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Frequently Asked Questions
  Does Nasdaq consider a contractual disincentive to sell a security a "resale restriction" for purposes of Restricted Securities definition?
Identification Number 1860

Nasdaq has observed that certain companies enter into agreements (sometimes referred to as a forward purchase agreements) in connection with their initial listing whereby the investor purchases shares prior to the company’s initial listing on Nasdaq and the company commits to reimburse the investor for the purchase price at a future time (after the initial listing on Nasdaq) if the trading price of the security is below its purchase price. In such circumstances, the investor would suffer a loss from trading below certain thresholds, but would be able to recoup the purchase price by withholding from trading.  These agreements take various forms, including different trigger prices and time frames, but in all cases provide an economic disincentive for the investor to sell the security in certain circumstances.  While such agreements are not prohibited, Nasdaq, generally, would treat such economic resale disincentives as a resale restriction for purposes of determining whether the securities are Restricted Securities as defined in Rule 5005(a)(38). 

Publication Date*: 2/8/2023 Mailto Link Identification Number: 1860
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