OTC Business Solutions

Pink Sheet Shell Companies

Pink Sheet Shell Companies or “Pinks” are companies that are listed by the National Quotation Bureau (NQB). The NASD and the SEC do not require Pink Sheet companies to maintain current reporting status or undertake expensive annual audits. Also, there are no listing requirements for the Pink Sheets such as amount of capital; number of shareholders; market cap; share price; or amount of assets.

A Pink Sheet Company is regulated by state and federal securities laws, but is not subject to separate exchange regulations. Requirements regarding number of board members, whether such board members are independent, annual shareholder meetings, proxy notices etc. originate from state law and are not imposed by the National Quotation Bureau or the Securities Exchange Commission (SEC). For example, the American Stock Exchange (AMEX) and the New York Stock Exchange (NYSE) in and of themselves are Self Regulatory Organizations (SRO's) whereas the National Quotation Bureau is not. In summary, Pink Sheets are subject to fewer regulations and are governed by fewer regulatory bodies than NASDAQ Small Cap, NYSE and AMEX issues.

Pink Sheet Shell Companies exist in various forms; including reporting and non-reporting as well as trading and non-trading. Pink Sheet Companies are generally priced lower than Bulletin Board Companies due to the fact that they are subject to the limitations of the Penny Stock Rules promulgated under the Securities Exchange Act of 1934 including:

Broker-dealers who recommend these stocks must establish a special written suitability determination for the purchaser.

The purchaser's written agreement to the transaction must be received prior to the sale.

The purchaser must be provided with risk disclosure documents that identify certain risks associated with investing in penny stocks and describe the market for penny stocks as well as a purchaser's legal remedies.

Broker-dealers who recommend these stocks must obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction can be completed

The term “Pink Sheets” also refers to a centralized quotation service that collects and publishes market maker quotes for OTC securities in real time. Their web site http://www.PinkSheets.com provides price quotes, financial news and information about OTC companies to investors. Quotes are provided with a fifteen-minute delay.

The Pink Sheets is not a stock exchange or a regulated entity. Price quotations are provided by OTC market makers and company information is provided by the OTC companies.