Disclosure Guidelines

OTC Markets Group updates its “Pink Tier” Basic Disclosure Guidelines and related Attorney Letter Guidelines

On February 19, 2019, the OTC Markets Group announced updated guidelines for its “Pink Tier” basic disclosure and related “Attorney Letter” regarding the availability of an issuer’s “current public information.”  The information disclosure guidelines primarily remain the same; however, the Form contains a cover page similar to Forms 10-K or 10-Q, which is very helpful, and a “Change in the Number of Outstanding Shares” Table that requires all changes in the number of outstanding shares to be fully disclosed, including a description of any stock transaction, its date, the number of shares involved, the class of securities issued, the consideration or value received for the issuance, any discount in the consideration from the market value for the issuer’s class of securities sold, the identity of the acquiree, the reasons for the share issuance (cash, debt, conversion or nature of services provided, if applicable), whether the shares are “free trading” or “restricted securities” and the exemption from registration under the Securities Act of 1933, as amended, which the issuer relied upon.  The information required in this Table is very detailed and will be very important to shareholders and potential investors in any issuer listed in the OTC Markets Group.  You can access the new guidelines at Pink Basic Disclosure Guidlines.

The Attorney Letter guidelines are substantially the same; however, they have replaced the term “promotional activities” in Exhibit B to these guidelines with the “caveat emptor” designation utilized by the OTC Markets Group for requiring additional information in the Attorney Letter regarding purchases and sales of securities by directors, officers, consultants, 5% stockholders and others, as may be applicable.  This modification directly clarifies what the “promotional activities” designation related to and is a welcome amendment for legal practitioners.  You can access these new guidelines at Attorney Letter Guidelines.