Tag: Nasdaq listing rules
Nasdaq proposes to codify new standards for review by Listing Council [Updated 10/17/24]
Nasdaq is proposing to codify the standards of review that govern appeals and reviews before the Nasdaq Listing and Hearing Review Council, referred to as the Listing Council. When a listed company receives a Staff Delisting Determination or a Public Reprimand Letter, or when its application for initial listing is denied, the company may request a review before a Hearings Panel. The decision by the Hearings Panel may then be reviewed by the Listing Council, either on appeal by the company or on the Listing Council’s own initiative. Nasdaq observes that the use of the Listing Council “helps address the perception of conflicts that may otherwise exist given Nasdaq’s status as both a self-regulatory organization and a for-profit entity.” Currently, however, there is no standard of review applicable to these Listing Council reviews of Hearings Panel decisions and, as even Nasdaq acknowledges, the Listing Rules are ambiguous regarding the extent of the Listing Council’s mandate in this context. Accordingly, Nasdaq now proposes to adopt two new standards of review: one standard—intended to “limit frivolous and baseless appeals”—for appeals of Hearings Panel decisions before the Listing Council and a second standard for Hearings Panel decisions called for review by the Listing Council. Nasdaq would apply the new standards of review to all matters that enter the Listing Council review process following approval of the proposal; matters pending review by the Listing Council when the proposal becomes effective would remain subject to current rules.
Nasdaq toughens up suspension and delisting process for SPACs
Nasdaq has just filed a proposal, Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend Certain Procedures Related to the Suspension and Delisting of Acquisition Companies, designed to address the suspension and delisting process applicable to Acquisition Companies, companies such as SPACs with business plans to complete one or more acquisitions, as described in Rule IM-5101-2. The rule changes would apply to an Acquisition Company that “fails to (i) complete one or more business combinations satisfying the requirements set forth in Listing Rule IM-5101-2(b) (“Business Combination”) within 36 months of the effectiveness of its IPO registration statement; or (ii) meet the requirements for initial listing following the Business Combination.” The proposal would also “limit the Hearings Panels authority to review the Nasdaq Staff’s decision in these instances to a review for factual error only.” Nasdaq also proposes to clarify Listing Rule 5810(c)(1) (with no substantive change) to improve transparency and readability. The rule changes will be operative for Staff Delisting Determination letters issued on or after October 7, 2024.
Nasdaq simplifies “confusing” timing requirements for board diversity rules
A new rule change designed to simplify the rules regarding the timing of compliance with the Nasdaq board diversity listing rules has been filed by Nasdaq and declared immediately effective. As you probably remember, on August 6, 2021, the SEC approved Nasdaq’s proposal for new listing rules regarding board diversity and disclosure, along with a proposal to provide free access to a board recruiting service. The listing rules adopted a “comply or explain” mandate for board diversity for most listed companies and required companies listed on Nasdaq’s U.S. exchange to publicly disclose “consistent, transparent diversity statistics” regarding the composition of their boards in a matrix format. (See this PubCo post.) Now, Nasdaq acknowledges that the formulation of the compliance deadlines, which were tied to the approval date of the proposal by the SEC, is “confusing and unnecessarily complicated.” Not Nasdaq’s fault though—it meant well! At the time of filing of the proposal, “Nasdaq and listed companies could not know when the proposal would be approved,” and Nasdaq “wanted to assure that listed companies had at least one year from the approval of the rules, or until their next annual meeting, to take necessary actions to satisfy the requirements” of the rules. Nasdaq is now making technical changes to several rules to address that problem by eliminating complicated references to the SEC approval date, and instead requiring compliance by December 31st of the applicable year (which, according to Nasdaq, is the fiscal year-end for approximately 80% of Nasdaq-listed companies subject to the rules).
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