Regulation A+ IPO – Where Can My Company’s Securities Trade?

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For those of you still trying to get  your arms around the SEC’s recently released Final Rules implementing Title IV of the JOBS Act, commonly known as Regulation A+, one of the most important areas for a company to consider in evaluating whether an IPO utilizing Regulation A+ is right for it is where will these securities trade?

The primary benefit of an IPO, from the company perspective, is to achieve liquidity for its securities. Not only does this provide an “exit” for investors, but liquidity will normally result in an increased valuation for the securities being sold. This means less dilution to the issuing company and its shareholders.  So a fundamental question is where can an issuer’s securities trade?

Though some companies may choose to list directly on a national exchange, such as Nasdaq or NYSE, the large majority of issuers with an initial IPO will not meet the heightened listing standards of a national exchange. Other companies who may meet these requirements will initially choose not to list on a national exchange, as their listing requirements dictate that issuers be a fully reporting company under SEC rules.  One of the principal advantages of being a Regulation A+ issuer is to have the option of having lighter ongoing public reporting than a fully reporting company.  National exchanges also have certain qualitative listing standards addressing corporate governance requirements. Meeting these requirements typically results in additional ongoing expense.

As I mentioned in an earlier article, the OTC Markets Group currently operates a three tier exchange.  Each of these tiers has their own distinct requirements.  Additional information regarding OTC Markets and the requirements for listing on each of the three tiers is available on their website.

But the question many issuers will also ask is this: Is there life after OTC Markets? To this question I offer two thoughts. There are many high quality companies which are listed on OTC Markets and choose to remain there even though they are eligible for listing on Nasdaq or NYSE. Others do eventually graduate, or “uplist”, to a national exchange.

To put this in context I thought I would share with my readers information provided by OTC Markets on the number of companies that have uplisted from OTC Markets to Nasdaq or the NYSE in the past.  These numbers can be expected to grow as new Regulation A+ issues come on line in the coming months and years.

For additional information about whether a Regulation A+ offering is right for your company, feel free to contact me at

Following is information provided by OTC Markets Group.

OTC Markets Group News MARCH 2015
Exchange Graduation, “Venture Exchanges” and Optimizing Public Markets for Small Companies A Message from OTC Markets Group CEO Cromwell Coulson Last year was a record ‘Exchange Graduation’ year with 83 companies up-listing from our OTCQX, OTCQB and OTC Pink marketplaces to a NYSE, NASDAQ or NYSE MKT listing. In the past five years, more than 400 companies have graduated from our marketplaces to an exchange listing.

Market 2014 Graduates to Main Boards
OTCQX, OTCQB and OTC Pink – US 83
TSX Venture – Canada 22
LSE AIM Market – UK 5

Companies are not just graduating, but using our premium marketplaces to improve trading, transparency and trust for investors. In 2014, we experienced a 92% increase in the number of U.S. companies that qualified for our OTCQX marketplace, which included 34 community banks. There are over 660 small companies now verified for trading on our OTCQB Venture Marketplace, which is bringing visibility to smaller and development stage companies and has become America’s Venture Market. We highlight these impressive numbers because “venture exchanges” are a current topic of discussion in Washington. Politicians, regulators, and market practitioners are discussing how to help small companies raise capital, go public and create more liquid trading markets. Optimizing public markets for growing small companies is a good idea and one we have pioneered here at OTC Markets Group. With a growing community of U.S. companies helping us build better markets, we look forward to continuing to play a key role in the trading of established and venture stage companies. The voices of our companies and broker-dealers need to be heard in Washington. Click here to read more about what we are proposing.

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