OTC Markets Group, the operator of financial marketplaces for 10,000 U.S. and global securities, has announced proposed new rules and standards for companies wanting to list with OTC after going public via Regulation A+.
The new OTCQX and OTCQB rules are designed to support informed and efficient secondary trading for Regulation A+ securities by defining initial and ongoing financial reporting obligations. They will also help investors by creating a roadmap for companies wishing to provide their investors with a transparent and credible public trading market.
“Companies that raise capital under Reg. A+ will benefit from our SEC-regulated ATS trading platform to build visibility for their companies, provide liquidity to their investors, broaden their shareholder base and build a robust, transparent public market for their investors as they grow and mature their businesses,” said R. Cromwell Coulson, OTC President and CEO.
Issuers, advisors and other marketplace participants will have 30 days to comment on the proposed changes before they go into effect.
Under the proposed new OTCQX rules, a company may use its required disclosure under Regulation A+ Tier 2 to help meet its initial and ongoing disclosure requirements. In addition to required Regulation A+ disclosure, an OTCQX company must file quarterly financial reports, make timely disclosures of material news events and meet a PCAOB audit standard on an ongoing basis. Canadian companies raising capital under Regulation A+ must be listed on a qualified foreign stock exchange such as the Toronto Stock Exchange to qualify for OTCQX.
More than 350 companies trade on the OTCQX marketplace. Their combined market capitalization is $1.4 trillion. Notable participants include Adidas, Heineken and Volkswagen.
The OTCQB Venture Marketplace offers transparent trading for entrepreneurial and development stage U.S. and international companies. Under the proposed new OTCQB standards, a company that meets the existing OTCQB eligibility criteria can use its required Regulation A+ Tier 2 reporting to fully meet its initial and ongoing OTCQB disclosure requirements. Canadian companies raising capital under Regulation A+ must be listed on a qualified foreign stock exchange such as the TSX Venture Exchange to qualify for OTCQB.
The more than 900 OTCQB marketplace companies have a combined market capitalization of $73.1 billion.
