OTC MarketS Listing Planning

An OTC Markets Listing can be obtained through the following methods:

  • Reverse Takeover ["RTO"] – merging with an OTC shell; or
  • Directing Listing ["Direct Listing"] – adopting a direct listing process.

A Reverse Takeover ["RTO"] is the process in which a private company lists on OTC Markets by acquiring a OTC listed shell company. The practice is contrary to the norm because the private company is taking over the shell company – thus, the merger is in “reverse” order for an OTC Markets listing.


A OTC Markets Direct Listing enables companies to enter into the public markets by making previously restricted shares available for public trading by registered brokers on the OTCQX® or OTCQB® markets.


Overall the OTC Markets direct listing is a little less expensive and little quicker than a direct IPO process. The reason for this is that the company can work with a market maker to apply for a trading symbol immediately upon effectiveness of the S-1 as opposed to having to wait until after an offering has been sold and closed out.


The following is a summary of the direct listing process for an OTC Markets listing:


The beginning of the process includes gathering due diligence and completing any corporate cleanup or reorganization that may be necessary in advance of a public listing. While the company’s accounting and auditing are being completed, legal counsel will complete corporate cleanup and begin to draft the private offering documents, if the company is completing a new private offering round. 


In structuring the private offering(s) and subsequent resale registration statement, thought must be given to the public trading markets, including obtaining a trading symbol, qualifying for various tiers of OTC Markets, and hopefully, having an active trading market. Part of this process includes planning for the Form 211 Application, which will be filed by a market maker after effectiveness of the S-1 registration statement.


Concurrent with the Form 211 process, the company will apply to OTC Markets and determine which tier it qualifies for. Once FINRA issues a ticker symbol, the company can trade. 


Ultimately a company will be registering common stock and that common stock will trade on the OTC Markets.

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