I have recently taken the time to research many of the Canadian firms that have listed on the Frankfurt Stock Exchange and over 90% of the firms listed do not report properly to their local securities commission. As private companies, once they have over 30 shareholders in general they are required to begin filing documents with the local commission in BC, Albtera, Ontario, etc. To qualify for the Frankfurt Stock Exchange you require a minimum of 35, thus it is already triggered day one. Most of the shell companies incorporated in Canada are brand new incorporations. This means they hit the 35 shareholders in less than a year which is another triggering event.
Clearly the Frankfurt shell makers within Canada who spun out OTCBB companies in the past and probably still do have no grasp of their own local regulations and have realized to some degree since Frankfurt is in German they are safe – for now. Or at least while someone has money enough to buy the Frankfurt Listed Company they built with a Canadian company. However, the people who built the company in effect are the original source of the distribution of Shares, in reality when the new management issue shares within the Company without reporting the how and why and then sell those shares in Frankfurt they are effecting a distribution. Even if it’s the shareholders private shares, any transaction or series of transactions that leads to the sale of share’s is a distribution.
Provincial Regulatory bodies such as BC decided to enforce their jurisdiction and reporting requirements or they halt the shares within their jurisdiction. Clearly when they are incorporated within the provinces with Canadian ISIN numbers, that’s CA0000000 for example, they are within the Canadian jurisdiction no question.
Therefore, if you are going to do it right, report to your local commission or don’t buy a Canadian incorporated Frankfurt shell company. When you list a foreign private company, such as Canada or the US, you need to consider the local reporting rules or you may run the course of getting fined, banned, and or penalized or worse, incarcerated.
There’s another solution, one could list a European holding company that owns a Private Canadian firm, and the shares sold are in the European company. Such as Germany, the UK, Spain, etc. The benefit is that the Company selling the shares is within the jurisdiction of the EU and meets the requirements. It is important to note that the Companies Management and Directors in Canada also however designate the jurisdiction, not just the incorporation.
The best approach is to work with a firm like FSE Listings Inc that understands either how to build a Holding company and list that firm, or how to properly report within foreign jurisdictions. As one of the leading listing firms of Foreign Companies on the Frankfurt Stock Exchange FSELISTINGS.com prides on giving good and safe advice to ensure your firm is a success and doesn’t run into any negative situations that were avoidable by dealing with real professionals.
Contact info@fselistings.com and list on the Frankfurt Stock Exchange with the FSE Listings Professionals!
Author: Mark Bragg