Introduction
Small- and mid-cap companies seeking to gain access to capital markets and improved liquidity for their capital stock should consider the benefits that over-the-counter (“OTC”) markets can provide as a viable alternative to primary national stock exchanges such as Nasdaq and the New York Stock Exchange. Strategically, in the short term, they can be attractive to companies due to lower monetary and time costs. In the long term, they serve as a strong springboard for uplisting to a primary national stock exchange.
OTC markets function through a decentralized network of broker-dealers connecting buyers and sellers rather than the matching engine technology used by exchanges. The OTC markets have four tiers for companies at different stages of development: OTCQX® Best Market (OTCQX), OTCQB® Venture Market (OTCQB), OTCIDTM Basic Market (OTCID), and Pink LimitedTM Market (Pink Limited).
Initial Eligibility on OTCQX, QTCQB, and OTCID
To determine which tier is suitable, the starting point is to conduct an eligibility check based on the qualifications of each tier. The below sets forth a summary of each tier’s key qualifications.
OTCQX and OTCQB
OTCQX is for established domestic and international companies that comply with high financial standards, follow best practice corporate governance, demonstrate compliance with U.S. securities laws, and are current in their disclosures. OTCQB is for entrepreneurial and development stage U.S. and international companies. OTCQX and OTCQB have overlapping eligibility requirements but differ in certain aspects.
On March 5, 2026, OTC Markets Groups published for comment proposed amendments to the OTCQX Rules which are scheduled to become effective on April 6, 2026 (the OTCQX Proposed Amendments).
| Disqualifications | Shell or blank-check companies (excluding SPACs which may be considered for admission by OTC Market Group on a case-by-case basis) and companies in bankruptcy or reorganization proceedings are not qualified. |
| Registration and Reporting Status |
Meet one of the following conditions:
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| Penny Stock Exemption |
For OTCQX, must satisfy one of the “penny-stock” exemptions as set forth below:
A According to the OTCQX Proposed Amendments, companies that do not meet the revenue or net tangible asset tests may conditionally qualify for OTCQX, in the sole discretion of OTC Markets Group, under the $5.00 bid price test until their next annual report is published. At that time, the company must meet either the revenue or net tangible assets. |
| Financial Statement | Audited annual financial statements and audited or unaudited interim financial reports. |
| Shareholders |
At least 50 beneficial shareholders each owning at least 100 shares. According to the OTCQX Proposed Amendments, the minimum number of round lot shareholders holding at least 100 shares will be increased from 50 to 100. |
| Bid Price[i] | $0.25 per share for OTCQX; $0.01 per share for OTCQB. |
| Market Capitalization |
$10 million for OTCQX.
According to the OTCQX Proposed Amendments, the minimum market capitalization will be increased from $10 million to $25 million. |
| Freely Traded Public Float[ii] |
At least 10% of the total shares issued and outstanding of the class of securities to be traded on OTCQX or OTCQB, as applicable.
According to the OTCQX Proposed Amendments, all companies must have a minimum market value of freely-traded public float of $5 million and must also satisfy the float distribution criteria listed below for each class of securities on OTCQX:
|
| Price Quotations and Market Makers | For OTCQX, have proprietary priced quotations published by two market makers in OTC Link ATS. If the Company is applying to OTCQX in conjunction with an initial review for quotation eligibility in accordance with Rule 15c2-11 under the Securities Exchange Act of 1934, as amended, one market maker is required within three business days of admission to OTCQX; and (ii) two market makers publish proprietary priced quotes within 90 days of admission to OTCQX. |
| Corporate Governance |
Two independent directors and an audit committee with a majority of its members being independent directors
According to the OTCQX Proposed Amendments, an audit committee must have at least two members. |
| Transfer Agent | Have a transfer agent that participates in the Transfer Agent Verified Share Program |
OTCID
OTCID is for companies that publish baseline information. These companies provide ongoing financial disclosure and a management certification, and verify their company profile for U.S. investors, brokers and regulators. OTCID requirements are substantially scaled down relative to OTCQX and OTCQB eligibility requirements.
| Reporting Standards |
Must meet one of the following conditions:
|
| Financial Statement | Audited annual financial statements and audited or unaudited interim financial reports |
Filing of Form 211 by Market Maker
If the issuer does not apply to OTCQX or OTCQB in conjunction with an initial review by OTC Markets for quotation eligibility in accordance with Rule 15c2-11, or if OTC Markets determines that it will not conduct the initial review of an issuer, the issuer will need to rely on a market maker to compile and submit to the Financial Industry Regulatory Authority (FINRA) the information required by Form 211. To comply with Rule 15c2‑11, an issuer must provide extensive issuer information to the market maker for review prior to the initiation of quotations. Once FINRA approves Form 211, the market maker that filed the form can begin quoting the security on OTC Link ATS.
Market makers have practical or policy‑driven requirements in connection with the submission of Form 211. The below sets forth illustrative market-maker considerations. An issuer should consult with the market maker submitting Form 211 regarding any applicable thresholds or additional conditions.
|
Requirements |
Threshold |
| Shareholders | ≥ 30 round-lot shareholders |
| Total Shares Outstanding | ≥ 1,000,000 shares |
| Free-trading Shares | ≥ 250,000 shares |
Review and Approval by the OTC Markets Group
After an application is submitted, the company will be contacted by the analyst who is processing the application. Additional items may be requested at this time. After the OTC Markets Group grants approval for quotation, the securities may commence trading on the applicable OTC markets tier.
[i] As of the close of business on each of the 30 consecutive calendar days immediately preceding the Company’s admission to OTCQX. Under the prescribed circumstances, the OTC Markets Group may consider an exemption to this requirement if there has been no prior public market for the Company’s securities in the U.S.
[ii] “Public Float” shall mean the total number of unrestricted shares not held directly or indirectly by (i) affiliates; (ii) family members of officers and directors of the Company; and (iii) family members of any person who is the beneficial owner of 10 percent or more of the Company’s outstanding shares.
