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Frequently Asked Questions about the Uniform Practice Code (UPC)

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General Questions


  1. What is a "transfer agent"?
  2. Are there any rules that apply to transfer agents?
  3. What is a "registrar"?
  4. What is an "ADR"?
  5. What does "TSO" stand for?
  6. What is a CUSIP number?
  7. What instances require a change in the CUSIP number?
  8. How can I obtain a copy of the Daily Lists?
  9. Who is the" shareholder of record"?
  10. Who is the beneficial owner?
  11. What is meant by "street name"?
  12. What is a "due bill"?
  13. What is a "due bill redemption date"?
  14. What information must be submitted to be in compliance with SEA Rule 10b-17?
  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.?
  16. How do I submit the form(s)?

 

Dividends


  1. What rules govern the reporting of dividends; when must a company report a declaration of a dividend or other distribution?
  2. What is an "ex-dividend date"?
  3. How does a company report a dividend?
  4. What is the "record date" for a dividend?
  5. What is the "payable date" for a dividend?
  6. What documentation is required for stock dividends which are 25% or greater than the security value?

 

Other Company Related Actions


  1. What is a "stock split"?
  2. What documents are required for a stock split?
  3. What documents are required for a Company to change its name?
  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?

 

Rule 6490


  1. Where can I find out more information regarding FINRA Rule 6490?
  2. Are all mergers and acquisitions required to be filed under FINRA Rule 6490?
  3. When must an issuer notify FINRA of a filing of dissolution with the state?
  4. What party is responsible for paying all fees?
  5. Which company-related actions require a fee?
  6. When does the 10 calendar day commence in connection with calculation the fee?
  7. If my company is affecting multiple SEA 10b-17 events, are multiple action fees required to be paid?
  8. What are the applicable fees under FINRA Rule 6490?
  9. How do I submit the applicable fee?

 

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)?
Currently, the forms and attachments can be submitted in the following manners:
Email: [email protected]
Fax: (202) 689-3533
Parcel: FINRA
Operations, 5th Floor
9509 Key West Avenue
Rockville, MD 20850

 

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
  • Completed  (PDF 509 KB)
  • 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 out more information regarding FINRA Rule 6490?
The full text of the rule can be found at www.finra.org/rulefilings/2009-089 or in Regulatory Notice 10-38 at www.finra.org/notices/10-38
2. Are all mergers and acquisitions required to be filed under FINRA Rule 6490?
No, only a merger or acquisition that has a direct impact on the publicly tradable security of a company (e.g., name change, distribution, cancellation of shares) would an issuer be required to notify FINRA.
3. When must an issuer notify FINRA of a filing of dissolution with the state?
If the dissolution involves no distribution or cancellation of shares, we require notification upon filing with the state. If there is a distribution or cancellation of shares, we require 10 days notification prior to the record date or cancellation date of shares as required by SEA Rule 10-17.
4. What party is responsible for paying all fees?
The requesting party is responsible for paying all fees.
5. Which company-related actions require a fee?
All SEA Rule 10b-17 notifications (any distribution of cash and/or stock), voluntary symbol request changes, and appeals pursuant to FINRA Rule 6490 require a fee.
6. When does the 10 calendar day commence in connection with calculation the fee?
The 10 day calendar commences when the issuer provides all applicable requirements of SEA Rule 10b-17 to FINRA Operations as provided in FINRA Rule 6490.
7. If my company is affecting multiple SEA 10b-17 events, are multiple action fees required to be paid?
Yes. For example, if a company conducting a reverse split and spin-off that are submitted at the same time with timely notification, the fee would be $400, $200 for each action. Also, each class of securities affected by a corporate action is subject to all applicable fees.
8. What are the applicable fees under FINRA Rule 6490?
SEA RULE 10B-17ACTION 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.
9. How do I submit the applicable fee?
Applicable fess are submitted through the new electronic system by credit card or ACH.