inc.
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exemption to this Section 1.1(9), which exemption may be granted by OTC Markets Group
in its sole and absolute discretion.
A Company applying to OTCQB may submit a written request, which may be granted by
OTC Markets Group in its sole and absolute discretion, to be permitted to phase in its
compliance with the corporate governance standards set forth in this section 1.1(9) as
follows:
1. At least one member of the Board of Directors and the Audit Committee must be
independent at the time of application;
2. At least two members of the Board of Directors and a majority of the members of the
Audit Committee must satisfy the independence requirement within the later of 90
days after the Company begins trading on OTCQB or the time of the Company’s next
shareholder meeting. In any event, the independence requirement must be satisfied
within one year of the Company joining OTCQB
