company profile letters

As of December 1, 2008, the Financial Industry Regulation Authority (FINRA) has launched a new policy for corporate actions for securities quoted and OTCBB (securities listed and traded on the Over the Counter Bulletin Board and Pinksheets). Corporate actions include anything that would require notification to FINRA and the issuance of a new ticker symbol, such as a name change, reverse or forward stock split.

Before the initiation of new procedures, issuers to make changes in the companies were only required to submit a short letter to explain the action and provide the new CUSIP number. Moreover, were required to submit a copy of documents evidencing corporate action, including shareholders and board approvals and the amended articles of incorporation. In addition, transfer agents were and are yet to file transfer agent forms of verification of at least ten days before the effective date of the corporate action.

New Procedure and Exhibition

The new procedures require issuers to submit detailed letters, many business records and standardized forms. Moreover, issuers now must document appropriate procedures and testing companies and maintain books and records historical in its entirety. Although FINRA continues to refine its own internal review process, which will help streamline the documentation properly filed, the new procedures ultimately benefit the business management and deter legitimate attempt to take measures without proper authorization.

The new OTC Equity Issuer Notification Form requires detailed information about the company, specifically, your name and address, all contact information, details on their values as well as transfer agent complete information. In addition, all officials must be listed and copies of resolutions of the Council for the proper performance and minutes of meetings each appointing officer must be provided.

Name Change and Stock Splits

The new OTC Equity rename / Stock Split application form requires detailed information on institutional measures proposed and supported by documentation establishing that must be provided. In particular, the issuer must provide a letter offering a complete company history and details of the company, including an explanation for every corporate change than ever occurred. These corporate changes, including but not limited to, all amendments in the State of incorporation, change in control, and name changes and capital increases, from its start date to date.

To meet this requirement, the issuer must hold all documents have been filed with its state of incorporation and any successor State if there has been a change of address. Moreover, the issuer must
be prepared to provide supporting documents to evidence that historical changes (such as the Board and shareholder consents and minutes of meetings) has been implemented correctly.

Reverse Mergers & Documentation Required

In a transaction involving two entities, such as a reverse merger or acquisition, issuers should provide relevant documents concerning the proposed amendment, including the Board and shareholder consents and amendments filed with the state. Issuers also must provide a letter opinion of an attorney licensed in the State believe that the entity in question is the same legal entity as a public entity and the transaction is otherwise legal.

Simply stated, following a merger or change of domicile from Florida to Delaware, the issuer would have to give opinions of lawyers licensed in Florida and Delaware, opining that the merger entity is the same public company and the transaction was legal in both states.

In many cases, the documents provided by the issuer must be executed and notarized.

Another common application is that a letter of transfer agent confirm that they had sole custody and continuing the control of records of the shareholders of the company.

FINRA Notifications

All of the above documents and information should be provided by every issuer to participate in corporate action that requires notification of FINRA. Furthermore, upon review, and the option of FINRA, additional information may be requested. The additional request is common that the issuer to provide copies of all resignations of board members in advance.

Finally, if there is a change transfer agent, notifications of agents must be provided by the transfer agent, both past and present in order to re-establish an unbroken chain control over the company's shareholder records. This requirement also ensures that records of the company's shareholders have not been altered in any way.

The need for Corporate Counsel

Some issuers of receiving the emerging needs of FINRA to be cumbersome and unnecessarily costly to enforce. These issuers same also express their outrage at the additional time it now takes to have a revised submission by FINRA. However, as a whole, these new standards are appropriate and necessary. They merely require public agencies to maintain correct and complete books and records and to follow state law on companies Board and changes of shareholders and the authorization, the issuer practices should be adherence to ya.

Obviously, the above requirements FINRA that the continued involvement and advice of a securities attorney needed most.

Attorney Laura E. Anthony is the founding partner of Legal & Compliance, LLC, a national corporate, securities and civil litigation law firm. Ms. Anthony can be reached at LauraAnthonyPA@aol.com or through her websites http://www.LegalAndCompliance.com or http://www.Securities-Law-Blog.com

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