15c2-11 Application Going Public Attorney


Presentation Description

Many private companies that go public are opting for the listing on the OTC Market’s Pink Sheets due to the increased costs and more stringent regulations associated with Securities and Exchange Commission (“SEC”) reporting.  Rule 15c2-11 (“SEC Rule 15c2-11”) of the Securities Exchange Act of 1934 (the “Exchange Act”) can be used by a private company seeking to go public without an SEC registration statement by a sponsoring market maker submitting a Form 211 with the Financial Industry Regulatory Authority (“FINRA”).


Presentation Transcript

15c2-11 Application Going Public Attorney :

15c2-11 Application Going Public Attorney

Rule 15c2-11 & Going Public:

Rule 15c2-11 & Going Public Many private companies that  go public  are opting for the listing on the  OTC Market’s Pink Sheets  due to the increased costs and more stringent regulations associated with Securities and Exchange Commission (“SEC”) reporting.   Rule 15c2-11  (“SEC Rule 15c2-11”) of the Securities Exchange Act of 1934 (the “Exchange Act”) can be used by a private company seeking to  go public  without an SEC  registration statement  by a sponsoring market maker submitting a Form 211  with the  Financial Industry Regulatory Authority  (“FINRA”). This enables the company to be quoted on OTC Markets Pink Sheets quotation system.  In order to  go public  in this manner, the private company  must meet FINRA’s requirements.

The OTC Markets Quotation System:

The OTC Markets Quotation System The OTC Markets Group operates an electronic inter-dealer quotation system called OTC Link, which broker-dealers use to trade securities not listed on a national securities-related exchange.   OTC Markets categorizes issuers in tiers based upon the level of disclosure the company provides. Companies who  go public  using  Form 211  qualify for the “ OTC Pink Current Information ” tier.  The Pink Current Information tier is available to issuers who do not file reports with the SEC, but voluntarily provide specific disclosures required by OTC Markets

Requirements to use Form 211:

Requirements to use  Form 211 In general, a private company can  get a stock ticker symbol  if: ●  The private company has at least 25 non-affiliate shareholders who paid cash consideration for their shares at least 12 months prior to the   Form 211  filing date; ●  The private company must have at least 1 million shares outstanding, of which at least 250,000 are free trading shares; ●  The private company must never have been a shell company; and ●  The private company has current public information available.

Submitting Form 211:

Submitting  Form 211 In order to use Rule 15c-211 to  go public , the private company must locate a sponsoring market maker to submit the  Form 211  application to FINRA on its behalf.  FINRA may render comments to the  Form 211  application which the sponsoring market maker and private company must respond to. Once FINRA is satisfied that the disclosures satisfy the requirements of Rule 15c2-11, it will assign a trading symbol and the Market Maker can quote the company’s securities.  Once this occurs, the securities of the private company  going public  are quoted by the OTC Markets on the OTC Pink Sheets .  Once the sponsoring market maker has published quotations for the company’s securities for at least 30 days, other market makers can publish quotations for the security.

 Form 211 in Going Public Transactions:

  Form 211  in Going Public Transactions The market maker chosen by the company to file the  Form 211  is not permitted to accept payment for his or her services . Rule 15c-211 requires that the company have current public information available before the market maker can quote the security.  The information required in the Form 211 satisfies the current public information of Rule 15c-211.   Form 211  requires, among other things, the following disclosures: ●  Detailed description of the issuer’s business, products/services offered, assets and sources of revenue; ●  Description of the company’s facilities including the location, square footage and whether owned or leased ; ●  Identification of officers, directors and holders of more than 5% of the company’s securities; ●  Certificate of Incorporation and bylaws including any amendments; ●  Current transfer agent generated shareholder list, indicating name and address of each shareholder, the number of shares owned, date of share ownership, and whether the shares are restricted, control, or free trading ; ●  Description of the company’s free-trading shareholder base, including a description of exemptions from registration under the Securities Act ;

Form 211 in Going Public Transactions (cont.):

Form 211  in Going Public Transactions (cont.) ●  Agreements creating restrictions, liens or encumbrances on, or relating to, the transfer or voting of shares ; ●  Agreements evidencing stock rights, warrants or options; ● All stock purchase or asset purchase agreements for last five (5) years; ●  Disclosure of whether the company has entered into any discussions or negotiations concerning a potential merger or acquisition candidate; ● Merger and/or consolidation agreements; ●  Partnership and/or joint venture agreements; ●  Unaudited financial statements for the last 2 fiscal years and interim periods; ●  Details of all private offerings including who solicited investors, how they were known to the solicitor, and how many individuals were solicited, and whom did not purchase; ●  One full copy of the subscription agreement executed by each investor and copies of all checks from the subscribers or other proof of payment; ●  Copies of Form D filed with the SEC; ●  Description of all relationships among and between every shareholder and the issuer, its officers and directors , and other shareholders;

Form 211 in Going Public Transactions (cont.):

Form 211  in Going Public Transactions (cont.) ●  A statement indicating whether any person or entity has control, written or otherwise, of the sale, transfer , disposition, voting or any other aspect of the shares listed on the shareholders list other than the shareholder; ●  Whether any officer or director of the issuer had any regulatory action taken against him/her by the SEC , NASDAQ, NYSE or other securities-related regulatory agency and whether any officer or director of the issuer has been convicted of any felony charges within the last 5 years; ●  A detailed business plan, which includes a detailed chronological account of each and every step the issuer has taken in furtherance of its stated objective since inception; ●  A description of the steps the Company plans to take during the next year in furtherance of its business plan, including the activities in which the Company plans to engage, the names of the persons who will conduct these activities, and the expected dates of these activities; ●  A description of any future financing plan; ●  Any material agreements or letters of intent entered into by the Company; ●  Schedule of all material patents, trademarks, trade names, service marks, and copyrights; and ●  Legal opinion from company‘s securities lawyer as to tradability of the free trading shares.

Going Public on the OTC Pinks - Rule 144:

Going Public on the OTC Pinks  - Rule 144 Private companies that go public using 15c2-11 rely on the availability of the safe harbor of Rule 144 of the Securities Act of 1933 (the “Securities Act”) to create their free trading shareholder base.  Rule 144 is not available for private companies that have ever, at any time, been a shell company, or “blank check company.”  If a private company was once a shell company it must file a registration statement with the SEC in order to go public without a reverse merger.  Generally, for shareholders of private companies that have never been shells, Rule 144 is available 12 months after the payment of consideration so long as the shareholder is not an affiliate of the company.


Conclusion The OTC Pink Sheets provide private companies seeking to go public a less cumbersome method of obtaining public company status than filing a registration statement with the SEC.  Qualifying for OTC Markets’ Pink Current Information tier is a straight forward and relatively inexpensive way for small companies to go public, and to enjoy the benefits that status provides.


Hamilton & Associates  | Securities Lawyers Brenda Hamilton, Securities Attorney 101 Plaza Real South, Suite 202 North Boca Raton, Florida 33432 Telephone: (561) 416-8956 Facsimile: (561) 416-2855 www.SecuritiesLawyer101.com For further information about this  securities law blog  post, please contact  Brenda Hamilton,  Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida,  (561) 416-8956 , by email at  info@securitieslawyer101.com .  This  securities law blog  post is provided as a general informational service to clients and friends of  Hamilton & Associates Law Group  and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship.  For more information about  going public  and the rules and regulations affecting the use of  Rule 144 , Form 8K, crowdfunding, FINRA Rule 6490,  Rule 506 private placement  offerings and memorandums,  Regulation A,  Rule 504 offerings, SEC reporting requirements, SEC  registration statements  on Form S-1 , IPO’s,  OTC Pink Sheet  listings,  Form 10  OTCBB and  OTC Markets  disclosure requirements,  DTC Chills , Global Locks,  reverse merger s, public shells, direct public offerings and direct public offerings please contact Hamilton and Associates at  (561) 416-8956  or  info@securitieslawyer101.com .  Please note that the prior results discussed herein do not guarantee similar outcomes.


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