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Frequently Asked Questions
  Staff Interpretation Letter 2005-33  
Identification Number 880
This is in response to your letters regarding the applicability of The NASDAQ Stock Market’s shareholder approval requirements to an issuance of securities in a private placement (the “Transaction”).  Specifically, you asked about the potential applicability of Marketplace Listing Rule 4350(i)(1)(B) (the “Rule”).
According to the information you provided, in the Transaction the company expects to issue to institutional investors shares (the “Shares”) equal to approximately 12.5% to 15.7% of the pre-transaction outstanding shares of common stock, at a discount to the market value.  No officer, director, employee, or consultant of the company will participate in the Transaction.  Among the investors who may participate is “Fund”, which currently owns approximately 21% of the company’s outstanding common stock.  The Fund acquired its holdings by participating in private placements and by open market purchases.  Currently, no other stockholder or group of affiliated stockholders, including the company’s officers and directors as a group, has a larger beneficial ownership interest in the company’s common stock than the Fund, and according to the company’s last proxy statement, no other investor holds a position as large as 5% of the company’s common stock.  Depending on its level of participation, the Fund’s holdings in the company may go up or down, or even remain constant, as a result of the Transaction.  No other stockholder or group of stockholders will have a larger interest in the company than the Fund following the Transaction.
Following our review of the information you submitted, we have concluded that the Transaction, as described in your correspondence, does not require shareholder approval under the Rule because it will not result in a change of control.  The Fund, the largest current shareholder, will remain the largest shareholder upon the completion of the Transaction, and there is no other significant shareholder.  Further, at the time the Fund made the open market purchases that resulted in its ownership increasing from approximately 18% to approximately 21%, the company had not had any discussions with the Fund regarding the Transaction or other equity financing.
Publication Date*: 7/31/2012 Mailto Link Identification Number: 880
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