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Frequently Asked Questions
  May a company utilize a generic proxy proposal to obtain shareholder approval prior to entering into a transaction?
Identification Number 286

If shareholder approval of a transaction is required, then the proposal in the proxy should give specific details on the nature of the transaction (e.g., the number of shares offered, type of security being issued, the names of the investors and the purchase price).

If the proposal in the proxy is for a non-specific transaction, Nasdaq will consider whether the shareholders have sufficient information to make a meaningful decision. For example, proposals that ask for shareholder approval to issue more than 20% of the company's total shares outstanding or total voting power for future unspecified acquisitions would not be acceptable. Similarly, a generic proxy proposal would not suffice for shares issued as equity compensation.

However, if the company seeks shareholder approval for a private placement, but has not yet identified the investors or arrived at specific terms, Nasdaq may consider the proposal sufficient for the purposes of compliance with the shareholder approval requirements of Listing Rule 5635(d) if the company discloses:

    • The maximum number of shares to be issued;
    • The maximum dollar amount of the issuance;
    • The maximum amount of discount to the market;
    • The purpose of the transaction; and
    • The time frame to complete the transaction - generally, within three months.

In addition, if the generic proposal relates to a potential change of control, which requires shareholder approval under Listing Rule 5635(b), the proxy must also identify the potential new controlling shareholder.

Publication Date*: 10/10/2018 Mailto Link Identification Number: 286
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