Several new requirements are now or will soon be in effect as OTC Markets Group takes measures to strengthen the venture-stage marketplace for companies and investors. The new standards are important to note, as companies that do not comply with the new procedures and eligibility requirements will be downgraded to OTC Pink.
In short, the new standards are applicable to SEC, bank and international reporting companies, requiring that each security: has a minimum bid test of $0.01; not be in bankruptcy or reorganization proceedings; submit an application and pay required fees; and keep an updated annual OTCQB certification.
OTC Groups in May initiated the requirement that all current OTCQB companies meet the minimum bid test for at least one of the previous 30 consecutive calendar days, in addition to the other new standards. These companies will have 120 days after their fiscal year end (FYE) to comply with the new procedures, which will be rolled out over the course of a year. Again, those companies that do not comply with the new procedures within the required timeframe will be downgraded to OTC Pink.
Current OTCQB companies that apply for the exchange in 2014 can take advantage of a 25% “introductory discount” for each of the first two years, saving up to $5,000.
Companies that weren’t traded on OTCQB as of April 30, 2014, are required to submit an application, pay required fees ($2,500 application, $10,000 annual), and follow the new procedures. Securities will no longer be automatically put on OTCQB when a new Form 211 is cleared by FINRA, or when an OTC Pink company becomes current in its reporting.
Companies with a March 31 FYE will be the first to notice the change, and will be required to comply with the new OTCQB standards by July 31, 2014, while securities with an FYE of March 30 have until July 30, 2015, to comply with the new standards. During 2014, any company that chooses to apply to OTCQB prior to its required compliance date is offered discounted pricing for the application.
Furthermore, international reporting companies on a qualified foreign stock exchange are now able to trade on OTCQB upon meeting the aforementioned ongoing requirements for minimum bid test and other new requirements.
For more information, visit www.otcmarkets.com
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