TheCorporateCounsel.net

Yesterday, the SEC issued an order to approve Nasdaq’s proposal to require a listed company conducting a reverse stock split to:

– Notify Nasdaq about certain details of the reverse stock split at least 5 business days (no later than noon ET) prior to the anticipated market effective date, and

– Make public disclosure about the reverse stock split at least 2 business days (no later than noon ET) prior to the anticipated market effective date.

These changes will be reflected in new Rules 5250(b)(4) and 5250(e)(7), new IM 5250-3, and amended Rule 5250(b)(1) – so once they’re posted to the rulebook, read those for more detail. The Company Event Notification Form will also be updated to reflect the information that a company must disclose to the Exchange about a reverse split. Here’s what happens if you don’t comply:

Additionally, if a company takes legal action to effect a reverse stock split notwithstanding its failure to timely satisfy these requirements, or provides incomplete or inaccurate information about the timing or ratio of the reverse stock split in its public disclosure, Nasdaq will halt the stock in accordance with the procedure set forth in Nasdaq Equity 4, Rule 4120, that provides Nasdaq with the authority to halt trading to permit the dissemination of material news.

– Liz Dunshee