Los Angeles, CA (Law Firm Newswire) December 7, 2011 – The Securities and Exchange Commission released new rules in early November for companies that are going public via a reverse merger. The new rules come after the commission found that numerous companies did not have accurate information about their financial results and audits inside these companies were inadequate. Increased requirements to be listed on NASDAQ, NYSE, or NYSE Amex will now become standard for these types of companies.
“Domestic or international reverse merger companies looking to be on these exchanges will greatly benefit by getting legal counsel on these matters,” said Los Angeles business attorney Anthony Spotora. “We will make sure that the documents are thorough, compliant, and that all the right steps are taken before the listing occurs.”
Reverse mergers are sometimes sought by private companies to connect with U.S. investors and markets by merging with a public shell company that already exists. Before listing, a reverse merger company must trade in a U.S. over-the-counter market, another U.S. regulated exchange, or foreign exchange for a one-year “seasoning period”. All mandated reports must be filed with the SEC along with audited financial statements. A company must also maintain an obligatory minimum share price for a length of time and a minimum of 30 out of 60 trading days just before its application for listing is submitted.
“These steps can be quite complex and greatly affect the Exchange’s decision on listing your company,” said Spotora, who counsels businesses throughout California, the U.S., and abroad.
One of the few exemptions to the SEC requirements is that if the SEC has received four filed annual reports with audited financial information because the reverse merger happened long ago, then the company may be entitled to an exemption. Or, if the reverse merger company is listed as connected with a large, firm commitment of an underwritten public offering, the company can also apply for an exemption.
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Los Angeles, California 90067-2302
Call: (310) 556.9641