09 April 2020 - Article
This week's Corporate news includes predictions of potential hurdles for the OTCQX, the SEC approves FINRA crowdfunding portal rules, and new updates on London's Stock Exchange AIM market. ** OTCQX LISTING AND GOVERNANCE STANDARDS INCREASED Issuers who want their securities to trade on the OTCQX market will face greater hurdles in 2016, due to the OTCQX's tightening of its eligibility requirements effective January 1, 2016. The OTC Markets Group raised its initial and ongoing financial standards for OTCQX companies, added new corporate governance standards for U.S. companies and banks (including a requirement to have at least two independent directors and an audit committee comprised of a majority of independent directors) and broadened its current prohibition on penny stocks. The OTC Markets also updated its “OTCQX U.S. Premier” standards to reflect standards recognized by U.S. states for issuer exemptions from the applicability of blue sky laws. For more information, read here.. SEC APPROVES FINRA CROWDFUNDING PORTAL RULES The SEC recently approved final FINRA rules governing specialized crowdfunding portals for issuers offering and selling securities under the Jumpstart Our Business Startups Act of 2012 (JOBS Act) crowdfunding exemption. The JOBS Act requires funding portals to register with the SEC and become a member of a national securities association such as FINRA. Effective January 29, 2016, the rules and related forms address matters including general standards for portals, FINRA portal membership application forms, funding portal conduct and compliance and sanctions and investigations. For more information, read here. LONDON'S AIM MARKET TO PERMIT ELECTRONIC SETTLEMENT FOR CERTAIN REGULATIONS SECURITIES The London Stock Exchange (LSE)'s AIM market recently implemented electronic settlement procedures that will allow streamlined settlement of securities that are subject to complicated trading restrictions under the U.S. Securities Act of 1933, lowering the barrier to U.S. issuers' ability to raise capital in the London markets. Under recent European Union regulations, an issuer's securities must be eligible for electronic settlement in order to be traded on EU exchanges, including the LSE, a requirement that effectively would have prohibited continued trading of “Regulation S, Category 3” securities. These securities, which are subject to U.S. restrictions on manner and timing of trades, have typically been issued and traded in certificated form. With the LSE's new electronic settlement procedures that take applicable trading restrictions into account, settlement of such “Regulation S, Category 3” securities should permit wider access to overseas markets for some issuers. For more information, read here.