Terms and Definitions
OTC Bulletin Board
The OTC Bulletin Board or OTCBB is a United States quotation medium for subscribing members used for many over-the-counter (OTC) equity securities that are not listed on the NASDAQ or a national stock exchange.
OTC Markets Group
OTC Markets Group, Inc. (OTCQX: OTCM), headquartered in New York City, operates a financial marketplaces platform providing price and liquidity information for over-the-counter (OTC) securities. OTC-traded securities are organized into three marketplaces to inform investors of opportunities and risks: OTCQX, OTCQB and OTC Pink.
Trading Shell Company
Is a company that: already has 35+ shareholders, is trading, has a symbol, and previously has had an operating company inside of it. This past company may have been subject to a host of complications such as bankruptcy or lawsuits. Consequently this method is a less than ideal way to go public because the remaining shell company may be riddled with liabilities and or other issues in the future.
Reverse Merger
Is the process of merging your existing private operating company into an SEC reporting or publicly reporting company.
SEC
Is the abbreviation for the Securities and Exchange Commission. The SEC governs securities and publicly traded companies.
DTC Eligibility
Allows for a company's securities to be traded through electronic platforms.
Form 211
Is a form that a market maker fills out which must be submitted to FINRA in order to let them know that all requirements have been satisfied to achieve OTC status.
Stock Transfer Agent
Is an agent who maintains a list of all the shareholders of a company.
Market Maker
Is generally a broker dealer that makes a market in the securities your company has registered on its behalf by holding a particular quantity of shares in your company in order to facilitate trading.
A Form 10 Blank Check Shell Company
Is a shell company that has no assets or liabilities or operating history but is SEC Reporting with a class of common stock registered with the SEC.
S-1 Registration Statement
Registration statement that highlights a company's business plan, future company intentions, and registers with the SEC a certain amount of the restricted shares of stock of the company and or those shares of restricted stock held by other individuals such as company insiders or investors.
Accredited Investors
As defined by the SEC under rule 501: a bank, insurance company, registered investment company, business development company, or small business investment company; a natural person who has individual net worth, or joint net worth with the person's spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person; a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year (SEC.gov).
Initial Public Offering
A company or business's initial or first public stock offering to the public, available for purchase by any person(s).
Direct Public Offering
When a company raises capital by marketing its shares directly to its own customers, employees, suppliers, distributors, and friends in the community or through a crowd funding intermediary. Direct public offerings are considerably less expensive than traditional underwritten offerings. Additionally, they don't have the restrictions that are usually associated with bank and venture capital financing.
Blue Sky Laws
Laws designed to protect investors against fraudulent sales practices and activities. These laws typically require companies making small offerings to register their offerings before they can be sold in a particular state. The laws also license brokerage firms, their brokers, and investment adviser representatives (SEC.gov).
Emerging Growth Company
A company that has not had an IPO before December 8, 2011 and with less than 1 billion in assets that follows the requirements of JOBS Act as an EGC. For a more narrow definition please refer to the actual definition as written by the SEC on their website (SEC.gov).
Say on Pay
When shareholders vote on the pay of top executives.
Golden Parachutes
When shareholders vote on pension or benefits of top executives.
Underwriter
An individual or business that sells shares of your company to the public, or acts as a broker/dealer.
Crowdfunding registered offering
A combination of direct public offering (DPO) and initial public offering (IPO). A DPO is like an IPO except the Company does not use an underwriter to place and sell the stock. In an IPO, the Issuing Company actually sells to the underwriter or underwriters who immediately resell to other broker dealers and retail customers. In a DPO, the Company sells directly to the retail customer. In a crowdfunding registered offering a Company utilizes the services of a third party service provider, such as a broker dealer or crowdfunding intermediary, to assist in the presentation and advertising of what would otherwise be a DPO.