OTC Markets Group Inc. (the “Group”) recently announced significant changes to its OTCQB marketplace. These changes, which began to take effect on May 1, 2014, are intended to align the OTCQB more closely with venture stage markets focused on smaller growth and developing stage companies.
Previously, securities were eligible for quotation on the OTCQB market if, among other things, the issuer was a registrant with the Securities and Exchange Commission (the “SEC”) or the Federal Deposit Insurance Corporation (the “FDIC”) and an SEC registered broker-dealer filed a Form 211 with the Financial Industry Regulatory Authority (“FINRA”). Once the new changes are implemented, issuers seeking to trade on OTCQB will be required to meet a new bid price test (of $0.01), file an application with the Group, pay an initial application fee and an annual listing fee, and submit an annual OTCQB Certification signed by the CEO or CFO. In addition, and for the first time, securities of international reporting companies that trade on a qualified foreign exchange (including the Toronto Stock Exchange, the TSX Venture Exchange and the Canadian Securities Exchange) and that are eligible for the SEC’s 12g3-2(b) registration exemption will be eligible for quotation on OTCQB without being required to register with the SEC or the FDIC. As with the Group’s top tier market, the OTCQX, these qualified international reporting companies must be sponsored by a third party investment bank law firm or ADR Bank that has been approved by the Group to act as a Principal American Liaison (“PAL”). Approved PALs provide listed international reporting companies with knowledgeable advice about U.S. securities laws.
Until now, the Group would only approve a PAL if the PAL was domiciled in the United States. However, in conjunction with the recent changes to the OTCQB, the Group has decided to allow law firms in Canada with securities lawyers admitted to practice in one or more of the United States to act as a PAL. Of the 14 securities lawyers in Clark Wilson LLP’s Corporate Finance and Securities group, seven are members of at least one U.S. state bar association, and Clark Wilson LLP is pleased to announce that it has now been appointed to act as a PAL and as a Designated Advisor for Disclosure (a “DAD”) – the equivalent of a PAL for U.S. domestic issuers listing on the OTCQX.
If you would like to list your company on the OTCQB or the OTCQX markets in the United States, please contact any member of Clark Wilson LLP’s Corporate Finance and Securities Group.