Rule 15c2-11 allows companies to trade on over-the-counter (OTC) markets. OTC Markets tiers include OTCQB, OTCQX, OTCBB, and OTC Pink. Typically, smaller companies that can’t meet the listing requirements of major exchanges choose to trade their stock over-the-counter. The Financial Industry Regulatory Authority (FINRA) manages and reviews all 15c2-11 applications.
FINRA has specific guidelines regarding the information that issuers must disclose which can be found here. This information includes but is not limited to:
- quarterly and annual financial reports
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- documents that detail any significant corporate changes such as a change of ownership
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- or the sale of unregistered shares
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Issuers may become exempt from filing a 15c2-11 application, depending on the status of their securities. FINRA outlines three primary exemptions to Rule 15c2-11 in their document, paraphrased below. Exempt securities are ones that are:
- Attractive to investors without any solicitation
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- Consistently trading on an exchange for the past month
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- Traded on national security exchanges such as NASDAQ and the NYSE
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View the full 15c2-11 application and questionnaire for a comprehensive review of the requirements. Generally, if you have never participated in fraudulent or suspicious activity, are up to date on your financial reporting with adequate revenues and assets, and maintain legal compliance, you will be eligible for this application.