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Additional Reference Materials,Annual Shareholder Meeting/Proxy Solicitation,Board Composition/Committee Assignments,Continued Listing,Distribution of Annual & Interim Reports,Fees,Hearings and Appeals,Initial Listing,Listing Center,Listing Information,Non-U.S. Companies,Notifications and Forms,Regulatory Authority,Related Party Transactions,Shareholder Approval,Voting Rights; All
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Identification Number
276
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To determine whether securities that are convertible into or exercisable for common stock are issued at a discount to the Minimum Price, the conversion or exercise price is compared to the Minimum Price of the common stock. For purposes of
Listing Rule 5635(d) "Minimum Price" means a price that is the lower of: (i) the Nasdaq Official Closing Price (as reflected on
https://www.nasdaq.com/market-activity/quotes/historical-nocp) immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq Official Closing Price of the common stock (as reflected on
https://www.nasdaq.com/market-activity/quotes/historical-nocp) for the five trading days immediately preceding the signing of the binding agreement. See
FAQ #271. If the conversion or exercise price is less than the Minimum Price, then the issuance is at a discount to the applicable value. Please note that the Nasdaq Official Closing Price is different from the Closing Price.
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
Minimum Price. 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.
Note that the determination as to whether convertible securities are issued at a discount may differ for insiders (officers, directors, employees and consultants) and all other investors. When considering an issuance to an insider, the security must be issued
at a price greater than "market value". See
FAQ#271.
Publication Date*:
11/26/2019
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Identification Number:
276
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