Thanks.
Not a lot of activity......well...DTC Eligibility
Whether at the point of initial offering or when the terms of an already eligible security are amended in a corporate action, DTC’s underwriting department may require the issuer to execute and deliver related documentation including but not limited to the following:
• An offering document
• A completed eligibility questionnaire signed by a Participant
• For Book-Entry-Only (“BEO”) securities, in addition to the 2 documents above, an Issuer must provide a DTC Letter of Representation among the Issuer, its transfer agent and DTC. The Letter of Representation may be a blanket letter, which is Issuer specific and covers all securities by that Issuer or an Issuer Letter of Representation which is used for one time only issuances.
• Book-Entry-Only (“BEO”) securities are securities for which no physical certificates are made available and all securities are maintained by DTC in a “Cede & Co” account. Transactions are made through the FAST program. Most OTC Issuer securities are not BEO.
• DTC may request a rider, which is usually only required for REG S or non-U.S. issuers.
Potential Reasons For Rejection
The following points are potential issues that can hinder DTC approval:
(DTC has accepted issuers with these issues below. DTC eligibility is granted on a case by case basis.)
• The issuer should be an SEC reporting company with no history of late filings.
• The issuer should have a minimal history of name changes and/or reverse splits in the last five years prior to the eligibility application.
• The issuer should have no persons associated directly or indirectly (stock promoters, layers, accountants) with the company that have ever been under investigation by the SEC.
• DTC will notify the participant if a legal opinion of counsel will be required. The legal opinion should be written by a licensed securities attorney, in good standing with his bar and engaged in an independent private practice. Opinions of in-house counsel will not be relied upon by DTC.
• DTC requires that the securities lawyer writing the opinion NOT be a shareholder of the issuer.
• DTC reserves the right to approve counsel whose opinion DTC is being asked to rely.
• The issuer should have no record of being involved in a spam campaign, pump and dump scheme or any history of fraudulent activity throughout its corporate history.
• Affiliates of the issuer should have no record of unregistered re-sales at any brokerage firm
