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Nasdaq Rule 5250(c)

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
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December 14, 2021

Nasdaq Rule Amendments 2020

In addition to the temporary rule changes and relief that Nasdaq has provided this year for companies affected by Covid-19 (see HERE and HERE), the exchange has enacted various rule amendments with varying degrees of impact and materiality.

In particular, over the last year Nasdaq has amended its delisting process for low-priced securities, updated its definition of a family member for the purpose of determining director independence and has clarified the term “closing price” for purposes of the 20% rule.  This blog discusses each of these amendments.

Delisting Process

In April 2020, the SEC approved Nasdaq rule changes to the delisting process for certain securities that fall below the minimum price for continued listing.  The rule change modifies the delisting process for securities with a bid price at or below $0.10 for ten consecutive trading days during any bid-price compliance period and for securities that have had one or more reverse stock splits with a cumulative ratio of

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September 1, 2020

Nasdaq Proposed Rule Changes To Its Discretionary Listing And Continued Listing Standards

On April 21, 2020, the SEC Chairman Jay Clayton and a group of senior SEC and PCAOB officials issued a joint statement warning about the risks of investing in emerging markets, especially China, including companies from those markets that are accessing the U.S. capital markets (see HERE).  Previously, in December 2018, Chair Clayton, SEC Chief Accountant Wes Bricker and PCAOB Chairman William D. Duhnke III issued a similar cautionary statement, also focusing on China (see HERE).

Following the public statements, in June 2020, Nasdaq issued new proposed rules which would make it more difficult for a company to list or continue to list based on the quality of its audit, which could have a direct effect on companies based in China.

Nasdaq Proposed Rule Changes

On June 2, 2020, the Nasdaq Stock Market filed a proposed rule change to amend IM-5101-1, the rule which allows Nasdaq to use its discretionary authority to deny listing or continued listing

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August 4, 2020

NASDAQ Provides Additional Relief To Shareholder Approval Requirements For Companies Affected By Covid-19

Nasdaq has provided additional relief to listed companies through temporary rule 5636T easing shareholder approval requirements for the issuance of shares in a capital raise.  The rule was effective May 4, 2020 and will continue through and including June 30, 2020.  The purpose of the rule change is to give listed companies affected by Covid-19 quicker access to much-needed capital.

Temporary Rule 5636T is limited to the transactions and shareholder approval requirements specifically stated in the rule.  If shareholder approval is required based on another rule, such as a change of control, or another Nasdaq rule is implicated, those other rules will need to be complied with prior to an issuance of securities.

The Nasdaq shareholder approval rules generally require companies to obtain approval from shareholders prior to issuing securities in connection with: (i) certain acquisitions of the stock or assets of another company (see HERE); (ii) equity-based compensation of officers, directors, employees or consultants (see HERE); (iii)

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May 19, 2020

NYSE, Nasdaq And OTC Markets Offer Relief For Listed Companies Due To COVID-19

In addition to the SEC, the various trading markets, including the Nasdaq, NYSE and OTC Markets are providing relief to trading companies that are facing unprecedented challenges as a result of the worldwide COVID-19 crisis.

NYSE

The NYSE has taken a more formal approach to relief for listed companies.  On March 20, 2020 and again on April 6, 2020 the NYSE filed a notice and immediate effectiveness of proposed rule changes to provide relief from the continued listing market cap requirements and certain shareholder approval requirements.

Recognizing the extremely high level of market volatility as a result of the COVID-19 crisis, the NYSE has temporarily suspended until June 30, 2020 its continued listing requirement that companies must maintain an average global market capitalization over a consecutive 30-trading-day period of at least $15 million.  Likewise, the NYSE is suspending the requirement that a listed company maintain a minimum trading price of $1.00 or more over a consecutive 30-trading-day period,

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April 21, 2020

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