Update On Nasdaq And NYSE Direct Listings
The rules related to direct listings continue to evolve as this method of going public continues to gain in popularity. The last time I wrote about direct listings was in September 2020, shortly after the SEC approved, then stayed its approval, of the NYSE’s direct listing rules that allow companies to sell newly issued primary shares on its own behalf into the opening trade in a direct listing process (see HERE). Since that time, both the NYSE and Nasdaq proposed rules to allow for a direct listing with a capital raise have been approved by the SEC.
The Nasdaq Stock Market has three tiers of listed companies: (1) The Nasdaq Global Select Market, (2) The Nasdaq Global Market, and (3) The Nasdaq Capital Market. Each tier has increasingly higher listing standards, with the Nasdaq Global Select Market having the highest initial listing standards and the Nasdaq Capital Markets being the entry-level tier for most micro- and small-cap issuers.
SEC Adopts The Use Of Universal Proxy Cards
On November 17, 2021, the SEC adopted final rules requiring parties in a contested election to use universal proxy cards that include all director nominees presented for election at a shareholder meeting. The original rules were proposed on October 16, 2016 (see HERE) with no activity until April, 2021, when the SEC re-opened a comment period (see HERE). The rule adoption comes with a flurry of rule amendments, proposals and guidance related to the proxy process, some of which reverses recent rules on the same subject.
The final rules will require dissident shareholders and registrants to provide shareholders with a proxy card that includes the names of all registrant and dissident nominees. The rules will apply to all non-exempt solicitations for contested elections other than those involving registered investment companies and business development companies. The rules will require registrants and dissidents to provide each other with notice of the names of their nominees, establish a filing deadline and
Nasdaq Updated LAS Form
Effective September 17, 2021, Nasdaq updated its Listing of Additional Shares (LAS) Form and the process for the review of such forms.
Background
Nasdaq Rule 5250 sets forth certain obligations for companies listed on Nasdaq including related to requirements to provide certain information and notifications to Nasdaq, make public disclosures, file periodic reports with the SEC, and distribution of annual and interim reports. Rule 5250(e) specifies the triggering events that require a listed company to submit certain forms to Nasdaq.
Rule 5250(e) requires the submittal of specific forms related to the following triggering events:
- Change in Number of Shares Outstanding – Each listed company must file a form with Nasdaq no later than 10 days after the occurrence of any aggregate increase or decrease of any class of securities listed on Nasdaq that exceeds 5% of the amount of securities outstanding of that class.
- Listing of Additional Shares – As further detailed below, a listed company must give
SEC Updates Filing Fees And Payment Methods
During the busiest capital markets boom most practitioners, including myself, have ever experienced, on October 13, 2021, in a whopping 432-page release, the SEC amended and modernized the filing fee payment methods and disclosure requirements. The amendments revise most fee-bearing forms, including Securities Act registration statements, schedules, and related rules to require companies and funds to include all required information for filing fee calculation in a structured format. The amendments also add new payment methods including ACH and debit and credit card options while eliminating the antiquated paper checks and money orders as a payment option.
The amendments are generally effective January 31, 2022. The changes in payment type options will be effective May 31, 2022. Pursuant to the transition provision, large-accelerated filers will become subject to the structuring requirements for filings they submit on or after 30 months after the January 31, 2022, effective date. Accelerated filers, certain investment companies that file registration statements on Forms N-2 and N-14,
