By Cydney Posner

Nasdaq recently filed with the SEC a proposal that attempts to harmonize some Nasdaq rule requirements with those of the SEC. A number of Nasdaq rules require a company to disclose information through press releases, although companies are permitted to provide disclosure of material news via any Reg FD-compliant means. Nasdaq believes it is appropriate to expand the disclosures that a company can make through Reg FD-compliant methods and to eliminate some of Nasdaq's requirements that are duplicative of Form 8-K requirements (e.g., Item 3.01 of Form 8-K, which requires a filing when a company receives notice from Nasdaq that it does not satisfy a listing standard or Item 5.02, which could require a filing in the event of use of an inducement exception to grant equity compensation).

Nasdaq proposes to make changes to the following rules and related interpretive material to permit disclosure through any Reg FD-compliant method, which could include a press release or the filing of a Form 8-K:

  • Rules 4803(a), 4804(b), and 4811(f) and IM-4120-2, which require a company to "make a public announcement through the news media" in the event of notifications from Nasdaq staff regarding a company’s compliance with the listing standards. (Note that Nasdaq is not proposing any change to Rule 4380(b), regarding the voluntary delisting of a company, because the press release requirement in that rule is governed by Exchange Act Rule 12d2-2(c).)
  • Rule 4350(b)(4) and Rule 4360(b)(2)(C), which require foreign private issuers to disclose interim financial results "in a press release, which would also be submitted on a Form 6-K." Nasdaq would still maintain the requirement for filing on a Form 6-K. A foreign private issuer would continue to be allowed to disclose this information in a press release if it chooses.
  • Rule 4350(i)(1)(A)(iv) and IM-4350-5, which require that a company relying on the inducement exception to the requirement to obtain shareholder approval for equity compensation awards must "disclose in a press release" specific information about the equity award.
  • Rule 4350(i)(2)(B), which requires a company to "make a public announcement through the news media" when it receives an exception to the shareholder approval requirements because compliance would jeopardize the company’s financial viability. In addition to disclosure through any Reg FD-compliant method, companies that receive this exemption would continue to be required to mail this notice to all shareholders at least ten days before issuing securities in reliance on the exception.
  • Rule 4350(b)(1)(A), which relates to the distribution of a company’s annual report. Currently, this rule requires that a company either (i) distribute a physical copy of its annual report to shareholders, or (ii) issue a press release announcing the filing of its annual report and the availability of that report on the company’s website. Nasdaq proposes to maintain these two alternatives, but also to allow a company to satisfy this requirement by complying with SEC Rule 14a-16 related to "Internet Availability of Proxy Materials."
  • Rule 4350(b)(1)(B), which requiresthat a company issue a press release announcing the receipt of a "going concern" audit opinion. This rule requires duplication of disclosure that would already be provided in a company's annual report, which must be made available to all shareholders under Nasdaq rules and distributed to shareholders under the proxy rules.
  • Rule 4420(h)(3), which requires a company to "publicize through, at a minimum, a public announcement through the news media" any change in the terms of a listed unit.
  • Rules 4803(a), 4804(b) and 4811(f), whichrequire companies to notify multiple Nasdaq departments before they issue certain disclosures. To eliminate this burden, Nasdaq proposes to require that companies provide these disclosures only to MarketWatch using the Electronic Disclosure submission system. MarketWatch will notify other Nasdaq departments as necessary.

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