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OTC MARKETS DESLISTING DEADLINES COMING SOON FOR NON-CURRENT COMPANIES


Exchange Act Rule 15c2-11 governs when broker-dealers may publish electronic quotes in securities that are not traded on an exchange. On September 16, 2020, the SEC announced amendments to this rule to make it that all companies designated on the OTC Markets as “Pink No Information,” or otherwise fail to provide current information as required will no longer be eligible for public quoting, subject to certain limited exceptions. If these companies do not take proactive steps to make disclosures available before September 28, 2021, they will move to the Expert or Grey market.


The three classifications of OTC Pink companies, defined by Investopedia are:


  1. Current Information companies are those that follow the International Reporting Standard or Alternative Reporting Standard. These companies make filings publicly available through the OTC Disclosure & News Service.

  2. Limited Information companies include troubled firms in financial distress, bankruptcy, or those with accounting issues. This category also includes companies that are unwilling to meet the OTC Pink Basic Disclosure Guidelines.

  3. No Information companies are those businesses that do not provide any disclosure at all.


The OTC Markets has published a blog on this rule change and also a separate blog on the Expert Market.


There is also a separate deadline imposed by the OTC Markets applicable to companies who need to apply for the OTC News & Disclosure Service in order to post current information by the September 28, 2021 reporting deadline. In order to be able to assure the application is processed by the OTC Markets prior to the deadline, all companies who need access to the OTC News and Disclosure service must submit their applications by June 30, 2021.


Being sent to the Expert or Grey Market could significantly impact the value of each issuer. If you are interested in avoiding being sent to the Expert or Grey Market to preserve your company's value, please contact us. For a low flat rate, we can assist with submitting the proper disclosures to the OTC Markets in order to avoid being sent to the Expert or Grey Market.

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