• Issuing 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 issuer has a five percent or greater interest (or if such persons collectively have a 10% or greater interest), directly or indirectly, in the company or assets to be acquired or in the consideration to be paid.

• Issuing securities that may potentially result in a change of control of the issuer.

• Establishing, or materially amending, a stock option plan, purchase plan or other equity compensation arrangement, pursuant to which stock may be acquired by officers, directors, employees, or consultants unless shareholder approval has been obtained. However, when a company makes an equity grant to induce an individual to accept employment, notification is required to be filed no later than the earlier of: (i) five calendar days after an offer of employment is accepted, or other agreement made, pursuant to which inducement grants will be issued; or, (ii) the date the company discloses the material terms of the grant in a press release.

• Issuing any common stock, or any security convertible into common stock, in a transaction that may result in the potential issuance of common stock, greater than 10% of either the total shares outstanding or the voting power outstanding on a pre-transaction basis.

No. For information about Nasdaq’s Listing of Additional Shares process, please review these FAQs. For important information about Nasdaq’s shareholder approval and voting rights rules, please review these FAQs.

Nasdaq requires at least 300 round lot holders for listing on the Nasdaq Capital Market, 400 round lot holders for listing on the Nasdaq Global Market, or 450 round lot holders for listing on the Nasdaq Global Select Market. A round lot holder must hold at least 100 unrestricted shares of the security. In addition, at least 50% of the company’s required number of round lot holders (e.g., 150, 200 and 225 round lot holders for Nasdaq Capital Market, Nasdaq Global Market and Nasdaq Global Select Market, respectively) must each hold unrestricted securities with a market value of at least $2,500. If it is not clear from a company's public disclosures that it satisfies these round lot shareholder requirements, Nasdaq will typically request from the issuer, and review, registered shareholder lists from the company's transfer agent, data from Cede & Co about shares held in street name, and data from other providers showing the number of account holders, such as a share range analysis from Broadridge or a list of beneficial holders through a broker/dealer search.

Nasdaq will aggregate information on these lists for accounts held by the same person to eliminate duplicates from the count, including individual and retirement accounts for the same person. Nasdaq may also aggregate accounts that appear to represent a single investment decision, such as separate accounts for an individual and his or her minor children. In general, Nasdaq will seek to ensure that each account represents a separate investment decision by a bona fide holder and, for this reason, would also exclude accounts that only hold shares that were given as gifts or for minimal consideration to the holder, especially if such gifts were made to allow the company to satisfy Nasdaq's listing requirements.

Given the nature of this review, determining compliance with the holder requirement can be a time consuming process. Companies are therefore encouraged to work proactively with staff to facilitate this review and begin the process as soon as possible to allow the company to demonstrate compliance on the schedule it wishes.

Nasdaq rules require shareholder approval for certain transactions that are priced below the "Minimum Price," as defined in Nasdaq's rules. Under Listing Rule 5635(d), shareholder approval is required in connection with a transaction, other than a public offering, at a price below the Minimum Price involving the sale, issuance or potential issuance by the Company of common stock (or securities convertible into or exercisable for common stock), which alone or together with sales by officers, directors or Substantial Shareholders of the Company, equals 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance. Listing Rule 5635(d) defines "Minimum Price" as the lower of: (i) the closing price (as reflected on Nasdaq.com); or (ii) the average closing price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement. Please note that the Nasdaq Official Closing Price is different from the Closing Price. For purposes of Listing Rule 5635(d), the “closing price” means the Nasdaq Official Closing Price, available at https://www.nasdaq.com/market-activity/quotes/historical-nocp. See also FAQ #272.     

In addition, under Listing Rule 5635(c), shareholder approval is required for any issuance to an officer, director, employee or consultant of the company at a price less than market value. For this purpose, Listing Rule 5005(a)(23) defines "market value" as the consolidated closing bid price per share immediately preceding the entering into of the binding agreement to issue the securities.

If the transaction is entered into during market hours, before the close of the regular session at 4 PM Eastern Time, market value or Minimum Price are determined based on the previous trading day's closing bid or closing price (or the average closing price for the previous five trading days), as applicable. If the transaction is entered into after the close of the regular session, then that day's closing bid or closing price (or the average closing price for that day and the previous four trading days) is used. Please note that the closing price (Nasdaq Official Closing Price) may differ from the consolidated closing bid price and, therefore, a transaction priced at or above the Minimum Price may still be at a discount to market value for purposes of Listing Rule 5635(c). See also FAQ #275.

Yes. The issuance of common stock (or equivalents) or securities convertible into or exercisable for common stock to officers, directors, employees, or consultants at a price less than the market value of the stock is considered a form of "equity compensation" and requires shareholder approval unless the issuance is part of a public offering (as described in IM-5635-3). For this purpose, market value is the consolidated closing bid price immediately preceding the time the company enters into a binding agreement to issue the securities.

Issuances to an entity controlled by an officer, director, employee, or consultant of the listed company may also be considered equity compensation under certain circumstances, such as where the issuance would be accounted for under Generally Accepted Accounting Principles as equity compensation or result in the disclosure of compensation under the applicable provisions of Regulation S-K.

Note that this provision also applies to limited partnerships, which are required by Rule 5615(a)(4)(H) to obtain the same approval for equity compensation as would be required under Rule 5635(c) and IM-5635-1. Also note that the Minimum Price, as defined in Listing Rule 5635(d), is not applicable to Listing Rule 5635(c) and thus is not relevant to this FAQ.

A company considering an issuance to an entity controlled by an officer, director, employee, or consultant is encouraged to contact its Listing Qualifications analyst by phone at +1 301 978 8008 to discuss the transaction prior to entering into a definitive agreement.