November 2, 2018

Bill to Be Introduced to Allow Defining Companies on OTC Markets as Publicly Traded for ESOP Purposes

Executive Director

Under current regulations, companies traded over the counter are considered closely held for ESOP purposes. That means they have to comply with valuation and diversification requirements not applicable to public companies. Two OTC markets (OTCQX and OTCQB) are online trading platforms that have emerged since the regulations were issued. There are 68 companies on the exchanges, with about 200,000 employees in total. Senators Cory Booker (D-NJ) and Tom Tillis (R-NC) plan to introduce a bill to define ESOP companies on these markets as publicly traded. Proponents of the change argue these new markets provide enough active trading to set a true market price.