What is the difference between a non-trading shell and a trading shell?

The major difference is that a non-trading shell, while legally a public corporation, is not listed or approved for trading. A trading shell's stock has already been approved for trading.

What does it take to get the stock of a non-trading shell trading?

That depends on your vision for your company and where you want your stock to be listed. If you want to stay a non-reporting company, your company can trade on the Pink Sheets (OTC). You'll need to file a document called a 15c2-11 with NASDAQ, which once accepted, will allow your company's stock to trade on the OTC .

If you want your company's stock to be listed on the Bulletin Board (OTCBB), you'll need to become a reporting company. The first step is to file a disclosure document and Form 10 or SB1 with the SEC. Once that's accepted, you can file a 15c2-11 with NASDAQ for a symbol and price for your stock.

What are the Pink Sheets?

Published daily, the Pink Sheets list publicly owned corporations whose securities are being traded by various market makers. Generally, these companies have not yet achieved the minimum criteria for listing in the NASD system. The Pink Sheet listings provide the names, phone numbers and subject quotes of each market maker for the various securities.

The Pink Sheet listing is usually initiated by the various market makers. There are no minimum business or reporting requirements to get listed in the Pink Sheets. They can provide an important link to re-establishing trading for an inactive shell corporation.

What's the value of becoming a reporting company and being traded on the Bulletin Board vs. trading on the Pink Sheets?

When you are a reporting company and file with SEC, information about your company is made available to the public. Having a means to get information about your business, helps the public evaluate whether or not they want to buy your stock. Because people can look-up your company's information on their own, rather than relying on a market maker to approach them, the market for your stock is broadened. Also, some people and businesses won't buy pink sheet stocks, for example, banks and insurance companies.

Conversely , what's the advantage of being a non-reporting company and being on the Pink Sheets?

As long as your company is not reporting company you're allowed to do a Reg D 504 or 505 Offering, which allows you to raise up to $1,000,000 in a twelve month period. Regulation D, Rule 504 of the Securities Act of 1933, establishes an exemption from Securities Act registration for the offer and sale of up to $1 million of securities in a 12 month period. If you are a reporting company, you can't do a 504 or 505 Offering.

What is a 15c2-11?

A 15c2-11 is a relatively simple, cost-efficient filing process that, upon approval, provides a corporation with a market to publicly trade its registered securities.

What is the application process for a 15c2-11?

The Company must first undergo due diligence by the broker/dealer, where particular attention is paid to the issuance of outstanding shares, to whom and at what price they were issued, and free trading versus restricted shares. The broker dealer then files a Form 2-11 with the NASD. The NASD returns comments within approximately one week. Once comments are sufficiently answered and the NASD declares the filing effective, the stock will trade on the OTC-Bulletin Board, subject to company becoming a reporting company under the Securities Echange Act of 1934. The entire process typically takes 60 to 120 days.

What is a market makers role in the initial trading of the company's stock?

The market maker stands ready to buy or sell a particular security. In the filing process, the broker dealer must justify the valuation of its bid/offer price to the NASD. Therefore, when approved, it is not uncommon for the market maker to post "no-bid, no-offer", unless there is an unsolicited customer order.

Which states can the stock trade in?

Manual exemption services, offered by both Standard and Poors and Moodys, currently "Blue Skies" Securities in 38 states. However, trades between dealers to domestic dealers as well as dealers to international dealers are exempt from the Blue Sky laws.

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