The U.S. Securities and Exchange Commission defines a penny stock as one trading for less than $5 per share. In more specific terms, this refers to securities that are initially offered at this low price. To list a company in the penny stock market, the business must first choose which over-the-counter service to approach. Eligibility requirements vary by service. The company must then engage the services of a market maker.

Where to List

The over-the-counter bulletin board, known commonly as the OTCBB, refers to an electronic quotation service operated by the Financial Industry Regulatory Authority, or FINRA. To list a company with this service, FINRA requires compliance with SEC regulations for penny stocks. An alternative service, the OTC Link, is owned and operated by OTC Markets Group Inc. Collectively, securities trading in the penny stock market are said to be listed on the "pink sheets."

Market Makers

Regardless of what direction you choose to go in listing a small business in the penny stock market, one commonality applies: To list a company's stock in the OTC Markets, a broker-dealer known as a market maker must sponsor the security, as only market makers can list companies in the penny stock market. The business's owners cannot. The market maker must file Form 211 with the OTC service. Not all brokers will sponsor penny stocks. The OTC services offer contact information for the few that do.

Form 211

To complete Form 211, the market maker will need basic identifying information. This includes the company name, address, location of incorporation and par value of the security. Documents that accompany Form 211 for companies that must report to the SEC include either a recent prospectus or brochure of the initial offering and a copy of the most recent annual report. For nonreporting companies, a description of the business, its products or services and names of company officers are provided on the form.

OTCBB Requirements

According to FINRA, the OTCBB does not maintain specific requirements for a company to be listed with the service, such as minimum bid prices and financial requirements. The agency does, however, have eligibility requirements. These include having at least one market maker sponsor the stock, filing of Form 211 and registering with the SEC.

OTC Market

Not all penny stocks listed on the pink sheets are required to provide information to the SEC. Therefore, it's likely that your company's stock is not subject to the same federal regulations of stock trading that govern stocks on the big exchanges. For example, the OTC Pink follows federal guidelines in requiring companies to put forth financial information when first offering securities to the public. However, the OTC Market service does not require the information to be kept current.

Promoting Penny Stocks

Educated investors might not trust paid promotions of penny stocks, as some companies hire individuals to promote penny stocks of questionable value. If your company runs an advertising campaign to attract investors, potential investors may require transparency in the financial records. Under Federal Trade Commission guidelines, an individual or company being paid to promote a stock should disclose this information as part of the promotion.