OTC compliance and Nasdaq uplisting
Reporting discipline for OTC-quoted companies and a coordinated path to a Nasdaq listing.
Overview
Companies whose shares trade publicly must follow federal securities laws and the rules of their market. Many smaller companies trade on the over-the-counter (OTC) markets run by OTC Markets Group. Some later apply to move up, or ‘uplist’, to a national exchange such as the Nasdaq Capital Market.
Each step brings more rules. SEC-reporting companies file annual, quarterly and current reports. Exchanges add requirements for share price, public float, shareholders, independent directors and audit committees. Nasdaq tightened several of these standards in 2025 and 2026.
This page explains the legal framework for companies and their management. It is general information about legal services for issuers. It is not investment advice, and it is not a recommendation to buy or sell any security.
What the rules require
- OTC tiers: OTC Markets Group runs OTCQX (highest standards), OTCQB (the venture market), and, since July 2025, OTCID, which replaced Pink Current as the basic tier for companies that provide current information. Companies that do not qualify may fall to Pink Limited or a restricted tier where quotes are not publicly shown.
- OTCQB entry (Rules v6.1, as of September 2026): generally a $0.05 minimum bid price for 30 consecutive days before admission (then $0.01 ongoing), at least 10% public float, at least 50 beneficial holders each owning 100 or more shares, audited financials from a PCAOB-registered firm, current reporting, and an annual management certification.
- SEC reports: reporting companies file a Form 10-K each year, Form 10-Q for each of the first three quarters, and Form 8-K generally within four business days of major events. Deadlines depend on filer size (for example, 90 days after year-end for a smaller company’s 10-K and 45 days after quarter-end for its 10-Q).
- Rule 15c2-11: since the amended rule’s September 2021 compliance date, broker-dealers generally may not publish quotes for an OTC security unless current information about the issuer is publicly available. Companies that stop filing can lose public quotes.
- Nasdaq Capital Market listing: a company must meet one of three standards. Equity standard: $5 million stockholders’ equity and 2 years of operating history. Market value standard: $50 million market value of listed securities and $4 million equity. Net income standard: $750,000 net income from continuing operations (latest year or 2 of the last 3) and $4 million equity. All three require $15 million market value of unrestricted publicly held shares, 1 million unrestricted publicly held shares, 300 round-lot holders, 3 market makers, and a $4 bid price (lower closing-price alternatives exist in some cases).
- IPO proceeds rule: a company listing with an initial public offering must meet the public float value requirement using the offering proceeds alone. Since mid-2026, companies principally operating in China generally must raise at least $25 million in an IPO to list on Nasdaq.
- Governance: Nasdaq generally requires a majority-independent board, an audit committee of at least three independent directors (one financially sophisticated), an independent compensation committee, independent director oversight of nominations, and a code of conduct.
- Insider rules: officers, directors and 10% holders file Section 16 reports (Form 4 generally within two business days of a trade) and may owe short-swing profits. Regulation FD bars selective disclosure of material nonpublic information to analysts or investors. Sarbanes-Oxley requires CEO/CFO certifications and management’s report on internal control over financial reporting.
How we help
OTC reporting compliance
- Calendar for 10-K, 10-Q and 8-K deadlines
- Monthly close and audit document exchange with the company’s PCAOB auditor through the firm’s audit-compliance portal
- Board minutes and corporate records
Nasdaq uplisting readiness
- Listing-path analysis (OTC uplisting or SPAC merger) and gap analysis against Nasdaq Capital Market standards
- Independent board and audit committee buildout
- Reverse split planning, including Nasdaq notice and timing rules
Deal-team coordination
- Working with securities counsel, underwriters, auditors and the transfer agent
- Responses to Nasdaq Listing Qualifications staff comments and tracking open items to the listing date
- Bilingual communication with management and overseas shareholders
More ways we help
- Preparing uplisting gap assessments and closing checklists for Nasdaq or OTCQB applications
- Drafting board and committee charters, insider trading policies, clawback policies and disclosure policies
- Preparing and reviewing Forms 10-K, 10-Q, 8-K, and Section 16 filings for officers and directors
- Coordinating with auditors, transfer agents, and FINRA on reverse splits and other corporate actions
Registration statements and securities-law opinions are prepared with the company’s designated securities counsel.
How the process works
Gap assessment
Compare the company’s financials, share structure, holders and governance to the target market’s rules. Identify what must change and in what order.
Timing: 2-4 weeks
Audit and SEC reporting
Engage a PCAOB-registered audit firm and bring SEC filings current. Register the class of shares under the Exchange Act if not already registered.
Form: Form 10-K, 10-Q, 8-K; Form 8-A or Form 10Timing: Often 2-6 months
Governance build-out
Add independent directors, form audit and compensation committees, and adopt committee charters, a code of conduct, an insider trading policy and a clawback policy.
Form: Board resolutions and chartersTiming: 1-3 months
Capital structure and share price
If needed, raise capital to meet equity and float tests, and approve a reverse stock split to reach the bid price. OTC-traded companies generally process splits through FINRA’s corporate action process.
Form: Shareholder consent or proxy; charter amendment; FINRA corporate action noticeTiming: 1-3 months
Nasdaq application and review
Submit the listing application and respond to Nasdaq staff questions about the company, its officers, directors and advisors. Nasdaq may deny listing on discretionary grounds even if numeric tests are met.
Form: Nasdaq listing applicationTiming: Several weeks or more
Ongoing compliance
After listing, keep filing on time, hold annual meetings, and monitor bid price, equity and board composition to avoid deficiency notices.
Timing: Continuous
Documents to gather
- Audited financial statements and auditor engagement letter (PCAOB-registered firm)
- Articles or certificate of incorporation, bylaws, and all amendments
- Transfer agent shareholder list and share count reports
- Capitalization table, including options, warrants and convertible notes
- Recent SEC filings and any SEC or FINRA correspondence
- Director and officer questionnaires and biographies
- Board and committee minutes and charters
- Material contracts, debt agreements and related-party transactions
- Insider trading, disclosure, and clawback policies
Common problems to avoid
- Letting SEC reports go late, which can cost OTC tier status and public quotes under Rule 15c2-11.
- Relying on a reverse split alone to reach the bid price, without enough equity or public float; Nasdaq’s 2025 rules also limit relief for companies that recently did reverse splits.
- Counting restricted or affiliate-held shares toward public float, which Nasdaq excludes.
- Sharing earnings news or deal details privately with a few investors or on social media before public release, which can violate Regulation FD.
- Missing Section 16 filing deadlines for officers and directors after stock trades or grants.
- Waiting too long to recruit independent directors and a financially sophisticated audit committee member.
What has changed lately
The SEC approved a Nasdaq change raising the required market value of unrestricted publicly held shares under the Capital Market net income standard to $15 million, effective January 2026. Nasdaq’s guide now lists $15 million under all three Capital Market standards.
On May 14, 2026, the SEC approved Nasdaq Rule 5210(l), generally requiring companies principally operating in China to raise at least $25 million in an IPO (or meet a $25 million public float value in other listing paths).
In May 2026 the SEC proposed letting public companies file a semiannual Form 10-S instead of quarterly 10-Qs. This is a proposal only; quarterly reporting still applies until a final rule is adopted.
Rules, fees and processing times change often. Ask us to confirm what applies to your case today.
Frequently asked questions
What is the difference between OTCQB and Nasdaq?
OTCQB is a quoted market run by OTC Markets Group, with lighter entry standards. Nasdaq is a national securities exchange with stricter financial, share price, holder and governance rules. Many companies use OTCQB while they build toward an exchange listing.
How long does uplisting to Nasdaq usually take?
It varies. Companies that are already current in SEC reporting, audited by a PCAOB-registered firm, and near the financial tests may move faster. Companies that need new audits, directors, capital or a reverse split often need many months.
Do we need a reverse split to uplist?
Only if the share price is below Nasdaq’s minimum bid price, which is generally $4 for the Capital Market. A reverse split does not change the company’s value, and Nasdaq also looks at equity, float and holder counts. Recent Nasdaq rules limit relief for companies that repeat reverse splits.
Our company operates mainly in China. Are there extra rules?
Yes. Since mid-2026, Nasdaq generally requires companies principally operating in China to raise at least $25 million in an IPO, and it limits some other listing paths. Auditor access by the PCAOB is also reviewed.
What happens if we file a 10-K or 10-Q late?
A company may file Form 12b-25 for a short extension. Continued late filings can lead to loss of OTCQB or Nasdaq status, loss of Form S-3 eligibility, and Rule 15c2-11 quote problems.
Can the CEO talk to investors privately about upcoming results?
Regulation FD generally bars sharing material nonpublic information with analysts or investors before it is made public. If it happens by accident, the company must promptly make the information public. A written disclosure policy helps avoid problems.
- Nasdaq Initial Listing Guide
- SEC – Publication or Submission of Quotations Without Specified Information (Rule 15c2-11 amendments)
- SEC – Proposed optional semiannual reporting (Press Release 2026-42)
- OTC Markets Group – OTCQB Rules
- OTC Markets Group – 3 Things to Know About the Launch of OTCID
- SEC – Form 8-K general instructions
- SEC – Regulation FD (17 CFR 243)
- SEC – Officers, directors and 10% shareholders (Section 16)
Information current as of September 2026. General information only, not legal advice.
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General information only, not legal advice. Contacting the firm does not create an attorney-client relationship. Prior results do not guarantee a similar outcome, and no particular result is promised. Responsible attorney: JJ Zhang, Esq., Tez Law P.C., 4141 S. Nogales St., Suite C102, West Covina, CA 91792.