CLG OTC Markets Memo | April 2025
On July 1, 2025, OTC Markets Group (OTC Markets) will discontinue the Pink Current Market. Without action and submission of a listing application, companies currently on the Pink Current Market will be downgraded to the Pink Limited or Expert Markets, potentially restricting investors from trading and depositing those companies’ securities. Under the new OTC landscape, the Pink Limited Market will no longer represent ‘limited’ or paired down disclosure. Rather, it will represent no formal engagement with OTC Markets Group, identifying greater risk for investors. In order to meet the July 1st deadline, companies affected by this change must submit their application for OTCID, OTCQB or OTCQX by May 1, 2025.
This change is part of the OTC Markets’ ongoing modernization of their platform. Since OTC Markets believes that the Pink Current Market limits investors’ ability to discern the level of disclosure companies actively provide, they have determined that the creation of OTCID, which will replace the Pink Current Market, will help investors better understand the level of qualified companies engagement, compliance and disclosure with the OTC Markets.
OTCID will be a basic reporting market for companies that meet a minimal current information standard and provide management certification without the qualitative standards of the OTCQX and OTCQB markets. Many of the requirements remain largely the same as the existing disclosure requirements for Pink Current information. This memorandum will answer some of your questions regarding this upcoming change.
My company is currently on the OTC Pink Current; do I need to do anything before May 1, 2025?
It depends – If your company is already subscribed to the OTC Disclosure & News Service (DNS), you need not submit a new application. If your company is only subscribed to the OTCIQ Basic Service, you will need to apply to the OTCID Basic Market. In order to fulfill the new OTCID Basic Market requirements, you need to have access to the DNS.
Although existing DNS subscribers do not need to submit a new application, in order to qualify for the OTCID these companies will need to file an annual management certification or Rule 12g3-2(b) certification.
What happens to companies that do not qualify for the OTCID Basic Market?
As mentioned above, companies need to submit an application for OTCID (or OTCQB or OTCQX, as applicable) by May 1, 2025. After an application is submitted, companies will have until June 30, 2025 to submit all necessary disclosure materials. On July 1, 2025, OTCID will go live, and companies will shift to the respective markets. Companies that have not taken necessary action to qualify for the OTCID Basic Market will be downgraded to the Pink Limited Market or Expert Market. If the company provides disclosure in compliance with SEC Rule 15c2-11 in a manner that can be confirmed by OTC Markets then it will be eligible for the Pink Limited Market; otherwise it will be automatically transitioned to the Expert Market.
How does a new company apply for OTCID?
If the company is eligible and retains a transfer agent that participates in the Transfer Agent Verified Shares Program, the company must (i) verify its Company Profile, (ii) file a management certification, and (iii) certify compliance with Exchange Rule 12g3-2(b).
In order to be eligible, the company must be either (i) a SEC reporting company, (ii) a Regulation A reporting company, (iii) a Regulation Crowdfunding company or (iv) a company incorporated outside of the United States, exempt from Exchange Rule 12g3-2(b) and listed on a non-US stock exchange. A company can also make disclosure available through OTCIQ.com pursuant to OTCID Disclosure Guidelines and be considered an Alternative Reporting Company.
What are the initial disclosure obligations that must be uploaded through OTCIQ.com?
The company must upload an annual report for the most recently completed fiscal year and all quarterly reports for the current fiscal year. These reports are composed of disclosure information pursuant to the Disclosure Guidelines for the OTCID Basic Market and qualifying financial statements, which need not be audited.
What are the ongoing disclosure obligations to remain on OTCID?
Through OTCIQ.com, the company must publish quarterly reports within 45 days of the quarter end, annual reports within 90 days of the fiscal year end, and management certifications within 45 days of the annual report due date. In addition, material corporate events must be publicly disclosed within 4 business days. Some of these events include changes in control, departure of directors or officers, unregistered sales of securities and earnings releases.
This memo is provided as general information to clients and friends of The Crone Law Group and should not be construed as and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. This memo is a very general and nontechnical summary of complex legal requirements. A number of details, refinements, and exceptions have been omitted in an effort to achieve relative simplicity. If you have any questions, please contact us.