Compliance Alert: Year-End Filings

Essential Year-End Compliance Requirements

As 2024 draws to a close, OTC companies must prepare for critical year-end filing requirements that will determine their market tier eligibility and compliance status for 2025. The convergence of SEC, OTC Markets, and state regulatory deadlines creates a complex compliance landscape that requires careful planning and execution.

SEC Filing Requirements

All SEC reporting companies must file their Form 10-K annual reports within 60, 75, or 90 days of fiscal year-end, depending on their filer status. Large accelerated filers face the most stringent 60-day deadline, while smaller reporting companies have 90 days to complete their filings. The Form 10-K must include audited financial statements, management's discussion and analysis, and comprehensive disclosure of business operations, risk factors, and material agreements.

OTC Markets Disclosure Requirements

Companies trading on OTCQX and OTCQB must maintain current disclosure status through the OTC Disclosure & News Service. Annual reports must be filed within 90 days of fiscal year-end for OTCQB companies and within 60 days for OTCQX companies. These reports must include audited financial statements prepared in accordance with US GAAP or IFRS, along with management's discussion and analysis.

Pink Current companies must file annual reports within 120 days of fiscal year-end to maintain their current information status. While audited financials are not required for Pink Current companies, they must provide complete financial statements and comprehensive business disclosure to remain eligible for the Current Information tier.

State Blue Sky Compliance

Many states require annual filings and fee payments to maintain securities registration or notice filing status. These requirements vary significantly by state, with deadlines ranging from December 31st to March 31st of the following year. Companies must review their state filing obligations in each jurisdiction where their securities are offered or traded.

Audit Preparation and Timeline

Companies requiring audited financial statements should have completed their audit fieldwork by now to meet year-end filing deadlines. The audit process typically requires 4-6 weeks for smaller companies and 8-12 weeks for larger, more complex organizations. Delays in audit completion are the primary cause of late filings and compliance failures.

Management should ensure all supporting documentation is available to auditors, including bank confirmations, legal letters, and third-party confirmations. Any identified material weaknesses or significant deficiencies must be addressed promptly to avoid qualification of the audit opinion.

Consequences of Non-Compliance

Failure to meet year-end filing requirements can result in severe consequences, including automatic tier downgrades on OTC Markets, SEC enforcement action, and potential trading suspensions. OTCQX companies that fail to file timely annual reports are automatically downgraded to Pink Limited Information, while OTCQB companies face downgrade to Pink Current or Pink Limited Information depending on the nature of the delinquency.

Immediate Action Items

Companies should immediately review their filing calendar and confirm all deadlines with their legal and accounting teams. Any potential delays should be identified now, with contingency plans developed to address timing issues. Companies facing potential compliance challenges should consider engaging specialized counsel or consultants to ensure all requirements are met.