January 26, 2022

Direct Listings: Nasdaq Amends Direct Capital Raise Rule Proposal

When last we dropped in on Nasdaq, it had amended its proposal to permit direct listings with a capital raise in order to tweak the price range limitations contained in the rule. That amendment came only weeks after the SEC had approved the original version of the rule.  Now this Fenwick memo reports that Nasdaq recently filed another amendment to its proposal:

On January 6, 2022, Nasdaq filed an amended rule proposal with the U.S. Securities and Exchange Commission to address the SEC’s questions and concerns related to the prior proposal filed by Nasdaq on May 25, 2021, which sought increased pricing flexibility in a Direct Listing with a Capital Raise.

Among other things, the amended proposal includes additional requirements for pricing a Direct Listing with a Capital Raise at more than 20% above the price range, adds certain notification requirements and a price volatility constraint, eliminates market orders (other than by the company) from the opening of the offering, requires a company to specify the quantity of shares registered in the S-1 registration statement and aligns the 20% price range deviation calculation with the SEC’s rules.

The memo has additional details on the amended proposal, and notes that the comment period will run until February 2, 2022, and the SEC will make a final decision on the proposal by February 25, 2022.

John Jenkins