How Foreign Issuers Use Rule 12g3-2(b) for OTC Quotation

Foreign private issuers seeking U.S. market visibility without SEC registration often rely on Rule 12g3-2(b). This exemption allows non-U.S. companies listed on a qualified foreign exchange to trade on the OTCQX International or OTCQB Markets. It provides a cost-effective cross-border pathway for global companies to reach U.S. investors.

What is SEC Rule 12g3-2(b)?

Rule 12g3-2(b) provides an exemption from registration under Section 12(g) of the Exchange Act for certain foreign private issuers. It allows issuers to avoid duplicative SEC filings while ensuring U.S. investors have access to home-market disclosures.

• To rely on the exemption, an issuer must meet the following criteria:
• Primary listing on one or more foreign exchanges.
• Not required to file SEC reports under Section 13 or 15(d).
• Publication of English-language disclosures comparable to home-market requirements.

Automatic Qualification and Disclosure Obligations

Since the SEC modernization of Rule 12g3-2(b) in 2008, qualifying issuers automatically receive the exemption. They must maintain English-language investor information—such as financial statements, press releases, and shareholder reports—on their corporate website or public disclosure platform.

How Rule 12g3-2(b) Enables OTC Quotation

Foreign issuers can use Rule 12g3-2(b) to qualify for OTC quotation:

• Access to OTCQX International and OTCQB markets using home-country filings.
• Compliance with Rule 15c2-11 public-information standards through published disclosures.
• Eligibility for quotation without SEC registration or separate Form 211 review.

Coordination With Home-Country Filings

Foreign issuers must ensure U.S. disclosures mirror those filed abroad, using recognized public databases such as SEDAR+ (Canada), Companies House (U.K.), ASX, or HKEX. Issuers often engage an OTCQX Sponsor or U.S. securities counsel to verify accuracy and translation quality.

OTCQX International and OTCQB Requirements for Foreign Issuers

• Home Exchange Listing – Required (TSX, LSE, ASX, HKEX, etc.).
• Rule 12g3-2(b) Qualification – Mandatory for both OTCQX and OTCQB.
• Financial Statements – IFRS or home-country GAAP.
• Minimum Bid Price – $5.00 for OTCQX; $0.01 for OTCQB.
• Corporate Advisor – OTCQX Sponsor or U.S. counsel verification.

Advantages of Using Rule 12g3-2(b) for OTC Quotation

• No SEC registration or duplicative Exchange Act reporting.
• Faster access to the U.S. markets for established foreign issuers.
• Regulatory efficiency using existing home-market filings.
• Ability to trade in U.S. dollars through domestic broker-dealers.
• Improved liquidity and brand recognition in the U.S. market.

Common Compliance Issues

• Failure to maintain English-language disclosures online.
• Missing or delayed quarterly filings or material updates.
• Inactive OTCIQ profiles or outdated issuer information.
• Confusion between Rule 12g3-2(b) and Exchange Act registration.

Strategic Integration With MJDS and Rule 15c2-11

Canadian and other foreign issuers often pair Rule 12g3-2(b) with the Multijurisdictional Disclosure System (MJDS) to qualify for dual listing under OTCQX International or OTCQB. This allows reliance on SEDAR+ filings for Canadian issuers while meeting OTC Markets public-information requirements under Rule 15c2-11.

Conclusion

Rule 12g3-2(b) offers foreign private issuers a streamlined method to access U.S. investors via the OTC Markets. By maintaining accurate, English-language disclosures aligned with home-country filings, issuers can attract international capital and trading liquidity without SEC registration. Hamilton & Associates Law Group assists issuers and sponsors with Rule 12g3-2(b) compliance, OTCQX/OTCQB listings, and cross-border disclosure strategy.

If you are a foreign private issuer looking to go public on the OTC Markets or would like to speak to a Securities Attorney, Hamilton & Associates Law Group, P.A. is ready to help. Our Founder, Brenda Hamilton, is a nationally known and recognized securities attorney with over two decades of experience assisting issuers worldwide with going public on the Nasdaq, NYSE, and OTC Markets. Since 1998, Ms. Hamilton has been a leading voice in corporate and securities law, representing both domestic and international clients across diverse industries and jurisdictions. Whether you are taking your company public, raising capital, navigating regulatory challenges, or entering new markets, Brenda Hamilton and her team deliver the experience, strategic insight, and results-driven representation you need to succeed.

To speak with a Securities Attorney, please contact Brenda Hamilton at 200 E Palmetto Rd, Suite 103, Boca Raton, Florida, (561) 416-8956, or by email at [email protected].

Hamilton & Associates | Securities Attorneys
Brenda Hamilton, Securities Attorney
200 E Palmetto Rd, Suite 103
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.SecuritiesLawyer101.com