1. Understanding Foreign Company Exemptions
With OTCQX International
Why Join OTCQX Marketplace?
OTCQX International allows publicly traded foreign companies to efficiently and economically
distribute disclosure to U.S. investors and increase trading in their securities through the U.S.
broker-dealers.
International companies may qualify for an exemption to burdensome U.S. securities regulations
under an exemption found in The Securities Exchange Act - Rule 12g3-2(b). Once exempt, the
international company need not file periodic reports under the Securities Exchange Act. Further
exemptions apply to the Sarbanes-Oxley Act and certain governance requirements of The
Nasdaq Stock Market and the New York Stock Exchange.
International companies are allowed these exemptions because the Securities Exchange
Commission understands these international companies are regulated under foreign jurisdictions.
The SEC considers it significant that OTCQX International is an “inter-dealer quotation system”
rather than a “national securities exchange” for U.S. regulatory purposes.
An issuer typically can establish an OTCQX International quotation in 12 weeks or less if they
already have an over-the-counter sponsored American Depository Receipt program (“ADR”).
To be quoted on OTCQX International, a foreign issuer must have a minimum US$ 2 million in
total assets at the end of its most recent annual or quarterly fiscal period and also must satisfy
one of the following minimums during its most recent fiscal year:
(1) US$ 2 million in revenues;
(2) US$ 1 million in net tangible assets;
(3) US$ 500,000 in net income; or
(4) US$ 5 million in global market capitalization.
Qualifying Foreign Stock Exchange Listing
A foreign issuer must have been listed on one of more than 60 Qualifying Foreign Stock
Exchange for at least the preceding 40 days to qualify for OTCQX International.
A Rule 12g3-2(b) exemption issuer must publish electronically certain information in English that
it makes public to shareholders under home country requirements. The issuer must also post this
information for the preceding 24 months within 90 days after their application was submitted to
OTCQX International.
Appointment of a “PAL”
OTCQX International Issuers must have a sponsor known as a Principal American Liaison
(“PAL”). William Cavalier has completed this process and is pre-qualified to act as a PAL for
OTCQX International issuers.
The PAL assists the issuer in the following manner:
 determines whether the issuer meets OTCQX International eligibility requirements
 assists the issuer in completing the application process
 the PAL provides a letter to OTC Markets Group confirming that the issuer is in
compliance with the requirements of Rule 12g3-2(b) and other applicable OTCQX
International requirements.
 On an ongoing basis, the PAL provides advice concerning compliance with Rule 12g3-
2(b) and the OTCQX rules.
William Cavalier - Attorney at Law
wsc@williamcavalier.com / 469-767-8643
2012 All Rights Reserved

2. Understanding Foreign Company Exemptions
With OTCQX International
 The PAL conducts an annual review to confirm that the issuer is in compliance with these
requirements and to provide a confirming letter to the OTC Markets Group.
DTC Eligible Security
OTCQX International requires securities must be eligible for deposit with the Depository Trust
Company (“DTC”) which acts as a clearinghouse for settling securities trades.
The shares of most foreign issuers trade in the United States via DTC-eligible American
Depository Receipts (“ADR”). ADRs are issued by a depositary bank.
Proprietary Priced Quotations
The issuer must have proprietary priced quotations of its securities published by a U.S. market
maker in OTC Link, which is an electronic inter-dealer quotation system operated by OTC
Markets Group that provides price quotations for securities issued by OTCQX issuers.
Inclusion in a Recognized Securities Manual
The issuer must provide disclosure on an ongoing basis in a securities manual published by
Standard and Poor’s or Mergent (formerly known as Moody’s). By providing disclosure in a
recognized securities manual, secondary trading is automatically permitted in up to 38 U.S.
states. Exemptions in other states usually can be obtained through an application process which
is not required for establishing or maintaining an OTCQX International quotation.
Satisfying the Rule 12g3-2(b) Exemption
In order to satisfy the Rule 12g3-2(b) exemption, the issuer must meet four requirements:
 It must be a “foreign private issuer,” which is defined as a non-governmental issuer that is
organized under the laws of a country other than the United States, unless: (1) U.S.
residents own more than 50 percent of its outstanding voting securities; and (2) either (a)
the majority of its executive officers or directors are U.S. citizens or residents or (b) more
than 50 percent of its assets are located in the United States or c) its business is
administered principally in the United States.
 The issuer is not a Securities Exchange Act registrant.
 The issuer maintains a listing of its securities on one or more non-U.S. exchanges that,
either singly or together, constitute the primary trading market for its securities.
Although there is no “bright-line” test for determining when information is material, information
generally is considered to be material to an investment decision if there is a substantial likelihood
that a reasonable investor would consider it important in deciding
whether to purchase or sell a security.
Rule 12g3-2(b) issuers still may be held liable for fraudulent statements contained in their Rule
12g3-2(b) disclosure under Section 10(b) of the Securities Exchange Act and Rule 10b-5
thereunder.
William Cavalier - Attorney at Law
wsc@williamcavalier.com / 469-767-8643
2012 All Rights Reserved

3. Understanding Foreign Company Exemptions
With OTCQX International
Maintaining an OTCQX International Quotation
Like other quotation platforms, OTCQX International requires issuers to satisfy various ongoing
quantitative and qualitative maintenance requirements.
An OTCQX International issuer must continue to satisfy the financial standards, proprietary priced
quotation and Qualifying Foreign Stock Exchange requirements
applicable to an initial quotation. It also must comply with home country securities laws, as well as
any applicable U.S. federal and state securities laws, including Rule 12g3-
2(b), and must post its Rule 12g3-2(b) information through the OTC Disclosure and News
Service.
The quoted issuer also must continue to retain the services of a PAL, and, on an annual basis, it
must provide a letter to the PAL confirming that it continues to satisfy the requirements of the
applicable OTCQX International tier, that it is in compliance with Rule 12g3-2(b) and that it has
posted its Rule 12g3-2(b) information through the OTC Disclosure and News Service. On an
annual basis, the PAL also must furnish a
compliance letter relating to the issuer to OTC Markets Group.
There is an annual fee of US$ 15,000 to maintain an OTCQX International quotation.
Other Common Topics of Interest For Foreign Issuers Considering US Quotation
Raising Capital in the United States
Rule 12g3-2(b) issuers often wish to raise capital in the United States, typically as a tranche in a
primarily non-U.S. offering. A Rule 12g3-2(b) issuer can privately raise capital in the United
States without triggering the transaction registration requirements of the Securities Act or the
ongoing reporting requirements of the Securities Exchange Act. In some cases, the U.S. tranche
is structured as an exempt Rule 144A offering, in which investors are limited to qualified
institutional buyers, which generally are institutional investors with US$ 100 million or more in
assets under management. The Rule 144A exemption requires the issuer to make available upon
request to investors and prospective purchasers specified reasonably current information about
the issuer. The information published under Rule 12g3-2(b) satisfies this requirement.
There are other U.S. private placement exemptions that can be used while still maintaining a Rule
12g3-2(b) exemption. In addition, a Rule 12g3-2(b) issuer always has the flexibility to conduct a
public offering in the United States, although that would trigger the registration and reporting
requirements of the Securities Act and the Securities
Exchange Act.
Terminating an OTCQX Quotation
An OTCQX International company may withdraw its securities from OTCQX quotation at any
time, upon 24 hours written notice to OTC Markets Group or downgrade to a
lower-tier quotation.
William Cavalier - Attorney at Law
wsc@williamcavalier.com / 469-767-8643
2012 All Rights Reserved

4. Understanding Foreign Company Exemptions
With OTCQX International
Exposure to U.S. Securities Fraud Claims
Although Rule 12g3-2(b) issuers are not subject to all of the liability provisions of the federal
securities laws because they are not Securities Exchange Act registrants, they are subject to
Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder,
which prohibit the use of manipulative and deceptive practices in securities transactions. Foreign
private issuers establishing a U.S. listing or quotation historically have been concerned about
potential exposure to fraud claims brought under the U.S. federal securities laws by both U.S. and
foreign plaintiffs, irrespective of the location of the transactions in the securities.
In an important 2010 U.S. Supreme Court case that overturned almost 40 years of judicial
interpretations, the court held that Section 10(b) applied only to transactions in securities listed on
a domestic stock exchange or domestic transactions in other securities. The effect of this case
was to scale back the extraterritorial application of the anti-fraud provisions of the federal
securities laws.
In early 2012, the Second Circuit Court of Appeals, an important U.S. court for federal securities
law jurisprudence, addressed what constitutes a domestic transaction in securities not listed on a
U.S. exchange. Consistent with the earlier Supreme Court case, the Court of Appeals concluded
that a domestic transaction requires either that the parties become irrevocably bound to complete
the transaction in the United States or that title to the securities at issue be transferred in the
United States.
…
William Cavalier - Services
William Cavalier has been approved by the OTC Markets Group to act as an Attorney
Designated Advisor for Disclosure/Principal American Liaison (DAD/PAL) for OTCQX
companies. Mr. Cavalier is also a licensed investment banker with Independent Investment
Bankers in Austin, Texas, As an investment banker to middle market and public
companies Mr. Cavalier raises capital for natural resource projects through private joint
ventures and Rule 144A offerings.
Disclaimer
This information has been prepared by EJ Grace LLC for general informational purposes
only. It is by no means complete and does not constitute legal advice. This general
information is presented without any representation or warranty as to its accuracy,
completeness or timeliness.
William Cavalier - Attorney at Law
wsc@williamcavalier.com / 469-767-8643
2012 All Rights Reserved