Emerging Markets Law

OTC Markets Provides Regulation A+ On-Ramp

OTC Markets, the operator of the OTCQX and OTCQB trading markets, has published its proposed rules for issuers utilizing Regulation A+ to raise capital from investors. (CNN Money.)

The SEC’s recently-issued Regulation A+ rules (which become effective June 19, 2015) allow issuers to raise up to $50 million with a streamlined prospectus.

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.

OTC Markets claims more than 350 companies traded on the OTCQX marketplace, representing an aggregate $1.4 trillion in market capitalization. These  companies range from global, blue-chip leaders like Adidas, Heineken, Roche and Volkswagen to investor-focused U.S. community banks to established and growing U.S. and international companies.

The OTCQB Venture Marketplace claims to offer 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.

Stay Connected

Subscribe to blog updates via email

Contributors