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 Nasdaq 15 calendar days advance notice before issuing additional securities in specified circumstances.
- Record Keeping Change – Each listed company must give Nasdaq notice of (a) a change in its name, par value or title of its security, trading symbol or similar change within 10 days following the change; (b) promptly following a change in the general character or nature of its business or any change in the address of its principal executive offices; and (c) at least 10 calendar days advance notice of certain corporate actions relating to non-convertible bonds listed on the Nasdaq Bond Exchange, including redemptions (full or partial calls), tender offers, changes in par value, and changes in identifier (e.g., CUSIP number or symbol).
- Substitution Listing – Each listed company must give Nasdaq 15 calendar days advance notice of a substitution listing event (other than a re-incorporation or a change in place of domicile). For a reincorporation or change in domicile, a company must notify Nasdaq as soon as practicable after such event.
- Transfer Agent, Registrar, ADR Bank Changes – Each listed company shall notify Nasdaq promptly following a change in transfer agent, registrar or ADR bank.
- Dividend or Stock Distribution – Each listed company shall notify Nasdaq, no later than 10 calendar days prior to the record date of any dividend or stock distribution.
I’ve included a full chart of all Nasdaq notification form requirements at the end of this blog.
Listing of Additional Shares (LAS)
All listed companies, other than foreign companies that only list an ADR or ADS, must give Nasdaq 15 calendar days advance notice before issuing additional securities in specified circumstances. In particular, a LAS form must be filed when a listed company:
- Establishes or materially amends a stock option plan, purchase plan or other equity compensation arrangement pursuant to which stock may be acquired by officers, directors, employees, or consultants without shareholder approval. However, Nasdaq recognizes that when a grant is given as a material inducement to employment, it may not be practical to provide the 15 days advance notice. Accordingly in such a case it is sufficient to notify Nasdaq about the grant no later than the earlier of: (x) five calendar days after entering into the agreement to issue the securities; or (y) the date of the public announcement of the award required. For more on the issuance of equity based compensation, see HERE
- Issues securities that may potentially result in a change of control of the Company (see HERE).
- Issues any common stock or security convertible into common stock in connection with the acquisition of the stock or assets of another company, if any officer or director or Substantial Shareholder of the Company has a 5% or greater interest (or if such persons collectively have a 10% or greater interest) in the Company to be acquired or in the consideration to be paid (see HERE).
- Issuing any common stock, or any security convertible into common stock in a transaction that may result in the potential issuance of common stock (or securities convertible into common stock) greater than 10% of either the total shares outstanding or the voting power outstanding on a pre-transaction basis (including through a rights offering or adoption of a poison pill).
Rule 5250(e) warns that Nasdaq reviews these forms to determine compliance with applicable Nasdaq rules, including the shareholder approval requirements. As such, if a Company fails to file timely the form required by this paragraph, Nasdaq may issue either a public reprimand letter or a delisting determination.
Previously an incomplete LAS form could be submitted to Nasdaq starting a review process. However, listed companies often believed that submittal of an incomplete form satisfied the notice requirement and would not provide updated information until well past the 15-day limit. In order to facilitate the intent of the Rule, effective September 17, 2021, Nasdaq updated the LAS form. The new notification form will require basic information about the transaction and cannot be submitted unless this information is included. Once submitted, the form cannot be amended or changed. If the terms of a transaction change after submittal of the form, the listed company must notify Nasdaq either by calling the listing qualifications staff or via email.
Upon submission of the new form, Nasdaq will promptly notify the company that the obligation to notify Nasdaq is completed. In many cases, this will happen the next day. Although the new form will satisfy the notification requirement, Nasdaq can continue to review the transaction and require additional information from the listed company.
The form is submitted through the Nasdaq listing center and does not require any supporting documentation. Rather, the form is designed to illicit the necessary information for Nasdaq to determine compliance with its rules.
Nasdaq Notification Requirements
The following is a chart of required Nasdaq notifications, form type and due dates.
|Company Action||Notification Form||Due Date|
|Apply to transfer between Nasdaq Market Tiers||Listing Application Market Transfer||Upon company request|
|Cash Dividends and Other Cash Distributions
Forward Stock Splits, Stock Dividends and Rights Offerings
|Dividend/Distribution/Interest Payment Form||As soon as possible after declaration, and, in any event, no later than simultaneously with the public disclosure and no later than 10 calendar days prior to record date|
|Change in Company Name
Change in Security Title or Par Value
|Company Event Notification||No later than 10 calendar days after the change|
|Change in State of Incorporation or Place of Organization
Change Requiring Updated Corporate Governance Certification or Listing Agreement
|Company Event Notification||As soon as practicable after change|
|Change in Trading Symbol||Company Event Notification||No later than two business days prior to desired change|
|Change in Transfer Agent or Registrar
Noncompliance with Corporate Governance Rules
|Email notification to email@example.com||At time of occurrence|
|Check Payments||Check Payment Form||At time of occurrence|
|Formation of a Holding Company that Replaces a Listed Company or Listing a New Class of Securities in Substitution for a Previously Listed Class of Securities
Reverse Stock Split
|Company Event Notification||No later than 15 calendar days prior to effective date
|Hearing Request||Hearing Request Form||No later than 7 calendar days following Staff Determination|
|Increase or Decrease of 5% or More in the Number of Shares Outstanding||Change in Shares Outstanding||No later than 10 calendar days after occurrence|
|Investment Management Entity and Portfolio Company Certification||Certification Form||No later than December 31 of current year|
|Listing of Additional Shares||Listing of Additional Shares||No later than 15 calendar days prior to the share issuance|
|Listing a New Class of Securities||Listing Application Seeking to List a New Class of Securities||No later than 30 calendar days prior to the anticipated first trade date|
|Mergers||Email notification to firstname.lastname@example.org||Prior to declaring the shareholder meeting date|
|Redemptions/Extensions of Derivative Securities||Email notification to email@example.com||Prior to declaring the shareholder meeting date|
|Request Rule Interpretation||Rule Interpretation Request||Upon company request|
|Tender Offers||Email notification to firstname.lastname@example.org||As soon as practicable|
Securities attorney Laura Anthony and her experienced legal team provide ongoing corporate counsel to small and mid-size private companies, OTC and exchange traded public companies as well as private companies going public on the Nasdaq, NYSE American or over-the-counter market, such as the OTCQB and OTCQX. For more than two decades Anthony L.G., PLLC has served clients providing fast, personalized, cutting-edge legal service. The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker-dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions, securities token offerings and initial coin offerings, Regulation A/A+ offerings, as well as registration statements on Forms S-1, S-3, S-8 and merger registrations on Form S-4; compliance with the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers; applications to and compliance with the corporate governance requirements of securities exchanges including Nasdaq and NYSE American; general corporate; and general contract and business transactions. Ms. Anthony and her firm represent both target and acquiring companies in merger and acquisition transactions, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. The ALG legal team assists Pubcos in complying with the requirements of federal and state securities laws and SROs such as FINRA for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the small-cap and middle market’s top source for industry news, and the producer and host of LawCast.com, Corporate Finance in Focus. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.
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