Replies to post #175496 on JB and ZJMY Holding Co (JBZY)

[LaFortuna]

I would read the following, especially the last paragraph....

An issuer is required to obtain a new CUSIP for each change in its security, such as a name change, reverse split or reorganization.  That issuer then submits the new CUSIP number to FINRA as part of its corporate action notification documents.  Both FINRA and CUSIP notify the DTC of the new CUSIP number, which triggers a review of the security and a requirement by DTC that the issuer submit an opinion letter supporting the ongoing eligibility of the securities.  Like with a DTC chill notice, the issuer is required to submit an opinion letter, prepared by independent counsel, confirming that the issuer’s securities deposited at the DTC satisfy the DTC’s eligibility requirements, including that they are freely tradable.  In particular, the opinion letter must specify that the securities (i) are not restricted securities under SEC Rule 144(a)(3), or (ii) are exempt from any restrictions on transferability under the Securities Act.  The DTC provides a template for the legal opinion to the issuer.

Accordingly, if the free tradability of the issuer’s securities relies on Rule 144 and the issuer is not qualified for the use of Rule 144, that issuer will no longer be DTC eligible.  After a period of time, almost all issuers rely on Rule 144 for ongoing DTC eligibility.  Even shareholders of issuers that have completed a self-underwritten direct public offering (DPO) or initial public offering (IPO) eventually rely on Rule 144 for securities that were not included in such registration.

Rule 144 is not available to shell companies.  A shell company is an issuer with no or nominal operations or no or nominal non-cash assets. The rule is unavailable for the sale of securities initially issued by a shell company or any issuer that has, at any time, previously been a shell company unless all the requirements of Rule 144(i)(2) are met.  These requirements include that the issuer no longer be a shell company, is subject to the reporting requirements of the Exchange Act for 12 months following the time that it filed Form 10 information indicating it was no longer a shell company, and is current with all Exchange Act reporting requirements.