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Frequently Asked Questions
  Must a company provide notice to Nasdaq about its shareholder meeting?
Identification Number 85
A company that files its proxy statement via EDGAR in connection with an annual shareholder meeting does not have to provide any additional notice to Nasdaq about its annual meeting. A company that does not file a proxy via EDGAR must send its proxy statement or other shareholder notice to Listing Qualifications via email at continuedlisting@nasdaq.com no later than when it is mailed to shareholders.  
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 85
Frequently Asked Questions
  How is the percentage of shares of common stock to be issued in a transaction calculated?    
Identification Number 182
The percentage of shares of common stock to be issued in a transaction is calculated using the following formula:
 
Maximum Potential Issuance of Shares of Common Stock
Pre-transaction Issued and Outstanding Shares of Common Stock
 
To correctly calculate the percentage of shares to be issued, the numerator of this equation must contain all securities initially issued or potentially issuable or potentially exercisable or convertible into shares or common stock as a result of the transaction (e.g., earn-out clauses, penalty provisions, equity compensation awards assumed or in assumed plans, etc.).
 
To correctly determine the denominator, the company should use only issued and outstanding shares. If the company has multiple classes of common stock, all shares should be added together. However, the denominator should not assume the conversion or exercise of any options, warrants or other convertible securities.
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 182
Frequently Asked Questions
  What is required for a company to rely on the exception from the shareholder approval requirement for an equity compensation inducement award?    
Identification Number 253
In order to rely on the exception from the shareholder approval requirement for an equity compensation awarded as an inducement material to the individual's entering into employment with the company, the issuance must be approved by the company's compensation committee or a majority of the company's independent directors. In addition, the company must issue a press release promptly following the grant, which discloses the material terms of the award.
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 253
Frequently Asked Questions
  Does a sale of securities in a transaction (other than a public offering) at a discount to the market value to officers, directors, employees, or consultants require shareholder approval under Listing Rule 5635(c)?  
Identification Number 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 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.
 
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.
 
Publication Date*: 6/18/2013 Mailto Link Identification Number: 275
Frequently Asked Questions
  What is considered a material amendment to an existing equity compensation plan or arrangement?    
Identification Number 219
As set forth in IM-5635-1, a material amendment includes, but is not limited to, the following:
    • Any material increase in the number of shares to be issued under the plan (other than to reflect a reorganization, stock split, merger, spinoff or similar transaction);
    • Any material increase in benefits to participants, including any material change to: (i) permit a repricing (or decrease in exercise price) of outstanding options, (ii) reduce the price at which shares or options to purchase shares may be offered, or (iii) extend the duration of a plan;
    • Any material expansion of the class of participants eligible to participate in the plan; and
    • Any expansion in the types of options or awards provided under the plan.
While general authority to amend a plan would not obviate the need for shareholder approval, if a plan permits a specific action without further shareholder approval, then no such approval would generally be required. In that regard, absent specific authorization in the plan, a repricing, or a similar action, would not be permitted without shareholder approval.  
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 219
Frequently Asked Questions
  How does a company reserve a symbol to trade on Nasdaq?
Identification Number 486
A company may request a symbol for trading on the Nasdaq Stock Market by using our online form.
 
A company may request to reserve a symbol up to 24 months in advance of an initial listing application submission. If the symbol is not used during the 24-month reservation period, it will be made free and available for other potential applicants. A company may then re-apply for a symbol reservation after the original reservation expires provided that no other company has reserved the symbol. A reserved symbol may also be released at any time with given notice. A new symbol reservation can then be made if the applicant wishes to change its reserved symbol, assuming the new symbol is free and available.
 
The Nasdaq Stock Market does not reserve symbols for the OTCBB or the OTC Markets. Symbol reservations for OTCBB or OTC Markets are managed by FINRA. Any inquiries regarding symbol reservation for OTCBB or the OTC Markets should be forwarded to otcsymbols@finra.org
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 486
Frequently Asked Questions
  For purposes of Nasdaq's shareholder approval rules, what is "market value"?    
Identification Number 271
As set forth in Listing Rule 5005(a)(22), "market value" means the consolidated closing bid price multiplied by the measure to be valued. For purposes of the shareholder approval requirements, "market value" is 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, the previous trading day's consolidated closing bid price is used. If the transaction is entered into after the close of the regular session, then that day's consolidated closing bid price is used. Please note that the Nasdaq Official Closing Price may differ from the consolidated closing bid price and, therefore, should not be used to determine market value for this purpose. In addition, an average price over any period of time is not acceptable.
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 271
Frequently Asked Questions
  Are there any exceptions to Nasdaq's shareholder approval requirement for equity compensation?    
Identification Number 238
Yes. Pursuant to Listing Rule 5635(c), shareholder approval is not required for:
    • Warrants or rights issued to all security holders on equal terms;
    • Stock purchase plans available to all security holders on equal terms (e.g., a dividend reinvestment plan);
    • Tax qualified, non-discriminatory employee benefit plans or parallel nonqualified plans which are regulated under the Internal Revenue Code and Treasury Department regulations, provided such plans are approved by the issuer's independent compensation committee or a majority of the issuer's independent directors. A similar plan for the company's non-U.S. employees, which provides features necessary to comply with applicable non-U.S. tax laws, is also exempt from the shareholder approval requirement;
    • Plans that provide a convenient way to purchase shares on the open market or from the issuer at fair market value;
    • Certain plans relating to mergers and acquisitions; or
    • Inducement grants.  
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 238
Frequently Asked Questions
  Can a company establish and issue shares from an equity compensation plan or arrangement before seeking shareholder approval?    
Identification Number 212
A company may adopt an equity plan or arrangement, and grant options (but not shares of stock) thereunder, prior to obtaining shareholder approval provided that: (i) no options can be exercised prior to obtaining shareholder approval, and (ii) the plan can be unwound, and the outstanding options cancelled, if shareholder approval is not obtained. Companies should be aware of any accounting issues that may arise under these circumstances.
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 212
Frequently Asked Questions
  Is the inducement exemption available to induce a member of the board of directors to enter into employment?    
Identification Number 248
No. Listing Rule 5635(c) provides that the exemption is available only for a "person not previously an employee or director."
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 248
material_search_footer*The Publication Date reflects the date of first inclusion in the Reference Library, which was launched on July 31, 2012, or a subsequent update to the material. Material may have been previously available on a different Nasdaq web site.
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