As we previously blogged, The Nasdaq Stock Market filed with the Securities and Exchange Commission an amendment to its shareholder vote rule, often referred to as the 20% rule. The amendment was recently approved by the Commission. The amendments eliminate “book value” in the determination of what constitutes a dilutive transaction. Shareholder approval is required in connection with a 20% issuance at a price less than the Minimum Price. A 20% issuance is a transaction other than a public offering that involves the sale, issuance or potential issuance of a listed company’s common stock (or securities convertible or exercisable for common stock) that alone or together with sales by certain control persons equal 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance. The Minimum Price is a price that is the lower of the closing price immediately preceding the signing of the definitive agreement or the average closing price for the five trading days immediately preceding the signing of that agreement. While the amendment is limited and does not modify or affect other aspects of Rule 5635, which still requires shareholder approval in many instances, it is still helpful for listed companies.
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2018. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.