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  Staff Interpretation Letter 2007-24
Identification Number 800
This is in response to your correspondence regarding the applicability of NASDAQ’s shareholder approval requirements of Marketplace Listing Rule 4350(i)(1)(D) (the “Rule”) to a proposed issuance (the “Proposed Issuance”) of common stock which could exceed 20% of the pre-transaction outstanding shares.  You asked whether the Proposed Issuance would be considered to be a public offering and, therefore, not require shareholder approval under the Rule.
According to the information you submitted, the company has entered into an agreement with the Investment Banker whereby the company could, at its choice, sell shares of its common stock (the “Shares”) from time to time to the Investment Banker, which would purchase the shares on a firm commitment basis for approximately 94% of market value.  The Investment Banker would then sell the Shares through several brokerage firms (the “Brokers”) via ordinary market transactions on the Foreign Stock Exchange at prevailing market prices.  The company is also listed on the Foreign Stock Exchange, and over 80% of its volume has traded on that market over the last three months.  The sales would be open to all market participants, and the company would have no control over the sale of the Shares after selling the Shares to the Investment Banker.  You stated that it is the intent of the Investment Banker to distribute the Shares to the Brokers for resale immediately after acquiring them from the company.
Following our review of the information you submitted, we have determined that the Proposed Issuance would be a “public offering” under the Rule and therefore would not require shareholder approval under the Rule.  We have reached this conclusion because the Shares would be sold into the market at the prevailing market prices in ordinary brokerage transactions open to all market participants.  This conclusion is based on the representation that the Investment Banker intends to distribute the Shares to the Brokers for resale into the market immediately after acquiring them from the company.
Publication Date*: 7/31/2012 Mailto Link Identification Number: 800
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