Compliance for a public biotech company listed on the OTC Markets involves several regulatory and financial requirements to ensure adherence to both federal and state laws, as well as the rules and regulations established by the OTC Markets Group. Here are the key areas of compliance:

1. Financial Reporting and Disclosure

• SEC Filings: The company must comply with the Securities and Exchange Commission (SEC) rules, including filing quarterly and annual reports (10-Q and 10-K). This includes providing financial statements, management discussions, and disclosures about risks and operations.
• OTC Markets Disclosure Guidelines: Depending on the tier the company is listed under (OTCQX, OTCQB, or Pink Sheets), there are varying levels of required disclosures, such as audited financials, shareholder reports, and updates on corporate governance practices.

2. Corporate Governance

• Board Structure: Companies must have an appropriate board of directors and internal control mechanisms.
• Audit Committees and Independent Directors: Companies are often required to have an audit committee and ensure some degree of board independence for corporate governance.

3. Insider Trading and Reporting

• Insider Trading Compliance: The company must adhere to insider trading rules set forth by the SEC. This includes monitoring and reporting trades by officers, directors, and large shareholders (Section 16 Filings).
• Form 4 Filings: Directors, officers, and significant shareholders must file Form 4 to disclose any changes in their ownership.

4. Sarbanes-Oxley Act (SOX)

• For companies listed on the OTC Markets but also meeting certain size thresholds (e.g., larger companies), they may be subject to provisions of the Sarbanes-Oxley Act, which mandates enhanced internal controls, financial reporting, and audit requirements.

5. Regulation D and Crowdfunding (if applicable)

• If the company engages in private offerings or crowdfunding, it must comply with Regulation D or Regulation A+ for raising capital. This may include filing Form D with the SEC.

6. Biotech-Specific Regulations

• FDA Compliance: The biotech company must comply with the Food and Drug Administration (FDA) regulations regarding drug development, clinical trials, and marketing if applicable.
• Clinical Trials and Patents: Disclosure of clinical trial results, intellectual property, patents, and licensing agreements is crucial for a biotech company.
• Lab and Research Compliance: Ensuring that laboratory practices meet all federal and state health and safety regulations is critical, including compliance with Good Laboratory Practices (GLP).

7. Anti-Money Laundering (AML)

• Companies listed on the OTC Markets must also have Anti-Money Laundering (AML) procedures in place to prevent illegal activities.

8. Public Communication and Investor Relations

• Press Releases and Investor Communication: Regular updates and press releases about significant developments, clinical trial outcomes, or financial performance must be shared with the public and investors in a timely manner.

9. State Compliance

• In addition to federal regulations, companies must comply with state-level regulations where they operate, including state securities laws (often referred to as "blue sky laws").

10. Shareholder Rights

• Companies must comply with shareholder rights, including voting rights, proxies, and annual meeting disclosures.

For a biotech company on the OTC Markets, the level of regulatory compliance required may vary depending on whether they are on the OTCQX, OTCQB, or Pink Sheets, with OTCQX generally having the highest reporting and governance standards.