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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
  Is shareholder approval required of an equity award to a new employee?    
Identification Number 247
Under Listing Rule 5635(c)(4) shareholder approval is not required of an issuance to a person not previously an employee or director of the company, or following a bonafide period of non-employment, as an inducement material to the individual's entering into employment with the company, provided that such an issuance is approved by the company's compensation committee or a majority of the company's independent directors.
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 247
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
  Does Nasdaq require shareholder approval of equity compensation plans?    
Identification Number 203
Yes. Listing Rule 5635(c) requires that a Nasdaq listed company seek shareholder approval when it establishes or materially amends a stock option or purchase plan or other arrangement pursuant to which stock may be acquired by officers, directors, employees or consultants. This includes any sale of securities at a discount to the market value to an officer, director, employee or consultant, even if part of a larger financing transaction.
 
In addition, please see IM 5635-1, which focuses on those corporate actions that would be considered material amendments to existing plans and/or arrangements, and thus, require shareholder approval. IM 5635-1 also discusses circumstances under which shareholder approval is not required pursuant to Listing Rule 5635(c).  
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 203
Frequently Asked Questions
  How does Nasdaq determine whether securities that are convertible into or exercisable for common stock are issued at a discount to market value?    
Identification Number 276
To determine whether securities that are convertible into or exercisable for common stock are issued at a discount to market value, the conversion or exercise price is compared to the market value of the common stock. Market value is the consolidated closing bid price immediately before the company enters into a binding agreement with the investor. If the conversion or exercise price is less than the market value, then the issuance is at a discount.
 
A potential adjustment to the number of shares or conversion price due to a change to the company’s capital structure, such as due to a stock split or extraordinary dividend, does not affect the determination of whether a transaction is at a discount to market value. However, if the company may reduce the conversion price, issue additional shares, or make a cash payment to the investors as a result of subsequent transactions or events, including "make whole" payments, the calculation of the conversion price will presume that the maximum amount of any such adjustments will be made. Similarly, potential cash payments to the security holders at the time of conversion, other than for accrued interest, are deducted from the value of the note and the resulting amount would be divided by the number of shares issuable when determining the effective conversion price. An example of such cash payments is payments for “foregone interest” that would have been earned by the investors after the time of conversion.
 
Publication Date*: 6/4/2014 Mailto Link Identification Number: 276
Frequently Asked Questions
  When should I fill out a Listing Application?  
Identification Number 40
A Listing Application must be completed by all companies that wish to initially list on Nasdaq or by a company that is already listed on Nasdaq but wishes to transfer between the Nasdaq Global Market and the Nasdaq Capital Market. A listed company should also complete and submit a listing application if it wishes to list a secondary security on Nasdaq.
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 40
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
  What factors does Nasdaq consider when determining whether to aggregate the shares issued in separate transactions for purposes of determining whether the threshold for shareholder approval has been triggered?    
Identification Number 283
In deciding whether to aggregate transactions to determine whether shareholder approval is required, Nasdaq will consider whether the company is engaging in a stand-alone transaction or a series of issuances.

In general, Nasdaq will consider the following factors in making this determination:
    • Timing of the issuances - Timing alone is not necessarily a determining factor, and there is no definitive time period as to whether transactions are aggregated. Generally, if there are no other linkage factors present, transactions more than six months apart would not be aggregated;
    • Initiation of the subsequent transaction or transactions - At the time of the first transaction, was the company already planning the subsequent transaction? Did it already expect that it would have to raise additional capital?;
    • Commonality of investors - Transactions with common investors are more likely to be aggregated. In addition, the time period over which transactions would be aggregated, may be extended when there are common investors;
    • Existence of any contingencies between the issuances or transactions - Are the sales contingent upon one another? For example, a company may be required to obtain an equity line of credit before completing a discounted private placement;
    • Commonality as to the use of the proceeds/Same plan of financing - Transactions may be aggregated if they are used for the same purpose or plan of financing; and
    • Timing of the board of directors approval.
When transactions are aggregated, the calculation total shares outstanding or total voting power outstanding is made based on the shares and votes outstanding prior to the closing of the first issuance.
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 283
Frequently Asked Questions
  Where are the necessary listing forms and instructions to list on Nasdaq?  
Identification Number 332
Listing applications and related forms are available electronically through the Nasdaq Listing Center. Before completing your application electronically, please take a few minutes to review our Initial Listing Guide. Generally, the company will need to complete the Listing Application, Listing Agreement, Corporate Governance Certification Form and Logo Submission Form. If you are unfamiliar with the contents of the Listing Application and related forms, we recommend that you preview the forms prior to logging into the Listing Center. This will help you gather all the information you will need to complete the forms.  Questions regarding the listing process should be directed to Listing Qualifications Staff at +1 301 978 8008.
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 332
Frequently Asked Questions
  If a company has two (or more) classes of common stock, how is the potential issuance calculated under the shareholder approval rules?    
Identification Number 288
Generally, the potential issuance is calculated as a percentage of the aggregate outstanding shares of all classes of common stock. For example, if a company has two classes of common stock, Class A and Class B, and plans to issue shares of Class A in a private placement, the percentage issuance would be calculated by dividing: (i) the number of Class A shares that could be issued; by (ii) the number of pre-transaction outstanding shares of both classes combined. This calculation generally applies even if only one of the classes is listed on Nasdaq.
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 288
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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