UPC FAQ - Corporate Actions

What rules govern the reporting of dividends; when must a company report a declaration of a dividend or other distribution?

Please refer to Section 10b-17 of the Securities Exchange Act of 1934, which effectively requires that any OTC Equity issuer must provide FINRA operations with 10 days notice prior to engaging in any 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 constitutes fraud under Section 10 of the Securities Exchange Act of 1934.

 

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 NASD Rule 11140 to see how an ex-dividend date is set.

 

How does a company report a dividend?

If a company has a dividend to report, whether it is stock or cash, it needs to fill out an OTC Equity Issuer Notification Form (PDF).The form may be sent via email to dividends@nasdaqomx.com or by fax to Corporate Data Operations at (203) 502-5480.

 

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.

 

What is the "payable date" for a dividend?

The date the dividend is sent to the record owner of the security.

 

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.

 

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.

 

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.

 

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.

 

What documents are required for a stock split?

The company needs to complete the OTC Equity Name Change / Stock Split Request form (PDF) as well as the OTC Equity Issuer Notification form (PDF). All notifications are required to be received by FINRA no later than 10 calendar days prior to the record date of the corporate action. Failure by an OTC Equity issuer to provide the requisite notice constitutes fraud under Section 10 of the Securities Exchange Act of 1934.

 

What documents are required for a Company to change its name?

The company needs to complete the  OTC Equity Name Change / Stock Split Request form (PDF) as well as the OTC Equity Issuer Notification form (PDF). All notifications are required to be received by FINRA no later than 10 calendar days prior to the record date of the corporate action. Failure by an OTC Equity issuer to provide the requisite notice constitutes fraud under Section 10 of the Securities Exchange Act of 1934.