Suspension for Failure to Timely File Periodic Reports
On May 10, 2005, the National Association of Securities Dealers, Inc. (“NASD”), through its subsidiary, the Nasdaq Stock Market, Inc. (“Nasdaq”), filed with the Securities and Exchange Commission a proposed rule change to limit the eligibility for quotation on the OTCBB of the securities of an issuer that is repeatedly late in filing required periodic reports. The proposed rule change can be viewed at SEC Filing and we encourage all of our clients to review the release.
The purpose of this Memorandum is to inform clients that the rule change would make those OTCBB issuers that are delinquent three times in a 24-month period, and those OTCBB issuers that are removed for failure to file two times in a 24-month period, ineligible for quotation on the OTCBB for a period of one year. Reports filed within the extension period permitted by SEC Rule 12b-25 will be considered timely filed. Once removed, the issuer cannot re-list on the OTCBB for a period of at least one year, and must file at least one Form 10-K and three Forms 10-Qs.
NASDAQ anticipates implementing the proposed rule in connection with filings for periods ending on or after June 1, 2005. Delinquent filings prior to that period will not count towards the new rule.
This new rule emphasizes the need to get filings done in a timely manner. As we have always done, The Lebrecht Group, APLC allocates time leading up to the filing deadline for all of our client filings. We remind clients that even after the financial statements are complete, there is often still several days of work to be done on the Management Discussion and Analysis and with the edgarization and final review process.
The information contained in this Memorandum is summary in nature, is for informational purposes only, and is not to be considered or relied upon as legal advice. Please contact our office if you have any questions.
