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Modification of NASDAQ Press Release Requirements for Listed Companies

Client Advisory

April 19, 2010

The U.S. Securities and Exchange Commission (the “Commission”) recently approved changes to certain NASDAQ rules relating to press release requirements for NASDAQ-listed companies[1], as described below. The rule modifications became effective on March 15, 2010. 

NASDAQ rules now permit a company to publicly disclose the following by filing a Form 8-K, where required by the Commission’s rules, in lieu of issuing a press release:

  • Receipt of (i) a notice that the company does not meet a listing standard; (ii) a notice that the NASDAQ staff has determined to delist the company; or (iii) a public reprimand letter[2]. However, in the case of a deficiency related to the requirement to file a periodic report, a company would still be required to issue a press release and would not be permitted to fulfill this requirement by only filing a Form 8-K. NASDAQ clarified that notification of these disclosures should be made to the NASDAQ MarketWatch Department through NASDAQ’s electronic disclosure submission system at least 10 minutes prior to the notification to the public.
  • Receipt of an exception to the NASDAQ shareholder approval requirements with respect to the issuance of equity securities in situations where compliance would jeopardize the company’s financial viability[3]. Companies that receive such an exemption are still required to mail such notice to all shareholders at least ten days before issuing securities in reliance on the exception.
  • Any change in the terms of a listed unit[4].

If a Form 8-K is not required by the Commission’s rules, disclosure can be made by issuing a press release.

Previously, foreign private issuers were required to disclose interim financial results, as of the end of the second quarter, in both a press release and in a Form 6-K filing[5]. NASDAQ has eliminated the requirement that this information be published in a press release, but has retained the requirement that it be on a Form 6-K. A foreign private issuer may disclose this information in a press release if it chooses. 

NASDAQ has eliminated the requirement that a NASDAQ-listed company issue a press release announcing the receipt of an audit opinion that expresses doubt about the ability of the company to continue as a going concern[6]. In its proposed rule change, NASDAQ indicated that the requirement was duplicative of disclosure already provided in a company’s annual filing with the Commission. However, if a company fails to include the disclosure in its annual filing with the Commission, NASDAQ would consider the filing deficient and would move to delist the company on that basis.

In addition, to streamline NASDAQ’s notification procedures, NASDAQ has eliminated the requirement that listed companies notify multiple NASDAQ departments before issuing certain disclosures. Listed companies must now provide a copy of such announcements only to NASDAQ’s MarketWatch Department[7]. For example, a company that makes a public announcement under NASDAQ Listing Rule 5810(b) of receipt of a notification of deficiency, staff delisting determination or public reprimand letter must provide a copy of such announcement to NASDAQ’s MarketWatch Department before its release and is no longer required to also provide a copy of the announcement to the Listing Qualifications Department and the Hearings Department.


Questions regarding this advisory should be addressed to Steven J. Glusband (212-238-8605, glusband@clm.com), Guy P. Lander (212-238-8619, lander@clm.com) or Sharon Rosen (212-238-8690, srosen@clm.com).


Endnotes


[1] SEC Release No. 34-61713; File No. SR-NASDAQ-2010-006 (March 15, 2010).

[2] See NASDAQ Marketplace Rules 5250(b)(2), 5810(b), 5840(k) and IM-5810-1.

[3] See NASDAQ Marketplace Rule 5635(f).

[4]See NASDAQ Marketplace Rule 5225(a)(3).See NASDAQ Marketplace Rule 5225(a)(3).

[5]See NASDAQ Marketplace Rule 5250(c)(2).See NASDAQ Marketplace Rule 5250(c)(2).

[6]See NASDAQ Marketplace Rule 5250(b)(2).See NASDAQ Marketplace Rule 5250(b)(2).

[7] See NASDAQ Marketplace Rule 5810(b) and 5840(k).



Carter Ledyard & Milburn LLP uses Client Advisories to inform clients and other interested parties of noteworthy issues, decisions and legislation which may affect them or their businesses. A Client Advisory does not constitute legal advice or an opinion. This document was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. © 2017 Carter Ledyard & Milburn LLP.
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