NASDAQ Proposes Modified Disclosure Requirements Relating to Non-compliance with Listing Standards | Practical Law

NASDAQ Proposes Modified Disclosure Requirements Relating to Non-compliance with Listing Standards | Practical Law

NASDAQ issued a proposed rule change that would modify certain disclosure requirements relating to a company's non-compliance with NASDAQ's listing standards.

NASDAQ Proposes Modified Disclosure Requirements Relating to Non-compliance with Listing Standards

by PLC Corporate & Securities
Published on 08 Oct 2012 • USA (National/Federal)
NASDAQ issued a proposed rule change that would modify certain disclosure requirements relating to a company's non-compliance with NASDAQ's listing standards.
On October 3, 2012, NASDAQ issued a proposed rule change that would modify certain disclosure requirements relating to a company's non-compliance with NASDAQ's listing standards.
Current NASDAQ rules require a company to make a public announcement after receiving a notification from NASDAQ that the company is not in compliance with a NASDAQ listing standard. The announcement must disclose the company's receipt of the notification and identify the NASDAQ rule on which the deficiency is based. The announcement may be made either by:
  • Filing a Form 8-K, where required by SEC rules.
  • Issuing a press release.
The proposed rule change would require a company to also include in its public announcement a description of the bases and specific concerns underlying NASDAQ's determination. A company would also be permitted to include its own analysis of the issues raised by NASDAQ's notification. Under the proposed rule change, if a company does not make the required public announcement or does not include in its announcement all of the required information, NASDAQ could:
  • Halt trading of the company's securities.
  • Make its own public announcement containing the required information. NASDAQ would ordinarily resume trading in the company's securities after making its own announcement if the company's failure to make a public announcement was the only basis for a trading halt.
The proposed rule change would also allow NASDAQ to make a public announcement at any time describing an action involving a company's listing or trading on NASDAQ.
The purpose of the proposed rule change is to ensure that investors receive adequate information when a company is deficient under NASDAQ's rules, so they may make more informed investment decisions about the company's securities.
To learn more about filing a Form 8-K, see Practice Note, Form 8-K.