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  Staff Interpretation Letter 2003-12
Identification Number 983
Rule 4350(a):  NASDAQ will provide exemptions to the extent that a rule requires any foreign issuer to do any act that is contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or the rule is contrary to generally accepted business practices in the issuer’s country of domicile.
Rule 4350(i)(1)(C)(ii):  Each issuer shall require shareholder approval … prior to the issuance of designated securities … in connection with the acquisition of the stock or assets of another company if: … (ii) where, due to the present or potential issuance of common stock, or securities convertible into or exercisable for common stock, other than a public offering for cash: (a) the common stock has or will have upon issuance voting power equal to or in excess of 20 percent of the voting power outstanding before the issuance of stock or securities convertible into or exercisable for common stock; or (b) the number of shares of common stock to be issued is or will be equal to or in excess of 20 percent of the number of shares of common stock outstanding before the issuance of the stock or securities.
Relevant Facts:  A Canadian company plans to issue in excess of 20% of its total common shares outstanding to acquire another company.  Pursuant to NASDAQ’s rules, shareholder approval for the transaction is required.  The company’s foreign counsel represents that neither the laws, regulations or the practices of its home country or the rules of its home country stock exchange require shareholder approval of the transaction.  Accordingly, the company requests an exemption from NASDAQ’s shareholder approval rules for this transaction.
Issue:  Is the company eligible for an exemption from the shareholder approval rules?
Determination:  Since the company's foreign counsel represented that the laws, rules, and regulations of the home country do not require the company to obtain shareholder approval for the proposed acquisition, and that obtaining such approval is not consistent with the requirements of the primary stock market in the company’s country of domicile, it appears that NASDAQ's shareholder approval requirements are contrary to generally accepted business requirements in the company’s home country.  Accordingly, NASDAQ granted the requested exemption to Listing Rule 4350(i)(1)(C)(ii).
Publication Date*: 7/31/2012 Mailto Link Identification Number: 983
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