TheCorporateCounsel.net

Over on The Cooley Capital Xchange Blog, Liz recently addressed the implications of the changes to Nasdaq’s trading halt rule made as part of the implementation of 23/5 trading. This excerpt summarizes the expanded rule:

The amended rule builds on the mandatory trading halt framework that already exists for reverse stock splits – extending it to eight specified categories:

1. trading symbol/ticker changes
2. CUSIP changes
3. Stock dividends valued at 25% or more of the Nasdaq official closing price on the day immediately preceding the ex-date (whether payable in cash, stock, another security or a combination)
4. Forward and reverse stock splits
5. DeSPAC transactions
6. Spinoffs
7. Changes to the form, type, class or designation of a listed security
8. Mergers or other mandatory exchanges

Additionally, a “catch-all” category applies when Nasdaq determines that another corporate action or issuer-related event requires a trading halt to protect investors or maintain fair and orderly markets.

When one of these actions or events occurs, Nasdaq will implement a trading halt after post-market hours end at 8:00 pm ET and before the 9:00 pm ET night session begins. This will happen on the day before the market effective date of the corporate action. Trading will resume at 8:00 am ET on the market effective date

Liz goes on to point out that the rule doesn’t change existing notice and public disclosure requirements for listed companies, including notification requirements applicable to reverse stock splits, dividends and distributions, and changes in ticker symbols.

Liz suggests that companies update checklists and existing processes for corporate actions to identify those that may trigger trading halts early on. She says that companies should also map out the full timeline for a particular action with their transfer agents, Nasdaq & other intermediaries to confirm key notice and disclosure deadlines, and prepare to respond to investor questions about a trading halt.

On a related note, yesterday the SEC announced the agenda and participants for its Sept. 17th roundtable on preparing for 24-hour trading.

– John Jenkins