New OTCQB Eligibility Standards We will be implementing a one penny ($0.01) bid price requirement which is intended to remove companies that are most likely to be the subject of dilutive stock fraud schemes and promotions. Any company that has traded below a penny for any length of time is not creating value for its shareholders and is therefore more appropriate for the open OTC Pink marketplace. This new requirement will become effective on May 1, 2014.
We are requiring that each company verify via an annual OTCQB Certification, signed by the company CEO or CFO, that their company information is current. This will include information about a company’s reporting status, company profile, information on management and boards, major shareholders, law firms, transfer agents, and IR / PR firms. Investor confidence improves when there is more information about a company’s ownership structure, professional advisors and service providers. This certification will be required for any security newly qualified to be publicly quoted by a broker-dealer under SEC Rule 15c2-11, or when an OTC Pink traded company becomes a current SEC reporting company, beginning May 1, 2014.
For companies already traded on OTCQB, we will roll out the annual management certification requirement throughout 2014 and 2015 based on a company’s Fiscal Year End ("FYE"). The first set of certifications will be due by July 31, 2014 for companies that have a FYE of March 31, 2014.
Also beginning May 1, 2014, we will permit International Reporting companies to upgrade from OTC Pink to OTCQB if they publish their 12g3-2(b) compliant disclosure on our website and verify their company profile. This will give international venture stage companies that cannot meet OTCQX financial standards the ability to join OTCQB and provide their home-market regulated disclosure to U.S. investors.
There will be an annual fee for the OTCQB marketplace of $10,000 per year and a one-time $2,500 application fee. These fees are discounted for current OTCQB companies that apply in 2014 to $7,500 per year for the first two years, and the application fee will be waived. Companies that are not currently OTCQB companies will be required to pay the standard annual fee and application fee.
The OTCQB Fact Sheet includes more details on the new requirements and the timing of the rollout.
We are confident that the improved OTCQB marketplace will be a much better option for engaged and investor-focused venture stage companies. The added transparency and minimum standards will be a welcomed improvement for investors, broker-dealers, company advisers, regulators, company executives, and shareholders.
For companies that do not wish to be fully transparent or engaged with their public market, we will continue to operate a marketplace for brokers to trade in these securities on OTC Pink.
Please make note of our upcoming events where we will be discussing changes to the OTCQB marketplace:
OTCQB Changes: Educational Events
OTCQB Changes | Breakfast Forum April 16, 2014 8:00AM-10:00AM (7:30AM registration) OTCQX Market Center 304 Hudson Street // New York, NY 10013 RSVP here
OTCQB Changes | Breakfast Forum May 2014 - Date to be determined. 8:00AM-10:00AM (7:30AM registration) The Palomar LA - Westwood 10740 Wilshire Boulevard // Los Angeles, CA 90024 RSVP here
OTCQB Changes Webinar April 29, 2014 10:00AM-11:00AM (EST) Register here
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