Frequently Asked Questions about the Uniform Practice Code (UPC)
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General Questions
- What is a "transfer agent"?
- Are there any rules that apply to transfer agents?
- What is a "registrar"?
- What is an "ADR"?
- What does "TSO" stand for?
- What is a CUSIP number?
- What instances require a change in the CUSIP number?
- How can I obtain a copy of the Daily Lists?
- Who is the" shareholder of record"?
- Who is the beneficial owner?
- What is meant by "street name"?
- What is a "due bill"?
- What is a "due bill redemption date"?
- What information must be submitted to be in compliance with SEA Rule 10b-17?
- Where can I find the required forms to submit for company-related actions such as stock splits, bankruptcies, liquidations, dividends, spin-offs, name changes, symbol change requests, etc.?
- How do I submit the form(s)?
- What if I don’t have a user ID?
Dividends
- What rules govern the reporting of dividends; when must a company report a declaration of a dividend or other distribution?
- What is an "ex-dividend date"?
- How does a company report a dividend?
- What is the "record date" for a dividend?
- What is the "payable date" for a dividend?
- What documentation is required for stock dividends which are 25% or greater than the security value?
Other Company Related Actions
- What is a "stock split"?
- What documents are required for a stock split?
- What documents are required for a Company to change its name?
- Are there any reasons when an OTC Voluntary Symbol Change will not be granted? Or are there any time restrictions when requesting an OTC Voluntary Symbol Change request?
Rule 6490
- Where can I find more information regarding FINRA Rule 6490?
- When must an issuer notify FINRA of a Company-Related Action under FINRA Rule 6490?
- When is an issuer considered to have provided notification of a Company-Related Action to FINRA?
- Which Company-Related Actions require a fee?
- What are the applicable fees under FINRA Rule 6490?
- What party is responsible for paying fees?
- If my company is effecting multiple Company-Related Actions, are multiple fees required to be paid?
- How will I know if my Company-Related Action was processed or found deficient?
- Is a FINRA Rule 6490 Company-Related Action deficiency determination a matter of public record?
- Will I be informed of a potential deficiency before a deficiency determination letter is issued?
- Can I appeal a deficiency determination?
- Who reviews deficiency appeals under FINRA Rule 6490?
- When can I expect my appeal to be reviewed by the subcommittee?
- Am I required to file an appeal to a FINRA Rule 6490(d) deficiency determination?
General Questions
1. What is a "transfer agent"?
A transfer agent maintains records of an issuer's stock and bond holders, records changes of ownership, issues or cancels certificates, and resolves problems arising from lost, destroyed, or stolen certificates.
2. Are there any rules that apply to transfer agents?
Yes. Transfer agents are governed by Section 17A of the Securities Exchange Act of 1934 and the rules thereunder.
3. What is a "registrar"?
A registrar is responsible for keeping track of the owners of bonds and the issuance of stocks. Working with the transfer agent, the registrar keeps current files of the owners of a bond issue and the stockholders in a corporation. The registrar ensures that no more than the authorized amount of stock is in circulation.
4. What is an "ADR"?
An ADR, or American Depositary Receipt, is a U.S. security that represents an ownership interest in a trust composed of a large number of shares of a foreign security. A U.S. bank creates an ADR based on evidence of ownership of a specified number of shares in the foreign security, while the underlying shares are held in a depositary in the issuing company's home country. U.S. investors may effectively buy shares in the foreign company in the form of an ADR. The certificate, transfer, and settlement practices for ADRs are identical to those for U.S. securities.
5. What does "TSO" stand for?
TSO can be an abbreviation for Total Shares Outstanding, meaning the number of shares of a company's stock issued and in the hands of shareholders. Total shares outstanding can usually be found listed on company balance sheets as "Capital Stock Issued and Outstanding."
6. What is a CUSIP number?
A CUSIP (Committee on Uniform Security Identification Procedures) number is a unique nine-character alpha/numeric code appearing on the face of each stock certificate that is assigned to a security by Standard & Poor's Corporation. The number is used to expedite clearance and settlement.
7. What instances require a change in the CUSIP number?
A CUSIP number is assigned to each issue and may need to be changed when there is a Corporate Action. If there is a question as to whether an issuer needs to request a new CUSIP number, the company should contact the CUSIP Service Bureau directly at (212) 438-6565.
8. How can I obtain a copy of the Daily Lists?
There are two Daily Lists available: the OTCBB Daily List and the Other-OTC/Portal Daily List. They are available each day on OTCBB.com.
9. Who is the" shareholder of record"?
The individual or entity that an issuer carries on its books as the registered holder (not necessarily the beneficial owner) of the issuer's securities.
10. Who is the beneficial owner?
A person who benefits from ownership of a security or mutual fund. Shares or title may be held by a bank or broker for safety and convenience, or in "street name" to expedite transactions, but the actual owner is the beneficial owner.
11. What is meant by "street name"?
A term given to securities held in the name of a broker on behalf of a customer. This arrangement allows shares to be transferred easily. If the stock were registered in the customer's name rather than the broker's name, physical certificates would need to be transferred.
12. What is a "due bill"?
A promissory note that is physically attached to a stock that is traded between the record date and payment date. The due bill confirms the rightful owner of the additional securities being issued in the distribution.
13. What is a "due bill redemption date"?
The date on which all outstanding due bills must be redeemed for the securities being distributed.
14. What information must be submitted to be in compliance with SEA Rule 10b-17?
SEA Rule 10b-17 prescribes information that must be included in the notice, including, but not limited to: the title of the security; date of declaration; record date; payment or distribution date; for cash distributions, the amount to be paid per share; for distribution of securities, generally the amount of the security outstanding immediately prior to and immediately following the dividend or distribution and the rate of the dividend or distribution; details of any condition that must be satisfied to enable the payment or distribution; and additional details relating to stock or reverse splits. Issuers should review the text of SEA Rule 10b-17 to fully understand their obligation, which may be amended from time to time.
15. Where can I find the required forms to submit for company-related actions such as stock splits, bankruptcies, liquidations, dividends, spin-offs, name changes, symbol change requests, etc.?
All forms required to be submitted by issuers and transfer agents can be found on our site.
16. How do I submit the form(s)?
To submit the Electronic Issuer/ADR Company Related Action Notification Form, log into the Corporate Actions Management system.
17. What if I don’t have a user ID?
To submit notice of a company-related action for an Issuer, you can create an account by going to https://gateway.finra.org, clicking the Create Account Here link, then select Create Individual Account, and following the set-up prompts. Please note, if you have an existing FINRA Gateway account that is associated with a firm or an organization, you will need to create a new Individual account to access the Electronic Issuer Company Related Action Notification Form.
If you need to submit notice of a company-related action for an ADR depositary bank, please see your organization’s Account Administrator for a new account.
Dividends
1. What rules govern the reporting of dividends; when must a company report a declaration of a dividend or other distribution?
Please refer to Rule 10b-17 (Untimely Announcements of Record Dates) of the Securities Exchange Act of 1934 ("SEA"), which generally requires an OTC Equity issuer to provide FINRA's Operations Department notice 10 days prior to the record date of the following corporate actions: (1) the issuance of a dividend or other distribution in cash or in kind; (2) a stock split or reverse split; or (3) a rights or other subscription offering. Failure by an OTC Equity issuer to provide the requisite notice may constitute a violation of Section 10 of the Securities Exchange Act of 1934.
2. What is an "ex-dividend date"?
The date on or after which a security begins trading without the dividend (cash or stock) included in the contract price. Please refer to FINRA Rule 11140 to see how an ex-dividend date is set. See Notice to Members 00-54, Ex-Dividend Dates (August 2000).
3. How does a company report a dividend?
As of March 14, 2011, issuers, ADR depositary banks and other parties that provide notice of company-related actions to FINRA under Rule 6490 must use a new electronic system to provide such notice to FINRA. As of this date, FINRA no longer accepts paper copies of the Issuer and ADR Company-Related Action Notification Forms. FINRA continues to accept paper copies of the Transfer Agent Verification Form, as it is not a part of the new electronic system. See Regulatory Notice 11-09 for more information.
4. What is the "record date" for a dividend?
The date on which a company's records are closed to determine which stockholders are to be sent dividends, proxies, rights, etc.
5. What is the "payable date" for a dividend?
The date the dividend is sent to the record owner of the security.
6. What documentation is required for stock dividends which are 25% or greater than the security value?
- Completed Issuer Company-Related Action Notification Form
- Documentation identified on the electronic system when completing the company-related action notification form, e.g.:File stamped articles of incorporation, executed and notarized copy of Board of Directors Resolution authorizing the dividend, or SEC filing equivalent, or notarized and executed offers certificate, or specific state law stating why it is not required.
Other Company Related Actions
1. What is a "stock split"?
The division of outstanding shares of a corporation into a larger number of shares (forward split) or a smaller number of shares (reverse split). For example: in a 3-for-1 forward split, a holder of 100 shares would receive 300 shares of the post-split security, In a 1-2 reverse split, a holder of 100 shares would receive 50 shares of the post-split security. In both examples, the proportionate equity in the company would remain the same.
2. What documents are required for a stock split?
The company needs to complete the Issuer Company-Related Action Notification Form and submit to FINRA no later than 10 calendar days prior to the record date of the corporate action. Submissions can be set via email or fax to (202) 689-3533. Failure by an OTC Equity issuer to provide the requisite notice may constitute fraud under Section 10 of the Securities Exchange Act of 1934.
3. What documents are required for a Company to change its name?
The company needs to complete the Issuer Company-Related Action Notification Form and submit to FINRA no later than 10 calendar days prior to the record date of the corporate action. Submissions can be set via email or fax to (202) 689-3533. Failure by an OTC Equity issuer to provide the requisite notice may constitute fraud under Section 10 of the Securities Exchange Act of 1934.
4. Are there any reasons when an OTC Voluntary Symbol Change will not be granted? Or are there any time restrictions when requesting an OTC Voluntary Symbol Change request?
Yes, FINRA will not process a voluntary symbol request if the issuer has either an announced corporate action or a symbol change within the past 60 days.
Rule 6490
1. Where can I find more information regarding FINRA Rule 6490?
The full text of FINRA Rule 6490 can be found at https://www.finra.org/rules-guidance/rulebooks/finra-rules/6490. For additional information about FINRA Rule 6490, please see the rule filing, available at https://www.finra.org/rules-guidance/rule-filings/sr-finra-2009-089, and Regulatory Notice 10-38, available at https://www.finra.org/rules-guidance/notices/10-38.
2. When must an issuer notify FINRA of a Company-Related Action under FINRA Rule 6490?
FINRA’s Operations Department reviews and processes documents related to announcements for Company-Related Actions, which includes (1) “SEA Rule 10b-17 Actions” and (2) “Other Company-Related Actions,” as described in Rule 6490, to facilitate the orderly trading and settlement of OTC securities. “SEA Rule 10b-17 Actions” include dividends or other distributions in cash or kind, stock splits or reverse stock splits, or rights or other subscription offerings, and other actions provided for in SEA Rule 10b-17. “Other Company-Related Actions” include, but are not limited to, any issuance or change to a symbol or name, mergers, acquisitions, dissolutions or other company control transactions, and bankruptcy or liquidations.
An issuer generally is required to notify FINRA of an SEA Rule 10b-17 Action no later than 10 days prior to the record date involved (please see SEA Rule 10b-17 for additional information). An issuer is required to notify FINRA of an Other Company-Related Action no later than 10 calendar days prior to the effective date of the Company-Related Action.
3. When is an issuer considered to have provided notification of a Company-Related Action to FINRA?
Notification is considered provided to FINRA when the issuer satisfies all applicable requirements of SEA Rule 10b-17, if applicable, and FINRA Rule 6490, including completion and submission to the Department, in the manner and form required, of a completed request to process the Company-Related Action together with such additional information or documentation necessary for the Department to review the request.
Fees
4. Which Company-Related Actions require a fee?
Requests to review SEA Rule 10b-17 Actions require a fee. Submissions regarding Other Company-Related Actions other than voluntary symbol request changes do not involve a fee. For additional information, please refer to Rule 6490(c).
5. What are the applicable fees under FINRA Rule 6490?
SEA RULE 10B-17 ACTION FEE Timely SEA Rule 10b-17 Notification $200 Late SEA Rule 10b-17 Notification Submitted at least 5 calendar days prior to Corporate Action Date $1,000 Late SEA Rule 10b-17 Notification Submitted at least 1 calendar day prior to Corporate Action Date $2,000 Late SEA Rule 10b-17 Notification Submitted on or after Corporate Action Date $5,000 OTHER COMPANY-RELATED ACTION FEE Voluntary Symbol Request Change $500 Initial Symbol Set Up No Charge Symbol Deletion No Charge APPEALS FEE Action Determination Appeal Fee $4,000 Please note that the fees above are not inclusive of any bank and/or wire fees. Such bank and/or wire fees are the responsibility of the requesting party and cannot be deducted from any amounts owed pursuant to FINRA Rule 6490. In addition, all fees pursuant to FINRA Rule 6490 must be paid in U.S. Dollars.
Note: The fee table is provided here for convenience only. Requesting parties should always refer to the fee table in FINRA Rule 6490, which may be amended from time to time, for the most current list of applicable fees.
6. What party is responsible for paying fees?
The requesting party is responsible for paying all fees.
7. If my company is effecting multiple Company-Related Actions, are multiple fees required to be paid?
Yes, if the type of Company-Related Action involves a fee. For example, if a company submits a request for the review of both a reverse split and a spin-off, the fee would be $400 total, i.e., $200 for each action (if timely notice is received). In addition, requests to review Company-Related Actions are subject to separate fees for each impacted class of securities. For example, if a company is conducting a reverse split of both its Class A common stock and its Class B common stock, the fee would be $400 total, i.e., $200 for each class.
Deficiency Determinations
8. How will I know if my Company-Related Action was processed or found deficient?
FINRA will provide a written notice to the requesting party setting forth the outcome of FINRA’s review. In addition, if FINRA determines that the request will not be processed pursuant to FINRA Rule 6490(d)(3), the written notice will state the specific factor(s) that caused the request to be deemed deficient.
9. Is a FINRA Rule 6490 Company-Related Action deficiency determination a matter of public record?
No. FINRA does not publicly announce deficiency determinations relating to a Company-Related Action.
10. Will I be informed of a potential deficiency before a deficiency determination letter is issued?
Yes. Department staff will inform a requesting party of a potential deficiency before a deficiency determination is issued. The requesting party may provide the Department staff with any additional documentation intended to address the potential deficiency basis.
11. Can I appeal a deficiency determination?
Yes. A requesting party may appeal a deficiency determination within seven calendar days after service of the notice of a deficiency determination by FINRA. The written request for an appeal must be accompanied by proof of payment of the non-refundable Action Determination Appeal Fee ($4,000) and must set forth with specificity any and all defenses to the deficiency determination.
An appeal will operate to stay the processing of the Company-Related Action (i.e., the requested Company-Related Action will not be processed during the period that the requesting party’s appeal is pending). A requesting party may submit any additional supporting written documentation up until the time the appeal is considered by the subcommittee (see question 12 below for more information about the subcommittee). The subcommittee will consider the appeal based solely on the written documents submitted by the requesting party and FINRA. The submission of new facts that address the concerns in the deficiency letter, however, will not serve as a basis to reverse the Department’s decision. If there are new facts that FINRA is requested to consider in reviewing the Company-Related Action request, the requesting party should submit that information to the Department as part of a new request.
Please see Rule 6490(e) (Request for an Appeal to Subcommittee of Uniform Practice Code Committee) for additional information on the appeal process.
12. Who reviews deficiency appeals under FINRA Rule 6490?
Appeals of a deficiency determination under FINRA Rule 6490 are reviewed by a three-member subcommittee comprised of current or former industry members of FINRA’s Uniform Practice Code Committee.
13. When can I expect my appeal to be reviewed by the subcommittee?
The subcommittee convenes once each calendar month to consider all appeals received during the prior month and renders a determination within three business days following the day the appeal is considered. The subcommittee’s determination constitutes final FINRA action.
14. Am I required to file an appeal to a FINRA Rule 6490(d) deficiency determination?
No. A requesting party is not required to appeal a deficiency finding. If a requesting party does not appeal a deficiency finding, the Department will not announce the requesting party’s Company Related Action.