referencelibrarybanner
Listing ETP Banner
Reference Library - Advanced Search
New! Find
 



Library 



** To make multiple selections, select the first criterion and then press and hold the Ctrl Key **
 
Timeframe
Category
 
Sub-Category
1- 17 of 17 Search Results for:
Libraries:   Staff Interpretation Letters
Filters:   All Years; Non-U.S. Companies;



Expand All
Printer Friendly View
Mailto Link 
Page: 1 of 1
Frequently Asked Questions
Staff Interpretation Letter 2003-51
Identification Number
1018
Rule 4350(a):  NASDAQ shall have the ability to provide exemptions from Listing Rule 4350 to a Foreign Private Issuer when provisions of this Rule are contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or contrary to generally accepted business practices in the issuer’s country of domicile.
 
Rule 4350(i)(1)(A):  Each issuer shall require shareholder approval … when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees, or consultants.
 
Relevant Facts:  An Israeli company that lists its ordinary shares on NASDAQ proposes an amendment (the “Amendment”) to its employee stock option plan (the “Plan”).  Pursuant to the Amendment, the company would cancel and re-issue options subject to the consent of each affected employee.  The terms of the new options would be identical to those of the cancelled options with regards to exercise price, vesting period, and expiration date.  The purpose of the Amendment is to enable the option holders to utilize favorable tax treatment under the Israeli Income Tax Ordinance, resulting in the new options being taxed at a lower rate.
 
The company requests an exemption from NASDAQ’s shareholder approval requirement to the extent it would otherwise apply based on Listing Rule 4350(a).
 
Issue:  Is the company eligible for an exemption from NASDAQ’s shareholder approval rules?
 
Determination:  Yes.  The company's home country counsel represented that the laws, rules, and regulations of Israel do not require the company to obtain additional shareholder approval.  In determining generally accepted business practices in the Foreign Private Issuer’s country of domicile, NASDAQ may look to the home country marketplace.  The company’s home country counsel noted that the Tel Aviv Stock Exchange did not require shareholder approval of the Amendment, and that in this instance, NASDAQ's shareholder approval requirements are contrary to generally accepted business requirements in Israel.  Based on these representations, NASDAQ granted the requested exemptions to Listing Rule 4350(i)(1)(A) to the extent it would otherwise apply.
 
Publication Date*: 7/31/2012 Identification Number: 1018 Mailto Link
Frequently Asked Questions
Staff Interpretation Letter 2003-50
Identification Number
1017
Rule 4350(a):  NASDAQ shall have the ability to provide exemptions from Listing Rule 4350 to a Foreign Private Issuer when provisions of this Rule are contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or contrary to generally accepted business practices in the issuer’s country of domicile.
 
Rule 4350(f):  Each issuer shall provide for a quorum as specified in its by-laws for any meeting of the holders of common stock; provided, however, that in no case shall such quorum be less than 33 1/3% of the outstanding shares of the company’s common voting stock.
 
Relevant Facts:  A Canadian company’s by-laws provide for a quorum of the lesser of the number of shareholders or two persons present in person.  As such, the company requests an exemption from NASDAQ’s quorum requirement based on Listing Rule 4350(a).
 
Issue:  Is the company eligible for exemption from NASDAQ’s quorum rules?
 
Determination:  Yes.  The company’s home country counsel represented that the company’s quorum requirement was in compliance with the Canadian securities laws and regulations.  In determining generally accepted business practices in a Foreign Private Issuer’s country of domicile, NASDAQ may look to the rules of the home country marketplace.  The company’s home country counsel noted that the Toronto Stock Exchange did not impose any quorum requirements and that the requirements of Listing Rule 4350(f) would be contrary to generally accepted business practices in Canada.  Accordingly, based on these representations, NASDAQ granted the requested exemption to Listing Rule 4350(f).
 
Publication Date*: 7/31/2012 Identification Number: 1017 Mailto Link
Frequently Asked Questions
Staff Interpretation Letter 2003-48
Identification Number
1015
Rule 4350(a):  NASDAQ shall have the ability to provide exemptions from Listing Rule 4350 to a Foreign Private Issuer when provisions of this Rule are contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or contrary to generally accepted business practices in the issuer’s country of domicile.
 
Rule 4350(i)(1)(A):  Each issuer shall require shareholder approval … when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees, or consultants.
 
Relevant Facts:  An English company has established equity compensation plans (the “Plans”) that may be funded by purchases on the open market.  While all of the Plans were approved by shareholders and conform to the securities laws and regulations of the United Kingdom and the rules of The London Stock Exchange, the company’s home country marketplace, the Plans are considered “unlimited” plans under NASDAQ’s rules because they may be funded by open market purchases.  Therefore, pursuant to Listing Rule 4350(i)(1)(A), NASDAQ would require shareholder approval of each award under the Plans.  Consequently, the company requested an exemption from NASDAQ’s shareholder approval requirement based on Listing Rule 4350(a).
 
Issue:  Is the company eligible for an exemption from NASDAQ’s shareholder approval rules?
 
Determination:  Yes.  The company’s home country counsel represented that: (i) the company is in compliance with the securities laws and regulations of its country of domicile; (ii) the company’s equity plans are in compliance with the rules of its home country marketplace, The London Stock Exchange; and (iii) compliance with NASDAQ’s shareholder approval rule would be contrary to generally accepted business practices in the United Kingdom.  Based on these representations, NASDAQ granted the requested exemption to Listing Rule 4350(i)(1)(A).
 
Publication Date*: 7/31/2012 Identification Number: 1015 Mailto Link
Frequently Asked Questions
Staff Interpretation Letter 2003-47
Identification Number
1014
Rule 4350(a):  NASDAQ shall have the ability to provide exemptions from Listing Rule 4350 to a Foreign Private Issuer when provisions of this Rule are contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or contrary to generally accepted business practices in the issuer’s country of domicile.
 
Rule 4350A(c)*:  Each issuer shall maintain a sufficient number of independent directors on its board of directors to satisfy the audit committee requirement as set forth in Listing Rule 4350(d)(2).
 
Rule 4350A(d)(2)(A)1:  Each issuer must have, and certify that it has and will continue to have, an audit committee of at least three members, comprised solely of independent directors, each of whom is able to read and understand fundamental financial statements, including the company’s balance sheet, income statement and a cash flow statement or will become able to do so within a reasonable period of time after his or her appointment to the audit committee.  Additionally, each issuer must certify that it has, and will continue to have, at least one member of the audit committee that has past employment, experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, including being a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities.
 
Rule 4350(f):  Each issuer shall provide for a quorum as specified in its by-laws for any meeting of the holders of common stock; provided, however, that in no case shall such quorum be less than 33 1/3% of the outstanding shares of the company’s common voting stock.
 
Relevant Facts:  A Korean company, which seeks to list its ADRs on NASDAQ, sought exemptions from NASDAQ’s independent director, audit committee, and quorum rules.
 
Issue:  Is the company eligible for exemptions from these NASDAQ’s rules?
 
Determination:  Yes.  For each requested exemption, the company's home country counsel indicated that the company’s practice was in full compliance with relevant laws, rules and regulations and the generally accepted business practices in Korea.  Counsel further stated that compliance with the NASDAQ rules would be contrary to generally accepted business practices in Korea.
 
Based on the company’s representations, NASDAQ determined to grant the requested exemptions to Rules 4350A(c), 4350A(d) and 4350(f).  Notwithstanding the grant of these exemptions, NASDAQ noted that, foreign companies must be in compliance with NASDAQ’s new audit committee rules no later than July 31, 2005, as required by Securities and Exchange Rule 10A-3.  As such, the exemptions to Rules 4350A(c) and 4350A(d) expire on July 31, 2005.  If the company believes it is eligible for an exemption under Rule 10A-3, it should reapply prior to that date.
* Rules 4350A(c) and 4350(A)(d)(2)(A) were subsequently renumbered as Rules 4350-1(c) and 4350-1(d)(2)(A), respectively.
Publication Date*: 7/31/2012 Identification Number: 1014 Mailto Link
Frequently Asked Questions
Staff Interpretation Letter 2003-46  
Identification Number
1013

Rule 4350(a): NASDAQ shall have the ability to provide exemptions from Rule 4350 to a foreign private issuer when provisions of this Rule are contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or contrary to generally accepted business practices in the issuer’s country of domicile.

Rule 4350(i)(1)(D)(ii): Each issuer shall require shareholder approval prior to the issuance of designated securities … in connection with a transaction other than a public offering involving the sale, issuance or potential issuance by the company of common stock (or securities convertible into or exercisable [for] common stock) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock.

Relevant Facts: A Canadian company intends to initiate a private placement of “Special Warrants”. Assuming the offering is fully subscribed, the company intends to first issue securities representing 25% of its outstanding common shares. In order to comply with the rules of the company’s home exchange, the balance of the offering will be issued upon receipt of shareholder approval. The maximum number of shares to be issued in the Special Warrant Transaction is approximately 40% of the company’s pre-transaction common shares outstanding. The issuance would be at a price less than the greater of book or market value of the company’s common stock.

Pursuant to Rule 4350(i)(1)(D)(ii), NASDAQ would require shareholder approval for the proposed issuance because the transaction would exceed 20% of both the common stock and voting power outstanding at a discount to the market price on a pre-transaction basis. Accordingly, the company requests an exemption from NASDAQ’s shareholder approval requirement based on Rule 4350(a).

Issue: Is the company eligible for an exemption from NASDAQ’s shareholder approval rules?

Determination: Yes. The company's home country counsel represented that the company is not required to obtain shareholder approval pursuant to either of: (i) Canadian Securities Laws; or (ii) the rules and policies of the Toronto Stock Exchange (“TSE”). The company also provided written confirmation from the TSE that it had accepted the company’s notice of the private placement and had granted conditional listing of the additional common shares. In determining generally accepted business practices in a foreign private issuer’s country of domicile, NASDAQ may look to the home country marketplace. In this case, the TSE does not impose the shareholder approval requirement set forth in Rule 4350(i)(1)(D)(ii). Further, the company’s home country counsel represented that it would be contrary to generally accepted business practices for a Canadian company to seek approval from its shareholders for the transaction, where such approval is not otherwise required. Accordingly, based on the representations made, NASDAQ determined to grant the requested exemption to Rule 4350(i)(1)(D)(ii).

Publication Date*: 7/31/2012 Identification Number: 1013 Mailto Link
Frequently Asked Questions
Staff Interpretation Letter 2003-45
Identification Number
1012
Rule 4350(a):  NASDAQ shall have the ability to provide exemptions from Listing Rule 4350 to a Foreign Private Issuer when provisions of this Rule are contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or contrary to generally accepted business practices in the issuer’s country of domicile.
 
Rule 4350(g):  Each issuer shall solicit proxies and provide proxy statements for all meetings of shareholders and shall provide copies of such proxy solicitation to NASDAQ.
 
Relevant Facts:  An English company that lists ADRs on NASDAQ requests an exemption from Listing Rule 4350(g) in connection with the solicitation and the distribution of proxies to the company’s foreign shareholders for an upcoming annual general meeting.  The company stated that such a distribution of annual proxies was contrary to the laws, regulations, and practices of its home country and was also not required by its home country stock exchange.  As such, the company requests an exemption from NASDAQ’s proxy solicitation requirement based on Listing Rule 4350(a).
 
Issue:  Is the company eligible for an exemption from NASDAQ’s proxy solicitation rule?
 
Determination:  Yes.  In determining generally accepted business requirement in a foreign issuer’s country of domicile, NASDAQ may look to the home country marketplace.  The company's home country counsel represented that the laws, rules, and regulations of the United Kingdom do not require the company to distribute annual proxies to foreign shareholders prior to its annual shareholder meetings, and that the requirements of the UK Listing Authority and the London Stock Exchange, the primary market for the company's securities, also do not impose such a requirement.  Based on these representations, NASDAQ granted the requested exemption to Listing Rule 4350(g).
 
Publication Date*: 7/31/2012 Identification Number: 1012 Mailto Link
Frequently Asked Questions
Staff Interpretation Letter 2003-44
Identification Number
1011
Rule 4350(a):  NASDAQ shall have the ability to provide exemptions from Listing Rule 4350 to a Foreign Private Issuer when provisions of this Rule are contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or contrary to generally accepted business practices in the issuer’s country of domicile.
 
Rule 4350(i)(1)(A):  Each issuer shall require shareholder approval … when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees, or consultants.
 
Relevant Facts:  A Swedish company that lists ADRs on NASDAQ proposes to establish an equity compensation plan (the “Plan”).  Under the Plan, certain executives would be entitled to receive cash payments to be decided upon annually by the board of directors. The executives would be required to purchase the company’s shares on the open market in the amount of the cash payment or, alternatively, an intermediary would purchase the company’s shares with funds obtained from the company and transfer such shares to the executives.
 
Pursuant to Listing Rule 4350(i)(1)(A), NASDAQ would require shareholder approval for the proposed Plan because it would result in an equity compensation arrangement. As such, the company requests an exemption from NASDAQ’s shareholder approval requirement based on Listing Rule 4350(a).
 
Issue:  Is the company eligible for an exemption from NASDAQ’s shareholder approval rules?
 
Determination:  Yes. The company's home country counsel represented that the company is not required to obtain shareholder approval pursuant to either of: (i) the company’s governing statutes; or (ii) the rules and policies of the Swedish Stock Exchange (“SSE”), the primary market for the company’s securities. In determining generally accepted business practices in a Foreign Private Issuer’s country of domicile, NASDAQ may look to the home country marketplace.  In this case, the SSE does not impose the shareholder approval requirement set forth in Listing Rule 4350(a)(1)(A). Further, the company’s home country counsel represented that it would be contrary to generally accepted business practices for a Swedish company to seek approval from its shareholders for the implementation of the Plan, where such approval is not otherwise required.  Accordingly, based on these representations, NASDAQ determined to grant the requested exemption to Listing Rule 4350(i)(1)(A).
 
Publication Date*: 7/31/2012 Identification Number: 1011 Mailto Link
Frequently Asked Questions
Staff Interpretation Letter 2003-28
Identification Number
998
Rule 4350(a):  NASDAQ will provide exemptions to the extent that a rule requires any foreign issuer to do any act that is contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or the rule is contrary to generally accepted business practices in the issuer’s country of domicile.
 
Rule 4350(i)(1)(B):  Each issuer shall require shareholder approval prior to the issuance of designated securities … when the issuance or potential issuance will result in a change of control.
 
Relevant Facts:  A Canadian company has arranged a loan transaction with a third party lender that will provide funds to allow the company to make a tender offer for its currently outstanding debentures.  As part of the transaction, the company will also issue warrants to the lender to purchase common stock of the company with an exercise price greater than book and market value of the stock.  If all debentures are tendered, and the loan is drawn in full, approximately 33% of the company’s outstanding stock would be issued.  As a result, the potential issuance of common stock upon the exercise of the warrants could result in a change of control; thereby requiring shareholder approval under NASDAQ’s rules.  As a foreign issuer, the company is requesting an exemption from the shareholder approval rules under Listing Rule 4350(a).
 
Issue:  Is the company eligible for an exemption from NASDAQ’s shareholder approval rules?
 
Determination:  Yes.  The company stated that it would seek approval of a majority of the voting shares, excluding any votes by or on behalf of the third party lender, through written consent consistent with Canadian law and the requirements of the Toronto Stock Exchange.  In addition, the company has provided notice to all of its shareholders regarding the pending transaction.  The company’s Canadian counsel indicated that as a Foreign Private Issuer, the company is not required to comply with Sections 14(a) and 14(c) of the Securities Exchange Act, and thus the written consent procedure does not have to comply with the SEC’s proxy or information statement requirements.  Finally, the company’s Canadian counsel stated that to obtain shareholder approval as required by the NASDAQ Rules for a transaction of this kind would be contrary to generally accepted business practices in Canada.  Based on these representations, NASDAQ granted the requested exemption to Listing Rule 4350(i)(1)(B).
 
Publication Date*: 7/31/2012 Identification Number: 998 Mailto Link
Frequently Asked Questions
Staff Interpretation Letter 2003-24
Identification Number
995
Rule 4350(a):  NASDAQ will provide exemptions to the extent that a rule requires any foreign issuer to do any act that is contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or the rule is contrary to generally accepted business practices in the issuer’s country of domicile.
 
Rule 4350(i)(1)(A):  Each issuer shall require shareholder approval … when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees, or consultants.
 
Relevant Facts:  A Canadian company intends to implement a Restricted Share Long-Term Incentive Plan (the Plan”), whereby the company’s president and chief executive officer may acquire subordinate voting stock of the company.  The company’s independent compensation and corporate governance committee will approve the awards under the Plan.  To implement the Plan, the company will form a new corporation that will purchase the Plan’s shares in either the open market or in privately negotiated transactions, using the company’s funds.  The shares would then be offered to the company’s president and chief executive officer at a discount to market as determined by the independent compensation and corporate governance committee.  The company requests an exemption from Listing Rule 4350(i)(1)(A), which would require shareholder approval for the proposed Plan, based on Listing Rule 4350(a).
 
Issue:  Is the company eligible for an exemption from the shareholder approval rules?
 
Determination:  The company’s home country counsel represented that the company is not required to obtain shareholder approval for the Plan by its governing statute or by the rules and policies of the company’s home country marketplace, the Toronto Stock Exchange.  Moreover, Canadian counsel represented that it would be contrary to generally accepted business practices for a Canadian company to seek approval from shareholders for a plan of this type, where such approval is not required.  Based on these representations, NASDAQ granted the requested exemptions to Listing Rule 4350(i)(1)(A).
 
Publication Date*: 7/31/2012 Identification Number: 995 Mailto Link
Frequently Asked Questions
Staff Interpretation Letter 2003-20
Identification Number
991
 Rule 4350(a):  NASDAQ will provide exemptions to the extent that a rule requires any foreign issuer to do any act that is contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or the rule is contrary to generally accepted business practices in the issuer’s country of domicile.
 
Rule 4350(i)(1)(A):  Each issuer shall require shareholder approval … when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees, or consultants.
 
Relevant Facts:  An Israeli company intends to amend an existing Employee Stock Option Plan (the “Plan”) by materially increasing the number of ordinary shares available under its Plan.  The company’s board of directors has approved the amendment to the Plan.  Pursuant to Listing Rule 4350(i)(1)(A), NASDAQ would require shareholder approval for the proposed amendment because it would result in a material increase in the number of shares available under the Plan.  As such, the company requests an exemption from the shareholder approval requirement based on Listing Rule 4350(a).
 
Issue:  Is the company eligible for an exemption from the shareholder approval rules?
 
Determination:  The company's home country counsel represented that the laws, rules, and regulations of the home country do not require the company to obtain additional shareholder approval, and that obtaining such approval is not consistent with the requirements of the primary stock market in the company's domicile. Accordingly, counsel represented that in this instance, NASDAQ's shareholder approval requirements are contrary to generally accepted business requirements in the company’s home country.  Based on these representations, NASDAQ granted the requested exemptions to Listing Rule 4350(i)(1)(A).
 
 
Publication Date*: 7/31/2012 Identification Number: 991 Mailto Link
Frequently Asked Questions
Staff Interpretation Letter 2003-17
Identification Number
988
Rule 4350(a):  NASDAQ will provide exemptions to the extent that a rule requires any foreign issuer to do any act that is contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or the rule is contrary to generally accepted business practices in the issuer’s country of domicile.
 
Rule 4350(b)(1):  Each issuer shall distribute to shareholders copies of an annual report containing audited financial statements of the company and its subsidiaries. The report shall be distributed to shareholders a reasonable period of time prior to the company's annual meeting of shareholders and shall be filed with NASDAQ at the time it is distributed to shareholders.
 
Relevant Facts:  An Israeli company requested an exemption from the NASDAQ requirement to distribute copies of its annual report with audited financial statements to its shareholders prior to its annual general meeting.  The company stated that such a distribution of annual reports was not in accordance with the practices of its home country and was also not required by its home country stock exchange.
 
Issue:  Is the company eligible for an exemption from the NASDAQ requirement?
 
Determination:  The company's home country counsel represented that the distribution of annual reports with audited financial statements prior to the annual shareholder meetings would not be in accordance with the practices of the listed company’s home country, and that the requirement to distribute such reports is not consistent with the requirements of the primary stock market in the company's domicile.  Accordingly, counsel represented that in this instance, NASDAQ's requirement to distribute copies of an annual report to its shareholders is contrary to generally accepted business requirements in the company’s home country.  In addition, the company confirmed that copies of its annual reports with audited financial statements are available to its shareholders on the company’s website.  Based on these representations, NASDAQ granted the requested exemption to Listing Rule 4350(b)(1).
 
Publication Date*: 7/31/2012 Identification Number: 988 Mailto Link
Frequently Asked Questions
Staff Interpretation Letter 2003-12
Identification Number
983
Rule 4350(a):  NASDAQ will provide exemptions to the extent that a rule requires any foreign issuer to do any act that is contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or the rule is contrary to generally accepted business practices in the issuer’s country of domicile.
 
Rule 4350(i)(1)(C)(ii):  Each issuer shall require shareholder approval … prior to the issuance of designated securities … in connection with the acquisition of the stock or assets of another company if: … (ii) where, due to the present or potential issuance of common stock, or securities convertible into or exercisable for common stock, other than a public offering for cash: (a) the common stock has or will have upon issuance voting power equal to or in excess of 20 percent of the voting power outstanding before the issuance of stock or securities convertible into or exercisable for common stock; or (b) the number of shares of common stock to be issued is or will be equal to or in excess of 20 percent of the number of shares of common stock outstanding before the issuance of the stock or securities.
 
Relevant Facts:  A Canadian company plans to issue in excess of 20% of its total common shares outstanding to acquire another company.  Pursuant to NASDAQ’s rules, shareholder approval for the transaction is required.  The company’s foreign counsel represents that neither the laws, regulations or the practices of its home country or the rules of its home country stock exchange require shareholder approval of the transaction.  Accordingly, the company requests an exemption from NASDAQ’s shareholder approval rules for this transaction.
 
Issue:  Is the company eligible for an exemption from the shareholder approval rules?
 
Determination:  Since the company's foreign counsel represented that the laws, rules, and regulations of the home country do not require the company to obtain shareholder approval for the proposed acquisition, and that obtaining such approval is not consistent with the requirements of the primary stock market in the company’s country of domicile, it appears that NASDAQ's shareholder approval requirements are contrary to generally accepted business requirements in the company’s home country.  Accordingly, NASDAQ granted the requested exemption to Listing Rule 4350(i)(1)(C)(ii).
 
Publication Date*: 7/31/2012 Identification Number: 983 Mailto Link
Frequently Asked Questions
Staff Interpretation Letter 2003-7
Identification Number
978
Rule 4350(a):  NASDAQ will provide exemptions to the extent that a rule requires any foreign issuer to do any act that is contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or the rule is contrary to generally accepted business practices in the issuer’s country of domicile.
 
Rule 4350(i)(1)(A):  Each issuer shall require shareholder approval of a plan or arrangement … when a stock option or purchase plan is to be established or other arrangement made pursuant to which stock may be acquired by officers or directors, except for warrants or rights issued generally to security holders of the company or broadly based plans or arrangements including other employees (e.g. ESOPs).  The establishment of a plan or arrangement under which the amount of securities which may be issued does not exceed the lesser of 1% of the number of shares of common stock, 1% of the voting power outstanding, or 25,000 shares will not generally require shareholder approval.  
 
Relevant Facts:  A non-U.S. company proposes to transfer to an officer of the company approximately 200,000 shares in lieu of cash bonuses.  The shares would not come from a shareholder-approved plan. Without the requested exemption, shareholder approval would be required pursuant to Listing Rule 4350(i)(1)(A).
 
Issue:  Is the company eligible for an exemption from the shareholder approval rules?
 
Determination:  The company’s foreign counsel represented that: (i) shareholder approval of the transfer is not required under any relevant law, rule, or regulation in the company’s home country, and (ii) the rules of the primary market in the company’s home country would not require shareholder approval.  Counsel also stated that it would be contrary to generally accepted business practice in the home country to seek approval from its shareholders for a transaction of this kind.  Based on these representations, NASDAQ granted the requested exemption to Listing Rule 4350(i)(1)(A).
 
Publication Date*: 7/31/2012 Identification Number: 978 Mailto Link
Frequently Asked Questions
Staff Interpretation Letter 2002-5
Identification Number
970
Rule 4351:  Voting rights of existing shareholders of publicly traded common stock registered under Section 12 of the Act cannot be disparately reduced or restricted through any corporate action or issuance.   Examples of such corporate action or issuance include, but are not limited to, the adoption of time-phased voting plans, the adoption of capped voting rights plans, the issuance of super-voting stock, or the issuance of stock with voting rights less than the per share voting rights of the existing common stock through an exchange offer.
 
IM-4351.  Voting Rights Policy:  NASDAQ will accept any action or issuance relating to the voting rights structure of a non-U.S. issuer that is in compliance with The NASDAQ Stock Market's requirements for domestic companies or that is not prohibited by the issuer's home country law.
 
Relevant Facts:  A non-U.S. company proposed to enter into a transaction, pursuant to which certain investors would be granted preemptive rights, director nomination rights, board committee appointment rights, and approval rights that could be prohibited by Listing Rule 4351.  The company submitted a letter from its legal counsel in its home country stating that the proposed rights were not prohibited under the laws of that country.
 
Issue:  Are the proposed voting and director nomination rights consistent with Listing Rule 4351 and IM-4351?
 
Determination:  Based on the letter from the company’s counsel, NASDAQ concluded that the proposed rights were consistent with Listing Rule 4351 and IM-4351 because IM-4351 states that: “NASDAQ will accept any action or issuance relating to the voting rights structure of a non-U.S. issuer that is in compliance with The NASDAQ Stock Market’s requirements for domestic companies or that is not prohibited by the issuer’s home country law”, and the proposed rights were not prohibited under the company’s home country law
Publication Date*: 7/31/2012 Identification Number: 970 Mailto Link
Frequently Asked Questions
Staff Interpretation Letter 2002-4
Identification Number
969
Rule 4350(a):  NASDAQ will provide exemptions to the extent that a rule requires any foreign issuer to do any act that is contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or the rule is contrary to generally accepted business practices in the issuer’s country of domicile.
 
Rule 4350(i)(1)(B):  Each issuer shall require shareholder approval prior to the issuance of designated securities … when the issuance or potential issuance will result in a change of control.
 
Rule 4350(i)(1)(D)(ii):  Each issuer shall require shareholder approval prior to the issuance of designated securities … in connection with a transaction other than a public offering involving the sale, issuance or potential issuance by the company of common stock (or securities convertible into or exercisable common stock) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock.
 
Relevant Facts:  A non-U.S. company has previously received the approval of its shareholders to issue shares in future private placements without further shareholder approval.  This prior approval was specific as to the maximum number of shares that could be issued, but was not specific as to the pricing or the identity of a purchaser.  The company now proposes to enter into a specific transaction that would result in both a change of control and the issuance of more than 20% of its pre-transaction outstanding shares at a discount. The number of shares that would be issued is less than the number previously approved by the shareholders.
 
Issue:  Does NASDAQ require shareholder approval for this transaction, given the prior approval by shareholders?
 
Determination:  Shareholder approval ordinarily would be required, pursuant to both Rules 4350(i)(1)(B) and 4350(i)(1)(D), because the company has not previously obtained approval for the specific transaction.  A more general authorization does not suffice unless the proposal contains parameters that are specific at least as to the maximum number of shares to be issued, the maximum dollar amount of the issuance, and the maximum discount to market.  Further, such a general authorization, even with these parameters, is not meant to permit the authorization of multiple transactions over an extended period of time.  Generally, a company may rely on such general authorization only for a transaction that closes within three months of the shareholder approval.
 
Issue:  Is the company eligible for an exemption from the shareholder approval rules?
 
Determination:  The company's foreign counsel represented that the laws, rules, and regulations of the home country do not require the company to obtain shareholder approval beyond that previously obtained, and that obtaining such approval is not consistent with the requirements of the primary stock market in the company's domicile.  Accordingly, counsel represented that in this instance, NASDAQ's shareholder approval requirements are contrary to generally accepted business requirements in the company’s home country.  Based on these representations, NASDAQ granted the requested exemptions to Rules 4350(i)(1)(B) and 4350(i)(1)(D).
 
Publication Date*: 7/31/2012 Identification Number: 969 Mailto Link
Frequently Asked Questions
Staff Interpretation Letter 2002-3  
Identification Number
968
Rule 4350(a):  NASDAQ will provide exemptions to the extent that a rule requires any foreign issuer to do any act that is contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or the rule is contrary to generally accepted business practices in the issuer’s country of domicile.
 
Rule 4350(f):  The by-laws of each issuer must provide for a quorum for any meeting of the holders of common stock of no less than 33 1/3% of the outstanding shares of the company’s common voting stock.
 
Issue:  A non-U.S. company’s by-laws provide for a quorum of at least two shareholders holding 25% of the outstanding shares of the company’s voting stock.
 
Determination:  The company’s foreign counsel represented that the law in the company’s home country requires a minimum of at least two shareholders holding 25% of the outstanding shares of a company’s voting stock to constitute a quorum to open shareholder meetings, and that this requirement provides a reliable indication of the generally accepted business practice in the home country.  Counsel also indicated that the primary market in the company’s home country does not impose any additional quorum requirements.  Accordingly, counsel represented that it believed that NASDAQ’s quorum requirement is contrary to the generally accepted business practices in the home country.  Based on these representations, NASDAQ granted the requested exemption to Listing Rule 4350(f).
 
 
Publication Date*: 7/31/2012 Identification Number: 968 Mailto Link
Frequently Asked Questions
Staff Interpretation Letter 2002-2  
Identification Number
967
Rule 4350(a):  NASDAQ will provide exemptions to the extent that a rule requires any foreign issuer to do any act that is contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or the rule is contrary to generally accepted business practices in the issuer’s country of domicile.
 
Rule 4350(f):  The by-laws of each issuer must provide for a quorum for any meeting of the holders of common stock of no less than 33 1/3% of the outstanding shares of the company’s common voting stock.
 
Issue:  A non-U.S. company’s by-laws provide for a quorum of two persons holding not less than 10% of the total number of issued voting shares outstanding.
 
Determination:  The company’s foreign counsel represented that under applicable foreign law companies are permitted to set the quorum requirements in their by-laws and that while the generally accepted business practice in the company’s home jurisdiction for a quorum is two persons, the company goes beyond this and also imposes an additional requirement that a minimum of 10% of the total number of issued voting shares outstanding be represented.  Counsel also represented that the primary market in the company’s home country does not have a quorum requirement regarding meetings of shareholders.  Finally, counsel indicated that NASDAQ’s requirement is contrary to the generally accepted business practices in the home country.  Based on these representations, NASDAQ granted the requested exemption to Listing Rule 4350(f).
 
Publication Date*: 7/31/2012 Identification Number: 967 Mailto Link
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.
Page: 1 of 1
home_footer_links
Copyright_statement
App Store       Google Play       Windows Store       Governance Clearinghouse RSS Feed
The Nasdaq Stock Market, Nasdaq, The Nasdaq Global Select Market, The Nasdaq Global Market, The Nasdaq Capital Market, ExACT and Exchange Analysis and Compliance Tracking system are trademarks of Nasdaq, Inc.
FINRA® and Financial Industry Regulatory Authority, Inc.® are registered trademarks of Financial Industry Regulatory Authority, Inc. OTCBBTM and OTC Bulletin BoardTM are trademarks of FINRA