Effective September 17, 2021,?Nasdaq
?updated its Listing of Additional Shares?(LAS) Form
?and the process for the review of such forms.
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...