International OTCQX (Over the Counter Quality and Excellence) aims to provide a cost-effective means for international companies that are already listed on a Qualified Foreign Stock Exchange to develop a presence in the U.S. securities markets.
By utilising the SEC Rule 12g3-2(b) exemption which came into force last month UK Main Market and AIM listed companies can now list in the US without having to register with the SEC, thereby avoiding the burdens of Sarbanes Oxley and US GAAP.
The secondary listing is on the International PremierQXMSM, the highest tier of the OTC market in New York which, despite current global economic conditions, has seen market capitalisation and the number of companies listed on OTCQX significantly grow. There are now 41 companies on the platform, seven of which are British and include Marks & Spencer, Imperial Tobacco Group, Tate & Lyle and British Gas.
To list on the OTCQX, companies must appoint a Principal American Liaison ('PAL') whose role is akin to that of a NOMAD on AIM. The PAL will ordinarily be an investment bank who will advise the company on the U.S. listing process and on an ongoing basis thereafter.
The listing process takes approximately two to three months and costs in the region of $20,000* with annual costs of approximately $31,000*, excluding professional advisors’ fees. * International OTCX Application Process, July 2008 The listing provides exposure to the US capital markets which could prove to be a much needed boost to liquidity in a company's shares whilst not having to duplicate a primary listing process.
One of OTCQX’s downfalls is that it is not possible to raise funds from US investors in the US by being listed on the platform, s.144A and Reg S remain the only routes to any such fundraisings. However, once exposed to US institutional investors, it is possible to bring them into a fund raising in London.
A OTCQX listing is not currently available to companies listed on Plus, however, Andy Kyzyk, Director of Business Development International at OTCQX, hopes that is only a matter of time before Plus becomes a Qualified Foreign Stock Exchange.