Anthony LG LLC Corporate and Securities Law Firm
Lion
Anthony LG LLC Corporate and Securities Law Firm

Our Expertise

We provide high-end legal representation to small and mid-cap, publicly traded companies.

THE ANTHONY L.G., PLLC ADVANTAGE

High end representation for small to mid-cap companies

The firm was founded to fill a specific void. We provide high-end legal representation to small and mid-cap, publicly traded companies and private companies that are generally not deemed as priority clients for larger, impersonal law firms.  Moreover, larger firms tend to be less familiar with the myriad of small-business-specific securities rules and regulations or the unique market place of the Nasdaq, the NYSE American or the over-the-counter trading market.  We provide full-service business representation from entity formation, corporate finance transactions, IPO’s and other forms of going public transactions, mergers and acquisitions, and ongoing SEC filings, transactional work and daily corporate operations.

We unite time-tested dedication with extensive legal experience to provide our corporate clients with superior legal representation. Anthony L.G., PLLC provides efficient expertise from a highly responsive staff to serve our entrepreneurial and growth-stage clientele.

Public Offerings

INITIAL PUBLIC OFFERINGS

Extensive OTC, NYSE and NASDAQ IPO procedures, requirements, regulations, exemptions.

PRIVATE PLACEMENT OFFERINGS

Find out more on how private placement offering may work for you.

INITIAL COIN OFFERINGS

Anthony L.G., PLLC is the leading South Florida ICO Attorney and an early adopter

DIRECT PUBLIC OFFERINGS

If you are choosing to self-underwrite, choose Anthony L.G., PLLC to assist.

REVERSE MERGERS

The increasingly popular and cost-efficient go public strategy.

CORPORATE COUNSEL

Corporate counsel responsibilities include maintaining proper corporate books and records, documenting contracts and transactions with board minutes; having yearly shareholders meetings; providing yearly and periodic reports to shareholders and advising officers, directors and shareholders on their rights and responsibilities.

GOVERNANCE

We act as a business consultant and guide corporate leaders in decision-making processes. We are corporate governance lawyers which represent business leaders and investors, with utmost importance placed upon their relationship and communication. Corporate governance is the combination of rules, processes or laws by which businesses are operated, regulated or controlled. The term encompasses the internal and external factors that affect the interests of a company's stakeholders, including shareholders, customers, suppliers, government regulators and management.

ENTITY FORMATION

In addition we provide basic corporate representation such as entity formation, board and shareholder minutes, assisting with board and shareholder meetings, shareholder agreements, operating agreement and director agreements.

REGULATORY & COMPLIANCE

Anthony L.G., PLLC provides necessary attention to each client without needless delays or over billing. Our founding partner, Laura Anthony and entire team of attorneys, establish close, long-term relationships with our clients, including private and publicly traded companies, and quickly ascertains their professional needs.

BUSINESS TRANSACTIONS

Our attorneys prepare all forms of transaction and operational documents for businesses. As requested by the client, our attorneys can also undertake thorough due diligence for business transactions as well.

Taking Your Private Company Public

What you need to know

REVERSE MERGERS

In a reverse merger, the acquirer merges into the target company and the target is the surviving accounting entity with the acquirer as the surviving legal entity. A reverse merger is often the method used for a private operating entity to go public. Often using a public shell company as the vehicle of choice.

REGULATION A+ IPO

Regulation A+ is simply a legal process allowing companies to file a registration statement with the SEC that in turn can be used to sell debt or equity securities to the masses to raise capital.

PIPE TRANSACTIONS

A PIPE (Private Investment in Public Equity) refers to any private placement of securities in an already-public company that is made to selected accredited investors. PIPE transactions are privately placed and issued equity or equity-related securities that are sold to accredited investors under an exemption to registration.

PRIVATE PLACEMENT (PPO)

Our attorney's facilitate the sale of stock shares or bonds to pre-selected accredited investors and institutions in order to comply with both state and federal securities laws when offering its securities for sale.

"Play by the rules, but be ferocious"

Representation of public companies generally includes advice and compliance with the Securities Act of 1933 (“Securities Act”) offer, sale, registration and exemption requirements including related to private and public offerings (including IPO’s, direct listings; tender and exchange offers; security token offerings; private placements and PIPE transactions); compliance with the registration and reporting requirements of the Securities Exchange Act of 1934 (“Exchange Act”); state corporate and securities laws compliance; assistance with corporate governance and compliance with the listing requirements of the OTC Markets or a national exchange such as Nasdaq or the NYSE American; and all forms of corporate finance transactions.

Including but not limited to:

The preparation of initial public offering documents such as an S-1 registration statement and subsequent filing and clearing of such registration statement with the SEC for both initial and follow-on offerings

The preparation and filing of offering circulars under Tier 1 and Tier 2 of Regulation A and subsequent filing and clearing of comments with the SEC

Preparation of S-3 registration statements and take-downs of shelf offerings

Preparation of employee stock option plans and S-8 registration statements

Preparation of S-4 registration statements in relation to mergers and acquisitions and exchange and tender offers

The preparation and filing of state registration statements under Rule 504 and subsequent filing and clearing of such registration statement with the subject state

The preparation of offering documents under a securities registration exemption such as Rules 506(b) and 506(c) of Regulation D or Section 4(a)(2)

Re-sale private offerings under Section 4(a)(7) of the Securities Act

The preparation of offering documents under new Section 4(a)(6) related to crowdfunding and subsequent filing requirements with the SEC

The preparation of relevant documents and assistance with the exemptions found in Section 3 of the Act including the intrastate exemption found in Section 3(a)(11) and general conversion found in 3(a)(9)

State blue sky compliance for both public and private offerings

Advise and consult and preparation of opinion letters relating to the Rule 144 and Rule 144A safe harbors for selling unregistered securities

Assistance with the preparation and filing of annual, quarterly and periodic filings including forms 10-K, 10-Q and 8-K

Preparation and assistance with the filing of a Form 10 or Form 8-A registration statement

Assistance with officer and director filing requirements including Forms 3, 4 and 5 under Section 16 and Forms 13D and 13G under Section 13

Preparation of and assistance with completing the proxy rule requirements, including a 14A notice of special or annual meeting and 14C information statement

Compliance with the tender offer rules under Section 14(d)

Regulation FD compliance regarding information to the public and corporate communications

Advise and consult regarding insider trading rules

Preparation of and assistance with listing applications for Nasdaq and the NYSE American Markets.

Preparation of policies and procedures and advice and counsel to ensure compliance with corporate governance requirements.

Compliance with the Exchange’s 20% rule related to shareholder approval of certain unregistered issuances of securities

Compliance with the filing of ongoing notice and LAS (listing of additional securities) requirements.

Interfacing and liaising with Nasdaq or the NYSE American related to ongoing listing compliance and transactional approvals.

Areas of representation relating to compliance with the rules for quotation in the OTC Markets, including OTCQB and OTCQX, include but are not limited to:

Meeting current information and disclosure requirements.

Acting as a sponsor and OTC advisor for domestic and international listings  on the OTCQB and OTCQX.

Review of disclosure materials and preparation of attorney representation letters.

Assistance in meeting the requirements of the various OTC market tiers.

Assistance in meeting the FINRA requirements for corporate changes including name changes, reverse and forward splits.

Facilitating a smooth change in management and updating the over-the-counter market on such changes.

Complying with state law, board and shareholder regulations for amendments to the articles of incorporation.

Changes to corporate documents and bylaws and notices of actions and meetings.

Notices to shareholders of actions taken by consent.

Quorum and voting requirements.

Anti-takeover and other poison pill options.

Capitalization structures including designating and properly documenting different series of common and preferred stock.

Minority shareholder rights including rights of dissension and appraisal.

Blue sky requirements related to offerings and quotation of company securities.

Assistance in meeting the FINRA requirements for corporate changes including name changes, reverse and forward splits.

Assisting with transfer agent and DTC requirements for the clearance and trading of securities.

Preparation of supporting documents, corporate history narratives and legal opinions for both FINRA and DTC.

This firm’s lawyers provide advice on every aspect of crowdfunding, including:

Preparation of issuer offering documents meeting the requirements of Regulation Crowdfunding.

Advising on offering structure.

Preparation and assistance in filing the SEC post offering reporting requirements;

Advising funding portals and intermediaries on compliance with federal regulations.

Monitoring and advising issuers and funding portals on state regulations impacting crowdfunding.

Monitoring and advising issuers and funding portals on potential and emerging secondary markets related to crowdfund equity holders.

The firm’s corporate lawyers provide advice on every aspect of mergers and acquisitions, including forward and reverse mergers and asset sale transactions.   We have a robust M&A practice representing both private and public companies in their transactions.  Our firm prepares all related deal documentation as well as necessary SEC filings (for example, a super 8-K for a SPAC or shell-related transaction; an S-4 for an exchange or tender offer transaction; Schedule TO; 8-K’s; Schedule 14A or 14C related to shareholder approvals and insider filings under Sections 13 and 16) and shareholder and board meeting notices and consents. Our attorneys have completed over 600 M&A transactions valued in the billions of dollars.  We urge you to review our representative transactions page for more information.

There is no substitute for experience when it comes to Private Placement Memorandums (PPM’s). Our securities attorneys have created PPM’s for start-up companies as well as multimillion-dollar national corporations, exercising the same degree of care and due diligence in every scenario while respecting the provisions of the Securities Act of 1933, as amended and applicable state regulations.

Our firm has become an industry leader in exempt securities token offerings utilizing the new blockchain technology.  We can assist in all forms of offerings using this technology to sell fractional ownership interests and rights in a whole company, a division or line, an asset, a product line or a revenue stream.

We combine professionalism and attention to detail to provide our clients with the best possible work product, whether they are embarking on a 504 or 506(b) or (c) Reg D offering or Section 4(a)(2) PIPE (private equity into public entity) financing or any other exempt financing.

Securities regulations are constantly changing as is the SEC, court and other regulatory bodies’ interpretations of existing regulations. It is imperative that the securities law practitioner stay abreast of these changing regulations and interpretations by the SEC and other governmental bodies. The most important aspect of an offering is the registration statement. In addition to setting forth relevant information regarding a company and its offering, the contents of a registration statement can provide a defense to claims of fraud or misrepresentation and conversely can create strict liability on company officers and directors for omissions and inaccurate or negligent representations.

The IPO process can indeed be complicated – all the more reason to exercise a high degree of due diligence when retaining corporate legal counsel. Our legal team takes many factors into consideration when drafting registration statements. We work to assure absolute SEC compliance in regard to various disclosure issues.
Regulatory compliance is our first and foremost consideration, and our attorneys provide comprehensive follow-through advice and counsel after the deal is funded. Our firm assists in the preparation and filing of all registration statements, including S-1’s, S-3’s, S-4’s, S-8’s and Form 10’s.

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Anthony LG LLC Corporate and Securities Law Firm

NASDAQ Capital Market Listing Requirements

5505. Initial Listing of Primary Equity Securities

A Company applying to list its Primary Equity Security on the Capital Market must meet all of the requirements set forth in Rule 5505(a) and at least one of the Standards in Rule 5505(b).

(a) Initial Listing Requirements for Primary Equity Securities:

(1) (A) Minimum bid price of $4 per share; or

(B) Minimum closing price of $3 per share, if the Company meets the requirements of the Equity or Net Income Standards under Rules 5505(b)(1) or (b)(3), or of $2 per share, if the Company meets the requirements of the Market Value of Listed Securities Standard under Rule 5505(b)(2), provided that in either case the Company must also demonstrate that it has net tangible assets (i.e., total assets less intangible assets and liabilities) in excess of $2 million, if the issuer has been in continuous operation for at least three years; or net tangible assets in excess of $5 million, if the issuer has been in continuous operation for less than three years; or average revenue of at least $6 million for the last three years. A security must meet the applicable closing price requirement for at least five consecutive business days prior to approval.

For purposes of this paragraph (B), net tangible assets or average revenues must be demonstrated on the Company’s most recently filed audited financial statements filed with, and satisfying the requirements of, the Commission or Other Regulatory Authority, and which are dated less than 15 months prior to the date of listing.

(2) At least 1,000,000 Unrestricted Publicly Held Shares;

(3) (i) At least 300 Round Lot Holders; and (ii) at least 50% of such Round Lot Holders must each hold Unrestricted Securities with a Market Value of at least $2,500; provided that (ii) shall not apply to a Company whose business plan is to complete one or more acquisitions, as described in IM-5101-2;

(4) At least three registered and active Market Makers;

(5) If the security is trading in the U.S. over-the-counter as of the date of application, such security must have a minimum average daily trading volume of 2,000 shares over the 30 trading day period prior to listing (including trading volume of the underlying security on the primary market with respect to an ADR), with trading occurring on more than half of those 30 days, unless such security is listed on the Exchange in connection with a firm commitment underwritten public offering of at least $4 million; and

(6) In the case of ADRs, at least 400,000 issued.

(b) Initial Listing Standards for Primary Equity Securities:

(1) Equity Standard

(A) Stockholders’ equity of at least $5 million;

(B) Market Value of Unrestricted Publicly Held Shares of at least $15 million; and

(C) Two year operating history.

(2) Market Value of Listed Securities Standard

(A) Market Value of Listed Securities of at least $50 million (current publicly traded Companies must meet this requirement and the price requirement for 90 consecutive trading days prior to applying for listing if qualifying to list only under the Market Value of Listed Securities Standard);

(B) Stockholders’ equity of at least $4 million; and

(C) Market Value of Unrestricted Publicly Held Shares of at least $15 million.

(3) Net Income Standard

(A) Net income from continuing operations of $750,000 in the most recently completed fiscal year or in two of the three most recently completed fiscal years;

(B) Stockholders’ equity of at least $4 million; and

(C) Market Value of Unrestricted Publicly Held Shares of at least $5 million.

NASDAQ Global Market Listing Requirements

Initial Listing Requirements and Standards for Primary Equity Securities

A Company applying to list its Primary Equity Security on the Global Market shall meet all of the requirements set forth in Rule 5405(a) and at least one of the Standards in Rule 5405(b).

(a) Initial Listing Requirements for Primary Equity Securities:

(1) Minimum bid price of at least $4 per share;

(2) At least 1,100,000 Unrestricted Publicly Held Shares;

(3) (i) At least 400 Round Lot Holders; and (ii) at least 50% of such Round Lot Holders must each hold Unrestricted Securities with a Market Value of at least $2,500; provided that (ii) shall not apply to a Company whose business plan is to complete one or more acquisitions, as described in IM-5101-2;

(4) If the security is trading in the U.S. over-the-counter market as of the date of application, such security must have a minimum average daily trading volume of 2,000 shares over the 30 trading day period prior to listing (including trading volume of the underlying security on the primary market with respect to an ADR), with trading occurring on more than half of those 30 days, unless such security is listed on the Exchange in connection with a firm commitment underwritten public offering of at least $4 million; and

(5) In the case of ADRs, at least 400,000 issued.

(b) Initial Listing Standards for Primary Equity Securities:

(1) Income Standard

(A) Annual income from continuing operations before income taxes of at least $1,000,000 in the most recently completed fiscal year or in two of the three most recently completed fiscal years;

(B) Stockholders’ equity of at least $15 million;

(C) Market Value of Unrestricted Publicly Held Shares of at least $8 million; and

(D) At least three registered and active Market Makers.

(2) Equity Standard

(A) Stockholders’ equity of at least $30 million;

(B) Two-year operating history;

(C) Market Value of Unrestricted Publicly Held Shares of at least $18 million; and

(D) At least three registered and active Market Makers.

(3) Market Value Standard

A Company listed under this paragraph does not also need to be in compliance with the quantitative criteria for initial listing in the Rule 5500 series.

(A) Market Value of Listed Securities of $75 million (current publicly traded Companies must meet this requirement and the $4 bid price requirement for 90 consecutive trading days prior to applying for listing if qualifying to list only under the Market Value Standard);

(B) Market Value of Unrestricted Publicly Held Shares of at least $20 million; and

(C) At least four registered and active Market Makers.

(4) Total Assets/Total Revenue Standard

A Company listed under this paragraph does not also need to be in compliance with the quantitative criteria for initial listing in the Rule 5500 series.

(A) Total assets and total revenue of $75 million each for the most recently completed fiscal year or two of the three most recently completed fiscal years;

(B) Market Value of Unrestricted Publicly Held Shares of at least $20 million; and

(C) At least four registered and active Market Makers.

NASDAQ Global Select Listing Requirements

Initial Listing Requirements for Primary Equity Securities

For inclusion in the Global Select Market, a Company must meet all requirements in Rule 5315(e), all applicable requirements of Rules 5315(f)(1), 5315(f)(2) and 5315(f)(3) and all applicable requirements in the Listing Rules.

However, if a Company is a closed end management investment company registered under the Investment Company Act of 1940, it must meet all requirements in Rule 5315(e), all applicable requirements in each of Rules 5315(f)(1) and 5315(f)(2), but not requirements of 5315(f)(3).

(c) A closed end management investment company that is listed concurrently with other closed end management investment companies that have a common investment adviser or whose investment advisers are “affiliated persons” as defined in the Investment Company Act of 1940 (a “Fund Family”) shall be eligible if:

(1) the total Market Value of Unrestricted Publicly Held Shares in such Fund Family is at least $220 million;

(2) the average Market Value of Unrestricted Publicly Held Shares for all funds in the Fund Family is $50 million; and

(3) each fund in the Fund Family has a Market Value of Unrestricted Publicly Held Shares of at least $35 million.

(d) A business development company as defined in Section 2 of the Investment Company Act of 1940 must meet all requirements in Rule 5315(e), and all applicable requirements in each of Rules 5315(f)(1) and 5315(f)(2), but not the requirements in 5315(f)(3). In lieu of meeting Rule 5315(f)(3), a business development company must have a Market Value of Listed Securities of at least $80 million.

(e) The Primary Equity Security shall meet all of the following:

(1) If the Company is not listed on the NGM, a bid price of at least $4 per share;

(2) At least 1,250,000 Unrestricted Publicly Held Shares;

(3) Market Makers

A Company that meets the requirements of the NGM Income Standard ( Rule 5405(b)(1)) or the NGM Equity Standard ( Rule 5405(b)(2)) shall have at least three registered and active Market Makers. Otherwise, a Company shall have at least four registered and active Market Makers;

(4) If the security is trading in the U.S. over-the-counter market as of the date of application, such security must have a minimum average daily trading volume of 2,000 shares over the 30 trading day period prior to listing (including trading volume of the underlying security on the primary market with respect to an ADR), with trading occurring on more than half of those 30 days, unless such security is listed on the Exchange in connection with a firm commitment underwritten public offering of at least $4 million; and

(5) In the case of ADRs, at least 400,000 issued.

(f)

(1) Ownership Requirement

The Primary Equity Security shall meet no less than one of the following:

(A) At least 550 Total Holders and an average monthly trading volume over the prior 12 months of at least 1,100,000 shares per month; or

(B) At least 2,200 Total Holders; or

(C) (i) A minimum of 450 Round Lot Holders; and (ii) at least 50% of such Round Lot Holders must each hold Unrestricted Securities with a Market Value of at least $2,500; provided that (ii) shall not apply to a Company whose business plan is to complete one or more acquisitions, as described in IM-5101-2.

(2) Market Value Requirement

The Unrestricted Publicly Held Shares shall meet one of the following:

(A) A Market Value of at least $110 million; or

(B) A Market Value of at least $100 million, if the Company has stockholders’ equity of at least $110 million; or

(C) A Market Value of at least $45 million in the case of: (i) a Company listing in connection with its initial public offering; and (ii) a Company that is affiliated with, or a spin-off from, another Company listed on the Global Select Market; or

(D) A Market Value of at least $70 million in the case of a closed end management investment company registered under the Investment Company Act of 1940.

(3) Valuation Requirement

A Company, other than a closed end management investment company, shall meet the requirements of sub-paragraph (A), (B), (C), or (D) below:

(A) (i) Aggregate income from continuing operations before income taxes of at least $11 million over the prior three fiscal years, (ii) positive income from continuing operations before income taxes in each of the prior three fiscal years, and (iii) at least $2.2 million income from continuing operations before income taxes in each of the two most recent fiscal years; or

(B) (i) Aggregate cash flows of at least $27.5 million over the prior three fiscal years, (ii) positive cash flows in each of the prior three fiscal years, and (iii) average market capitalization of at least $550 million over the prior 12 months and total revenue of at least $110 million in the previous fiscal year; or

(C) (i) Average market capitalization of at least $850 million over the prior 12 months, and (ii) total revenue of at least $90 million in the previous fiscal year; or

(D) (i) Market capitalization of at least $160 million, (ii) total assets of at least $80 million, and (iii) stockholders’ equity of at least $55 million.

NYSE American Listing Requirements

Companies must meet minimum listing requirements that include a specific financial liquidity and corporate governance criteria. NYSE American also maintains the right to deny an application if they believe it is necessary to protect investors, even if all of the technical requirements have been met. Typically, the NYSE American would reject an application for the nature of the company’s business, regulatory history and future projections, and reputation of management. As one of the most prestigious exchanges to be listed on, the NYSE American affords its patron companies many opportunities not found elsewhere. To gain an initial listing, companies must meet one of the following standards: (variations for Standard 1, 2, 3 ,4a , 4b) Standard 1 :
  1. Pre-tax income of at least $750,000
  2. Market Value of Public Float of at least $3 Millions
  3. Stockholders Equity of $4Million
  4. Minimum Price of 3$
Standard 2 :
    1. Market Value of Public Float of at least $15 Million
    2. Stockholders Equity of $4Million
    3. Minimum Price of 3$
    4. Operating History of 2 years
Standard 3 :
    1. Market Cap of at least $50 Million
    2. Market Value of Public Float of $15 Million
    3. Stockholders Equity of $4 Million
    4. Minimum Price of 2$
Standard 4 (a) (b) :
    1. Market Cap (a) $75 Million
    2. Total Assets and Total Revenue (b) of $75 Million
    3. Market Value (a/b) of $20 Million
    4. Minimum Price (a/b) of $3
Companies are also required to meet one of the following standards: Public Sharelholder of  (option 1)800, (options 2)400,  (option 3) 400 Public Float of (option 1) 500,000, (options 2) 1,000,000 or (option 3) 500,000 or Daily Trading Volume 6 months prior (option 3 ) 2000 shares

NYSE ARCA Listing Requirements

The NYSE ARCA caters to small, medium, and large cap companies, as well as Exchange-Traded Products (ETPs). The ETPs that the exchange supports includes: Exchange-Traded Funds (ETFs), Exchange-Traded Notes (ETNs), and Exchange Traded Vehicles (ETVs). They NYSE ARCA currently represents over 90% of all ETPs traded in the U.S.

The listing standards for the NYSE ARCA are as follows:

Basic Listing Standards

  • At least 500,000 publicly held shares and a market value of at least $3,000,000.
  • At least 800 public beneficial holders if the issuer has at least 500,000 and less than 1,000,000 shares publicly held, or a minimum of 400 public beneficial holders if the issuer has either:
    • At least 1,000,000 shares publicly held; or
    • At least 500,000 shares publicly held and average daily trading volume in excess of 2,000 shares for the six months preceding the date of application.
  • Net worth of at least $4,000,000.
  • Pre-tax income from continuing operations of at least $750,000 in the last fiscal year or two of the last three fiscal years.
  • The maintenance of at least $5 per share closing bid price for a majority of business days for the most recent six-month period prior to the date of application by the issuer. To meet this price requirement, the bid closing price must be at or above $5 per share at the time of application.

Alternative Listing Standards

  • At least 1,000,000 publicly held shares and a market value of at least $15,000,000.
  • At least 400 public beneficial holders.
  • Net worth of at least $12,000,000.
  • The maintenance of at least $3 per share closing bid price for a majority of business days for the most recent six-month period prior to the date of application by the issuer. To meet this price requirement, the bid price must close at or above $3 per share at the time of application.
  • An operating history of at least three continuous years.

OTC PINK Listing Requirements

Requirements to use Form 211 | Going Public OTC Pink Sheets

In general, a private company can go public 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.

OTCQB Listing Requirements

Eligibility Standards

To be considered for admission to OTCQB, a Company shall meet all the following conditions:

1) Audited Financials. Audited annual financial statements must be prepared in accordance with U.S. GAAP or, for International Reporting Companies or Alternative Reporting Companies listed on a Qualified Foreign Exchange, IFRS or an IFRS equivalent

2) Current Disclosure: Make current disclosure available pursuant to one of the qualified listed reporting standards: 

3) Bid Price of $0.01. Have a primary class of securities with proprietary priced quotations published by a Market Maker in OTC Link ATS with a closing bid price of at least $0.01 a) on each of the 30 consecutive calendar days immediately preceding the Company’s application for OTCQB

4) An exemption from Section 1.1(3) of these OTCQB Standards may be granted by OTC Markets Group in its sole and absolute discretion. Have at least 50 Beneficial Shareholders, each owning at least 100 shares.

5) Have a freely traded Public Float of at least 10% of the total shares issued and outstanding of the class of security to be traded on OTCQB., exemption may be granted by OTC Markets Group in its sole and absolute discretion.

6) Not be subject to any Bankruptcy or reorganization proceedings.

7) Be duly organized, validly existing and in good standing under the laws of each jurisdiction in which the Company is organized or does business.

8) Transfer Agent. A company incorporated in the U.S. or Canada must retain a transfer agent that participates in the Transfer Agent Verified Shares Program.

Corporate Governance (Required for Alternative Reporting Standard Only).

  • Have a board of directors that includes at least two Independent Directors; and
  • Have an Audit Committee, a majority of the members of which are Independent Directors. 
  • At least two members of the Board of Directors and a majority of the members of the Audit Committee must satisfy the independence requirement within the later of 90 days after the Company begins trading on OTCQB or the time of the Company’s next shareholder meeting.

Financial Reporting Requirements: a. SEC Reporting Companies must have filed all reports required to be filed on EDGAR. b. Regulation A Reporting Companies must have filed all reports required to be filed on EDGAR.

NYSE LISTING REQUIREMENTS

Have at Least 400 Shareholders

To qualify for NYSE listing, a company must have at least 400 shareholders who own more than 100 shares of stock, have at least 1.1 million shares of publicly traded stock and have a market value of public shares of at least $40 million. The stock price must be at least $4 a share. Initial public offerings, spin-offs from existing companies or affiliates need a market value of at least $100 million.

Meet the Basic Earnings Standard

In order to order to get listed on the NYSE, a company also must be profitable and it has to meet one of two basic earnings standards. The first is aggregate pre-tax income of $10 million for the previous three years, with at least $2 million in each of the two most recent years. An alternate is $200 million in global market capitalization. In each case, the company still has to meet the shareholding threshold.

Global Considerations

The NYSE has stricter standards for worldwide trading. The $4 share price and $100 million market value apply, but a company must have at least 2.5 million shares outstanding and 5,000 public shareholders. In the case of a non-American company whose home market does not have “registered” shareholders, the NYSE requires that a member brokerage firm attest to the depth of market and liquidity of the company’s stock.

File an Application

Assuming as company meets the required standard, getting listed on the NYSE is simply a case of filing an application with an agreement to meet NYSE guidelines and requirements. That also must include the articles of incorporation, company by-laws and resolutions, and information on the organization, including contact details for key executives and affirmation that none has a felony conviction. NYSE also requires a letter from security underwriters that the company meets listing standards.

NYSE Can Reject Unsuitable Companies

The NYSE has broad discretion in listing companies and will list only shares it deems suitable for the market’s auction trading process, in which buy and sell orders are matched on the exchange floor. It can apply more stringent criteria, even if a company meets the basic securities and financial criteria. A company that is accepted for listing can expect trading of shares to start in four to six weeks.

OTCQX Listing Requirements

The OTCQX listing requirements necessitates that a company meets the following:
  • A transfer agent that participates in the Transfer Agent Verified Shares Program.
  • Comply with SEC Reporting (Exchange Act reporting standard or Regulation A), International Reporting, Bank Reporting, or OTC Alternative Reporting Guidelines.
  • Audited financial statements that comply with US GAAP (for International and Alternative Reporting Companies listed on a Qualified Foreign Exchange, a valid auditing opinion) with a Balance Sheet dated within 15 months by a PCAOB auditor.
  • Have proprietary quotes by at least one Market Maker in OTC Link ATS (companies filing Form 211 shall have 3 business days to meet this requirement)
  • Have a minimum bid price of $0.25 per share and $10 million market capitalization on each day for the first 30 consecutive calendar days preceding Application Day. (exemptions for companies submitting Form 211 applications)
  • Have on-going operations and not be a shell company.
  • Not going through bankruptcy or reorganization.
  • Have at least 50 round-lot beneficial shareholders (each owning at least 100 shares).
  • Have a freely traded Public Float of 10% or more of total outstanding shares.
  • Obtain an OTCQX Sponsor
  • For International Reporting, comply with OTCQX Rules and publish required disclosures in English, as specified in 12g3-2(b).
  • Publish Annual reports, call reports and other disclosures required by bank regulators.

Corporate Governance requirements:

  • Have a board of directors with 2 independent directors
  • Have an audit committee with the majority being independent director

    • For further information view our page on OTCQX Requirements and application process.

    Going Public vs. Reverse Merger

    Going Public Via Reverse Merger

    A reverse merger transaction is one in which a private operating entity merges with a public shell company, resulting in the private operating company becoming public. Generally, the shareholders of the private operating company will exchange their ownership in the private company for a majority stake in the public shell company. A “shell company” is an entity that has no or nominal operations and no assets or assets consisting solely of cash and cash equivalents. A reverse merger is an alternative method of going public (as opposed to an IPO, DPO or private placement followed by the registration process).

    A reverse merger is often structured as a reverse triangular merger. In that case, the public shell forms a new subsidiary which new subsidiary merges with the private operating business. At the closing, the private company shareholders still exchange their ownership for shares in the public company and the private operating business becomes a wholly owned subsidiary of the public company. The primary benefit of the reverse triangular merger is the ease of shareholder consents. That is because the sole shareholder of the acquiring entity is the public company. The directors of the public company can approve the transaction on behalf of the acquiring subsidiary, avoiding the necessity of meeting the proxy requirements of the Securities Exchange Act of 1934.

    The advantages of a reverse merger revolve around time. A reverse merger transaction can be completed very quickly and efficiently. The disadvantages of a reverse merger generally revolve around undisclosed prior issues or liabilities with the public shell, including issues that could affect DTC eligibility. This primary disadvantage can be addressed by hiring competent securities counsel to assist with the due diligence process. Another disadvantage involves cost; a reverse merger transaction, although substantially quicker than an IPO, can cost substantially more. In addition to legal and accounting fees, a private entity must purchase the public shell itself.

    Like any transaction involving the sale of securities, the issuance of securities to the private company shareholders must either be registered under Section 5 of the Securities Act or by subject to an available exemption from registration. Generally, shell companies rely on Section 4(2) or Rule 506 of Regulation D under the Securities Act for such exemption.

    A reverse merger is a going public transaction but not a capital raising transaction.  Generally companies completing a reverse merger simultaneously complete a private placement transaction for fund raising.

    Finra and DTC

    FINRA and DTC

    For companies going public on the OTC Markets, following the effectiveness of the S-1 registration statement, the company will need to engage the services of a market maker to file a 15c2-11 application with FINRA to obtain permission to quote and trade the stock and to receive a trading symbol. FINRA is the self-regulatory body which overseas trading on the over-the-counter market. On the most basic level, FINRA issues trading symbols to company’s trading on the over-the-counter market (including the Pink Sheets, OTCQB and OTCQX).

    The Depository Trust Company (DTC) provides the clearing and settlement services for all the electronic trading of securities in the United States. Over the past year, DTC eligibility has become a concern for many OTC issuers. The DTC has become active in reviewing the securities of issuers and requiring that an issuer be able to prove, to the DTC’s satisfaction, that all shares trading electronically are indeed legally entitled to do so. This includes shares that may have been issued in a predecessor company many years before and for which records may not be available.

    Obtaining and maintaining eligibility is of the utmost importance for the smooth trading of an issuer’s float in the secondary market. Moreover, DTC eligibility is a prerequisite for OTC issuers’ shareholders to deposit securities with their brokers and have such securities be placed in street name.

    Anthony L.G. stays current with all DTC issuer requirements to assist clients in avoiding unnecessary disruptions to their stocks trading activity and to remove DTC chills and locks whenever possible.

    Listing on a National Exchange

    Listing on a National Exchange

    There are currently registered stock exchanges in the United States, however, the most common exchanges for small cap and middle market companies are the NYSE including the NYSE American and NASDAQ.  Both exchanges have quantitative and qualitative listing standards and ongoing corporate governance requirements for listed companies.  For a complete list of NYSE American listing requirements see my blog on the topic HERE and for a complete list of NASDAQ listing requirements see by blog HERE.  The attorneys at Anthony L.G. assist companies with the preparation for and application process to list on an exchange as well as compliance with ongoing listing requirements.

    Private Placement

    Private Placement Followed by Registration of Securities

    A public company, by definition, has public shareholders. Reverse mergers, IPO’s and DPO’s all result in a public shareholder base. Another option for a company going public directly is to complete a private placement; selling shares to unaffiliated third parties and then filing an S-1 resale registration statement as to those shares. Each of these options results in an unaffiliated public shareholder base. Simply stated, all of these aforementioned processes result in a company going public.

    The S-1 resale registration statement filed on behalf of selling shareholders contains substantially the same required information as an S-1 registration statement filed on behalf of the company itself.

    The main benefit to a private company going public through the filing of an S-1 Registration Statement as opposed to a reverse merger is that the company does not have to be concerned about undisclosed, potential or contingent liabilities.  Moreover, the SEC rules relating to shell companies (such as Rule 144 and Rule 145) prevent the operating company’s shareholders from selling stock using the Rule 144 exemption for twelve months following the completion of the merger. Furthermore, companies completing a reverse merger may face reputational challenges.  Finally, if not completed correctly, the newly merged entity may face trading difficulties with either or both FINRA and DTC.

    S1 Regulations

    There are four primary regulations governing the preparation and filing of Form S-1:

    (i) Regulation C – contains the general requirements for preparing and filing the Form S-1. Included within Regulation C are regulations and procedures related to (a) the treatment of confidential information; (b) amending a registration statement prior to effectiveness; (c) procedures to file a post-effective amendment; and (d) the “Plain English” rule

    (ii) Regulation S-T – requires that all registration statements, exhibits and documents be electronically filed through the SEC’s EDGAR system and must include interactive data using the XBRL process.

    (iv) Regulation S-K – sets forth, in detail, all the disclosure requirements for all the sections of the S-1. Regulation S-K is the who, what, where, when and how requirements to complete the S-1.

    (v) Regulation S-X – sets forth the requirements with respect to the form and content of financial statements to be filed with the SEC. Regulation S-X includes general rules applicable to the preparation of all financial statements and specific rules pertaining to particular industries and types of businesses.

    Both the Securities Act of 1933, as amended (“Securities Act”) and the Securities Exchange Act of 1934, as amended (“Exchange Act”) provide remedies to investors in the IPO and DPO process. The basic premise of such liability is that either an investor was not given an opportunity to review investment disclosure documents prior to making the investment, or such disclosure documents contained inaccurate information or failed to contain material information. The bottom line is that if an officer or director signs a registration statement which is filed with the SEC and which contains misstatements or fails to contain material information, they may be subject to liability on two fronts – from the SEC in an enforcement proceeding, and from individuals and entities in a private civil claim.

    Your Going Public Transaction with Us

    In an initial public offering (IPO), a company goes public directly by filing an S-1 registration statement for the public sale of its stock. That sale of stock can be by the company using an underwriter, which is known as an IPO. Alternatively, many issuers are choosing to self-underwrite their public offerings, commonly referred to as a Direct Public Offering (DPO). But of course, the process is highly regulated and without experienced legal counsel can be difficult, expensive and time-consuming.

    Pursuant to Section 5 of the Securities Act of 1933, as amended (“Securities Act”), it is unlawful to “offer” or “sell” securities without a valid effective registration statement, unless an exemption is available. Companies desiring to offer and sell securities to the public must file with the SEC and provide prospective investors all material information concerning the company and the securities offered. The Securities Act sets forth in-depth rules on what constitutes material information, and on what forms and in what format that material information must be disclosed.

    Rule 404(a) of the Securities Act sets forth the basic requirements for a registration statement. Rule 404(a) reads in part:

    “A registration statement shall consist of the facing sheet of the applicable form; a prospectus containing the information called for by Part 1 of such form; the information, list of exhibits, undertakings and signatures required to be set forth in Part II of such form; financial statements and schedules; exhibits; any other information or documents filed as part of the registration statement; and all documents or information incorporated by reference in the foregoing.”

    Over the years the SEC has created and eliminated various registration forms. Currently all domestic issuers must use either form S-1 or S-3. Form S-3 is limited to larger filers with a minimum of $75 million in non-affiliate public float, among other requirements. All other issuers must use form S-1.