Shareholders
The number of shareholders in the shell you are purchasing may or may not be an issue. If you purchase a manufactured shell (a shell that has recently been approved for trading) most likely you will have less than 50 shareholders. This does not pose an immediate problem but if you have high aspirations of eventually getting your stock listed on NASDAQ or the American Stock Exchange you should be aware that you will need a minimum of 300 shareholders. If you have an actively traded stock on the OTCBB there is the possibility of building your shareholder base organically. You can find out how many shareholders you have from the following three sources:
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Transfer Agent
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NOBO List
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OBO List
The transfer agents list will have the list of all of the original stockholders along with the names of shareholders from new stock certificate issuances. The NOBO and OBO list can be obtained from Broadridge Corporate Issuer Services http://www.ics.adp.com . Broadridge is a division of ADP. Broadridge will send you a list of all of the NOBO shareholders. The NOBO list contains the names and addresses of shareholders who have their shares in “street name” (i.e. TD Ameritrade, E*Trade, Scott Trade, Fidelity, ect.). The OBO list is similar in nature except that the shareholders do not allow their names and addresses to be published. A Company has to submit information to Broadridge and they will mail out the information to the OBO shareholders.
Recently, I had to contact shareholders of a shell to distribute an Information Statement of the Company. The Company had 858 shareholders listed with the Transfer Agent. I was stunned to find out there were 347 shareholders on the NOBO list. There was only a handful on the OBO list.
It is always a good idea to think three steps ahead when you are purchasing your OTCBB shell. The decisions you make today could have consequences down the road.
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