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(Created page with "OTCQB Going Public Structures. Many private companies seeking to go public are opting to list on the OTCMarkets [http://www.gopublic101.com/otcqb OTCQB]. The OTCMarkets Gro...")
 
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OTCQB Going Public Structures.
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Securities Law Blog For Securities Lawyer 101. Securities Lawyer 101 Blog
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Many private companies seeking to go public are opting to list on the OTCMarkets [http://www.gopublic101.com/otcqb OTCQB].  The OTCMarkets Group operates an electronic inter-dealer quotation system called OTC Link. OTCMarkets ranks issuers in tiers; each issuer's rank depends upon the amount of disclosure provided.
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Issuers using Form S-1 registration statements followed by Rule 15c2-11 applications to [http://www.gopublic101.com/s-1-registration-statement/ go public] qualify for the "OTCQB" tier. The QTCQB tier is only available to issuers who file reports with the SEC. These issuers are not required to provide additional disclosures to the OTCMarkets.
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A private company [http://www.securitieslawyer101.com/blog going public] is subject to three federal securities laws, each with its own unique requirements. The three laws are the Securities Act of 1933 (the "Securities Act"), the Securities Exchange Act of 1934 (the "Exchange Act") and the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley").
  
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In order for a private company to go public on the [http://www.gopublic101.com/otcqb OTCQB], it must become anSEC reporting issuer.  Once the company is reporting, it can then obtain its ticker symbol assignment from the Financial Industry Regulatory Authority ("FINRA") if it meets certain requirements.
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In addition to the federal securities laws, companies [http://www.securitieslawyer101.com/blog going public] are subject to state securities regulation of their securities public and private offerings.  The Securities Act sets forth the regulations that govern the offer and sale of securities by an issuer and certain shareholders.
  
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SEC Reporting l OTCQB Going Public Transactions
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The Securities Act governs both private offerings such as those conducted under Regulation D and public offerings such as those registered on Form S-1, Form S-8 or Form S-4.
  
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A private company seeking to go public can voluntarily become reporting either by filing a Form 10 registration statement to register a class of securities under the Securities Exchange Act of 1934, as amended (the "1934 Act") or by registering securities on a registration statement under the Securities Act of 1933, as amended (the "1933 Act"), typically on [http://www.gopublic101.com/forms-1 Form S-1]. All companies qualify to file a registration statement on Form S-1.
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Upon completion of a [http://www.securitieslawyer101.com/blog going public] transaction, the Exchange Act imposes periodic reporting obligations including the filing of Form 10-K, 10-Q and 8-K. For issuers who register a class of securities under the Securities Exchange Act in connection with their [http://www.securitieslawyer101.com/blog going public] transaction, the Exchange Act imposes proxy rules requiring certain disclosures be made on Schedules 14A or 14C and certain procedures for the solicitation of shareholder votes.
  
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Once a private company's registration statement becomes effective, the company is an SEC reporting issuer, but its stock cannot yet be publicly traded. First it must comply with Rule 15c2-11 ("SEC Rule 15c2-11") of the 1934 Act.
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Lastly, for companies with a class of securities registered under the Exchange Act, the Company's management and large shareholders must file beneficial ownership reports of their trading activities in the company's common shares.
  
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15c2-11 Requirements for OTCQB Going Public Transactions
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In addition to governing the disclosure obligations of public companies, Rule 15c-211 of the Exchange Act also regulates the disclosures public companies must provide in order for a market maker to enter quotations of their securities. The disclosures required by Rule 15c-211 are provided on Form 211. Form 211 disclosures also enable market makers to publish quotations in a company's securities the secondary market after the [http://www.securitieslawyer101.com/blog going public] process is completed.
  
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In order to use 15c2-11 to [http://www.gopublic101.com/s-1-registration-statement/ go public] and have its shares publicly traded, the private company must locate a sponsoring market maker who is a FINRA member to file an application on its behalf.
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The Sarbanes-Oxley Act of 2002 established corporate governance, corporate accountability and accounting oversight provisions for the federal securities laws that apply to publicly traded companies.
  
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The FINRA Comment Process in OTCQB Going Public Transactions
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During and upon completion of its [http://www.securitieslawyer101.com/blog going public] transaction, a company remains subject to the corporate laws of the state of its incorporation.  The state securities laws of the individual states also regulate private and public securities offerings unless the offering is preempted under federal law. Even where offerings are preempted under federal law, states may impose filing fees and notice filing requirements which is common in Rule 506 offerings under Regulation D.
  
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FINRA may render comments to the Form 211 application; the sponsoring market maker and company must respond to the satisfaction of FINRA. Once FINRA is satisfied that the disclosures satisfy the requirements of SEC Rule 15c2-11, a trading symbol will be assigned and the company will have completed its going public transaction. The market maker can quote the company's securities on the OTCMarkets [http://www.gopublic101.com/otcqb OTCQB] tier.
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For further information about [http://www.securitieslawyer101.com/blog going public], please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202N, Boca Raton Florida, (561) 416-8956, by email at info@securitieslawyer101.com or visit http://www.gopublic101.com/.
  
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The sponsoring market maker has the exclusive right to publish quotations for the security of the company [http://www.gopublic101.com/direct-public-offerings/ going public] for the initial 30 day period after the Form 211 is approved. After that, other market makers can "piggyback" on his Form 211, and publish their own quotations.
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This memorandum is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an [http://www.securitieslawyer101.com/ attorney]-client relationship. For more information concerning the rules and regulations affecting the use of Rule 144, Form 8K, FINRA Rule 6490, Rule 506 private placement offerings, Regulation A, Rule 504 offerings, SEC reporting requirements, SEC registration on Form S-1 and Form 10, Pink Sheet listing, OTCBB and OTCMarkets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, [http://www.securitieslawyer101.com/brenda-hamilton go public] direct transactions and direct public offerings please contact Hamilton and Associates at (561) 416-8956 or info@securitieslawyer101.com. Please note that the prior results discussed herein do not guarantee similar outcomes.
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A list of market makers who file 15c-211 applications can be obtained from the OTCMarkets website at www.otcmarkets.com.
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15c2-11 Disclosure Requirements in OTCQB Going Public Transactions
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The disclosures required by Rule 15c2-11 are provided on the Form 211 submitted by the sponsoring market maker. FINRA requires specific disclosures in the Form 211 and in the Information and Disclosure Statement, which includes much of the same information found in an SEC Registration Statement.
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FINRA Rules Applicable to the Going Public Process
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SEC Rule 15c2-11 requires that current public information be made available to investors. This information is initially provided on Form 211 and in the 15c2-11 application to FINRA. The sponsoring market maker must review basic issuer information prior to publishing quotations of an issuer's securities. FINRA also requires that market makers have a reasonable basis for believing the information provided by the company is accurate and from reliable sources. A private company that goes public and becomes an SEC reporting issuer satisfies the ongoing current public information requirement by filing its forms and reports with the SEC.
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Qualifying for OTCMarkets' [http://www.gopublic101.com/otcqb OTCQB] provides transparency to investors and is a straightforward method for small companies to [http://www.gopublic101.com/s-1-registration-statement/ go public], and to enjoy the benefits that status confers.
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This informational memorandum is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information concerning the rules and regulations affecting the use of Rule 144, Form 8K, FINRA Rule 6490, Rule 506 private placement offerings, Regulation A, Rule 504 offerings, SEC reporting requirements, SEC registration on Form S-1 and Form 10, Pink Sheet listing, OTCBB and OTCMarkets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, [http://www.gopublic101.com/s-1-registration-statement/ go public] direct transactions and direct public offerings or please contact Hamilton and Associates Securities Lawyers. Please note that the prior results discussed herein do not guarantee similar outcomes.
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Hamilton & Associates | Securities Lawyers
 
Hamilton & Associates | Securities Lawyers
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Brenda Hamilton, Securities Attorney
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Brenda Hamilton, Securities Attorney
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101 Plaza Real South, Suite 201 South
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101 Plaza Real South, Suite 202 N
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Boca Raton, Florida 33432  
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Boca Raton, Florida 33432
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Telephone: (561) 416-8956
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Telephone: (561) 416-8956
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Facsimile: (561) 416-2855  
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Facsimile: (561) 416-2855
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http://www.SecuritiesLawyer101.com
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www.SecuritiesLawyer101.com

Revision as of 19:42, 14 June 2014

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