This is the first of two blogs about the non-SEC part of Going Public and securing a Ticker Symbol: The Financial Institution Regulatory Authority, or FINRA.
In order to secure a Ticker Symbol from FINRA, a form called Form 211 after the SEC Rule 15(c)-211 upon which the Form is based must be submitted to FINRA.
Much of the same information that appears in your SEC filing also goes into the Form 211. However, FINRA focuses on different information that the SEC. FINRA does not focus so much on the disclosure and the financial statements in your SEC filing. Instead, FINRA’s primary focus is on two basic issues: 1. Regulatory Compliance, and 2. Viable Trading Market
There are five primary regulatory compliance factors that are of primary concern to FINRA, as follows:
- How you offered and sold all of your stock and whether that process was done in full compliance with SEC statutes, rules and regulations.
- Whether or not your company is a shell company as defined by the SEC. Thus, in connection with filing of the Form 211 you will be required to submit:
- All documents related to the offering of your securities from the inception of your company, including copies of checks and subscription agreement
- Proof that your company is engaged and in the future continues to engage in a valid business activity and is not a shell company.
- A shareholder list generated by a Transfer Agent.
Viable Trading Market
FINRA also focuses on whether there will be a viable trading market for you stock. In this connection, FINRA wants to know three things:
- Whether you have enough free trading shares to create a viable market.
- Whether you have enough non-affiliated shareholders to create a viable market.
- Whether your share ownership is concentrated in a few individuals, even if you have enough shareholders to create a viable market.
Unlike the SEC, which through a disclosure regulation called Regulation S-K tells you with some specificity what you need to disclose, FINRA doesn’t tell you anything. But I will if you contact me an schedule a No Obligation Consultation, I’ll be glad to tell you more about the FINRA requirements.