PubCoCEO™

On April 17, the OTC Markets Group proposed amendments to the OTCQB Standards. 

The new standard would allow companies that follow the Alternative Reporting Standard to qualify for OTCQB. These companies would be required to make public disclosure available pursuant to the OTCQX and OTCQB Disclosure Guidelines and meet certain Corporate Governance requirements.

Other proposed amendments include fine-tuning a number of continued eligibility requirements, and reorganizing several sections to improve clarity.

Proposed changes include: 

1. Addition of the Alternative Reporting Standard Eligibility Criteria including Corporate Governance where Alternative Reporting Companies are required to meet standards of corporate governance including having;

– A board of directors that includes at least two Independent Directors; and
– An Audit Committee, a majority of the members of which are Independent Directors

2. Companies delinquent in their filings are granted a longer cure period of 45 calendar days from the current 30 calendar days.

3. All U.S. companies must have audits conducted by an auditor registered with the Public Company
Accounting Oversight Board (PCAOB). Regulation A Reporting Companies are exempt from the PCAOB requirement at the time of application but will be required to have a PCAOB audit in subsequent years.

4. Bid Price Deficiency

a. The cure period for bid price deficiency will be reduced from 180 days to 90 days
b. If a Company’s closing bid price falls below $0.001 at any time for five consecutive trading days, the Company will automatically be removed from OTCQB.

5. Provided clarification that SEC registered Transfer Agents are only required for companies incorporated in the U.S. or Canada.

6. Provided clarification that the Annual Fee is due 30 days prior to the beginning of each new annual service period.

7. International Reporting Companies must now file annual and quarterly financial reports immediately after submission to their Primary Regulator.

8. Compliance with Blue Sky Laws. OTCQB has been designated as a “recognized securities manual” for the purposes of several U.S. jurisdictions’ securities laws. Such recognition permits certain secondary market transactions of OTCQB securities where eligible. The initial and ongoing disclosure required by these OTCQB Standards includes the company information required to be published in a securities manual under the Uniform Securities Act.

9. Additional Interim Event Disclosure Requirements including:

a. Timely Disclosure of Material News Releases/Developments;
b. An OTCQB Company should also act promptly to dispel unfounded rumors which result in unusual market activity or price variations; and
c. Information required to be released quickly to the public should be disclosed in a press
release or through the OTC Disclosure & News Service or through an Integrated Newswire.

10. OTCQB Certification – added requirement to remain registered and in good standing with state of incorporation.

View the OTCQB Standards Release No. 3 (Proposed Amendments) HERE.

The comment period for the proposed changes is 30 days. Send comments and questions to Mike Vasilios, Vice President of Issuer Compliance at mike [at] otcmarkets.com by May 17, 2017.