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  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 Mailto Link Identification Number: 1011
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