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Eligibility Requirements for OTCQX
I am attorney Laura Anthony founding partnerof Legal Compliance, a full service corporate, securities, and business transactions lawfirm. Today is the continuation in a LawCast seriesdetailing the OTCQX listing requirements. Over the next few LawCasts, I will give ahighlevel summary of each of the eligibility requirements related to the OTCQX. In order to qualify for an OTCQX U.S. issuera company must have two million in total assets as of the most recent annual or quarter end. As of the most recent fiscal yearend, haveat least one of the following: two million
in revenues; one million in net tangible assets;fivehundredthousand in net income; or five million in market value of publicly tradedsecurities. A company must have a market capitalizationof at least ten million; meet an exemption to the penny stock rule found in Rule 3a511of the Exchange Act, that is, the company cannot be a penny stock; not be a blank checkor shell company as defined by the Securities Act; not be in bankruptcy or reorganizationproceedings; be in good standing in its state of incorporation and in each state in whichit conducts business; have a minimum of 50 beneficial shareholders owning at least oneround lot, which is 100 shares each; be quoted
by at least one market maker on the OTC Link;have a minimum bid price of 25 cents per share for its common stock as of the close of businesson each of the 30 consecutive calendar days immediately preceding the company's applicationfor OTCQX. If there has been no prior public market forthe company's securities in the U.S. and FINRA has approved a Form 211, then the companymay apply to OTC Markets for an exemption from the minimum bid price requirements, whichexemption is at the sole discretion of OTC Markets. The company must have GAAP compliant auditedbalance sheet as of the end of each of the
two most recent fiscal years, or as of thedate within 135 days if the company has been in existence for less than two fiscal years,and have audited statements of income, cash flows and changes in stockholders' equityfor each of the two most recent fiscal years, or such shorter period as the company hasbeen in existence, and must include all going concern disclosures including plans for mitigationof such disclosures. The company must have GAAP compliant, unauditedinterim financial reports, including a balance sheet as of the end of the company's mostrecent fiscal quarter, and income statements, statements of changes in stockholders' equityand a statement of cash flows.
The company must be included in a recognizedsecurities manual or be subject to the reporting requirements of the Exchange Act, and thecompany must have an OTCQX Advisor which was previously called a designated advisor fordisclosure or DAD. I am securities attorney Laura Anthony, foundingpartner of Legal Compliance, and producer of LawCast. Should you have any questions about today'stopic, please visit SecuritiesLawBlog and LawCast , or contact me directly. Inquiries of a technical nature are alwaysencouraged.