The OTC Markets Group is rolling out a significant update that will transform the Pink Current Market into the OTCID (Over-the-Counter Integrated Disclosure) Basic Market starting July 1, 2025. This change aims to enhance transparency and streamline the reporting process for companies listed on the Pink Market.
Key Changes with OTCID
- Management Certification: Instead of requiring an annual attorney letter, companies listed on the OTCID will need to submit a Management Certification. This certification will confirm what reporting requirements the company is subject to, certify that it understands its reporting obligations, and confirm information regarding the company’s counsel, officers, directors, large shareholders, and convertible debt holders.
- The Management Certificate will become due 45 days after the due date for the company’s annual report. As such, the first anticipated Management Certification due date will be February 13, 2025, for companies with a September 30th fiscal year end.
- Companies that do not have an Annual Report or Management Certification deadline due by the launch of the OTCID Basic Market (on July 1, 2025) will still need to publish an initial Management Certification and meet the other eligibility requirements discussed below by July 1, 2025 to ensure they are transitioned to OTCID.
- Focus on Timely Disclosure: The OTCID emphasizes the importance of timely and accurate information disclosure. Companies will need to provide ongoing reporting to maintain their status on the OTCID. Failing to maintain timely disclosures or meet the other OTCID eligibility requirements discussed below may result in a company being moved to the Pink Limited Market or Expert Market, as applicable.
- New Guidelines: The new market tier aims to improve investor confidence by ensuring that companies meet minimal current information disclosure standards. OTC Markets has released new disclosure guidelines as of January 2025. Companies should review the new guidelines and make sure they are meeting OTC Markets’ most current requirements.
Eligibility Requirements for OTCID Basic Market
To be listed on the OTCID Basic Market, companies must meet the following eligibility requirements:
- Subscribe to the OTCIQ – Disclosure & News Service (DNS). Existing DNS subscribers do not need to submit a new application;
- Provide current disclosures via DNS, the SEC’s EDGAR system, or SEDAR (available starting in 2025);
- Complete a Management Certification (available for filing starting January 31, 2025), or a 12g3-2(b) Certification, as applicable;
- Maintain a Company Verified Profile on OTCMarkets.com via OTCIQ. Existing subscribers to the OTCIQ Basic Service will need to apply for the OTCID Basic Market by January 31, 2025; and
- Provide data about the company’s shares through the Transfer Agent Verified Shares Program. Companies that act as their own transfer agent may submit share data directly to OTC Markets.
Why This Change Matters
The transition to OTCID is designed to address some of the challenges faced by companies trading on the OTC Markets. By simplifying the reporting requirements and focusing on management accountability, the OTCID aims to create a more efficient and transparent market for investors.
Next Steps for Companies
Companies currently trading on the Pink Current Market should prepare for the transition by familiarizing themselves with the new requirements and ensuring that their reporting processes are up-to-date. It’s essential to stay informed about any additional guidelines that OTC Markets may release as the implementation date approaches.
More Information
Austin Legal Group, APC (ALG) represents the legal interests of businesses and individuals across the country. The firm was founded on a desire to deliver excellent legal services in a personalized and economical manner. We represent public and private companies in a variety of corporate transactions including strategic planning, public offerings, private equity, debt offerings, mergers and acquisitions, and other general corporate services. Our clients include companies from various sectors, including: technology, health and wellness, agriculture, real estate development, manufacturing, cannabis, renewable energy and digital assets/crypto currencies. For more information or to schedule a consultation, please call our office at (619) 924-9600 and ask to speak with one of our attorneys.
Disclaimer
ALG does not make any representations or warranties, expressed or implied, as to the accuracy, completeness or fitness for a particular purpose of this or any article. This article is meant for general informational purposes only and should not be construed as, and does not constitute, legal advice. No one should take any action regarding the information in this article without first seeking the advice of an attorney. This article does not create an attorney-client relationship. No attorney-client relationship will exist with ALG or any attorney affiliated with it unless a written contract is signed by all parties and any conditions in such contract are satisfied.
