Self-Regulatory Organizations; the NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change To Clarify the Listing of Additional Shares Notification Process, 19540-19542 [E8-7508]

Download as PDF 19540 Federal Register / Vol. 73, No. 70 / Thursday, April 10, 2008 / Notices general, to protect investors and the public interest. NASDAQ believes that by allocating pricing benefits to market makers that make tangible commitments to enhancing market quality for ETFs and ILSs listed on NASDAQ, the proposal will encourage the development of new financial products, provide a better trading environment for investors in ETFs and ILSs, and encourage greater competition between listing venues for ETFs and ILSs. B. Self-Regulatory Organization’s Statement on Burden on Competition NASDAQ believes that the proposed rule change will encourage greater competition among venues that list ETFs and ILSs, and will further strengthen the quality of the NASDAQ market as a venue for transactions in ETFs and ILSs. Accordingly, NASDAQ does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing rule change establishes or changes a due, fee, or other charge imposed by the Exchange, it has become effective pursuant to Section 19(b)(3)(A) of the Act 7 and Rule 19b–4(f)(2) 8 thereunder. At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. mstockstill on PROD1PC66 with NOTICES IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: 7 15 8 17 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). VerDate Aug<31>2005 16:48 Apr 09, 2008 Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NASDAQ–2008–029 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. [Release No. 34–57616; File No. SR– NASDAQ–2008–017] Self-Regulatory Organizations; the NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change To Clarify the Listing of Additional Shares Notification Process April 3, 2008. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on March 6, 2008, The NASDAQ Stock Market LLC (‘‘Nasdaq’’) filed with the Securities and All submissions should refer to File Exchange Commission (‘‘Commission’’) Number SR–NASDAQ–2008–029. This the proposed rule change as described file number should be included on the subject line if e-mail is used. To help the in Items I, II, and III below, which Items have been substantially prepared by Commission process and review your Nasdaq. The Commission is publishing comments more efficiently, please use this notice to solicit comments on the only one method. The Commission will proposed rule change from interested post all comments on the Commission’s persons. Internet Web site (https://www.sec.gov/ I. Self-Regulatory Organization’s rules/sro.shtml). Copies of the Statement of the Terms of Substance of submission, all subsequent the Proposed Rule Change amendments, all written statements with respect to the proposed rule Nasdaq proposes to clarify the process change that are filed with the concerning notifications of the listing of additional shares.3 The text of the Commission, and all written proposed rule change is below. communications relating to the Proposed new language is in italics; proposed rule change between the Commission and any person, other than proposed deletions are in brackets.4 those that may be withheld from the * * * * * public in accordance with the 4310. Listing Requirements for Domestic provisions of 5 U.S.C. 552, will be and Canadian Securities available for inspection and copying in To qualify for listing in Nasdaq, a the Commission’s Public Reference Room on official business days between security of a domestic or Canadian issuer shall satisfy all applicable the hours of 10 a.m. and 3 p.m. Copies requirements contained in paragraphs of such filing also will be available for (a), (b), and (c) hereof. Issuers that meet inspection and copying at the principal these requirements, but that are not office of the NASDAQ. All comments listed on the Nasdaq Global Market, are received will be posted without change; listed on the Nasdaq Capital Market. the Commission does not edit personal (a)–(b) No change. identifying information from (c) In addition to the requirements submissions. You should submit only contained in paragraph (a) and (b) information that you wish to make above, and unless otherwise indicated, available publicly. All submissions a security shall satisfy the following should refer to File Number SR– criteria for listing on Nasdaq: NASDAQ–2008–029 and should be (1)–(16) No change. submitted on or before May 1, 2008. (17) [The issuer shall be] A listed company is required to notify Nasdaq For the Commission, by the Division of [on the appropriate form no later than] Trading and Markets, pursuant to delegated at least 15 calendar days prior to: authority.9 Florence E. Harmon, Deputy Secretary. [FR Doc. E8–7507 Filed 4–9–08; 8:45 am] BILLING CODE 8011–01–P 9 17 Jkt 214001 SECURITIES AND EXCHANGE COMMISSION PO 00000 CFR 200.30–3(a)(12). Frm 00087 Fmt 4703 Sfmt 4703 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 The Commission notes that as part of the proposed rule filing, the Exchange submitted a revised Listing of Additional Shares Notification Form conforming the instructions on the Form to the proposed rule changes herein. 4 Changes are marked to the rule text that appears in the electronic manual of Nasdaq found at https://www.complinet.com/nasdaq. 2 17 E:\FR\FM\10APN1.SGM 10APN1 Federal Register / Vol. 73, No. 70 / Thursday, April 10, 2008 / Notices (A)(i) establishing or materially amending a stock option plan, purchase plan or other equity compensation arrangement pursuant to which stock may be acquired by officers, directors, employees, or consultants without shareholder approval. (ii) Nasdaq recognizes that when an issuer makes an equity grant to induce an individual to accept employment, as permitted by the exception contained in Rule 4350(i)(1)(A)(iv), it may not be practical to provide the advance notice otherwise required by this Rule. Therefore, when an issuer relies on that exception to make such an inducement grant without shareholder approval, it is sufficient to notify Nasdaq about the grant and the use of the exception no later than five calendar days after entering into the agreement to issue the securities; or (B)–(C) No change. (D) [entering into] issuing any common stock, or any security convertible into common stock in a transaction that may result in the potential issuance of common stock, [(or securities convertible into common stock)] greater than 10% of either the total shares outstanding or the voting power outstanding on a pre-transaction basis. The notifications required by this paragraph must be made on the Notification Form: Listing of Additional Shares and Nasdaq encourages companies to file this form as soon as practicable, even if all of the relevant terms are not yet known. Nasdaq reviews these forms to determine compliance with applicable Nasdaq rules, including the shareholder approval requirements. Therefore, if a company fails to file timely the form required by this paragraph, Nasdaq may issue a Staff Determination (pursuant to the Rule 4800 Series) that is either a public reprimand letter or a delisting determination. (18)–(30) No change. (d) No change. mstockstill on PROD1PC66 with NOTICES 4320. Listing Requirements for NonCanadian Foreign Securities and American Depositary Receipts To qualify for listing on Nasdaq, a security of a non-Canadian foreign issuer, an American Depositary Receipt (ADR) or similar security issued in respect of a security of a foreign issuer shall satisfy the requirements of paragraphs (a), (b), and (e) of this Rule. Issuers that meet these requirements, but that are not listed on the Nasdaq Global Market, are listed on the Nasdaq Capital Market. (a)–(d) No change. VerDate Aug<31>2005 16:48 Apr 09, 2008 Jkt 214001 (e) In addition to the requirements contained in paragraphs (a) and (b), the security shall satisfy the criteria set out in this subsection for listing on Nasdaq. In the case of ADRs, the underlying security will be considered when determining the ADR’s qualification for initial or continued listing on Nasdaq. (1)–(14) No change. (15) The issuer of any class of securities listed on Nasdaq, except for American Depositary Receipts, [shall be] is required to notify Nasdaq [on the appropriate form no later than] at least 15 calendar days prior to: (A)(i) establishing or materially amending a stock option plan, purchase plan or other equity compensation arrangement pursuant to which stock may be acquired by officers, directors, employees, or consultants without shareholder approval. (ii) Nasdaq recognizes that when an issuer makes an equity grant to induce an individual to accept employment, as permitted by the exception contained in Rule 4350(i)(1)(A)(iv), it may not be practical to provide the advance notice otherwise required by this Rule. Therefore, when an issuer relies on that exception to make such an inducement grant without shareholder approval, it is sufficient to notify Nasdaq about the grant and the use of the exception no later than five calendar days after entering into the agreement to issue the securities; or (B)–(C) No change. (D) [entering into] issuing any common stock, or any security convertible into common stock in a transaction that may result in the potential issuance of common stock, [(or securities convertible into common stock)] greater than 10% of either the total shares outstanding or the voting power outstanding on a pre-transaction basis. The notifications required by this paragraph must be made on the Notification Form: Listing of Additional Shares and Nasdaq encourages companies to file this form as soon as practicable, even if all of the relevant terms are not yet known. Nasdaq reviews these forms to determine compliance with applicable Nasdaq rules, including the shareholder approval requirements. Therefore, if a company fails to file timely the form required by this paragraph, Nasdaq may issue a Staff Determination (pursuant to the Rule 4800 Series) that is either a public reprimand letter or a delisting determination. (16)–(26) No change. (f) No change. * * * * * PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 19541 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Nasdaq included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. Nasdaq has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Nasdaq Rules 4310(c)(17) and 4320(e)(15) require a company to provide 15 days notice prior to issuing securities in certain specified situations. These notifications allow Nasdaq to make compliance determinations regarding stock issuances that are potentially subject to the shareholder approval rules. Nasdaq proposes to clarify the timing requirement contained in Rules 4310(c)(17)(D) and 4320(e)(15)(D).5 At present, the rules provide that notifications under these subparagraphs are required prior to ‘‘entering into’’ a described transaction. However, while Nasdaq has treated this requirement as being satisfied if the company files the required notification 15 days before issuing the securities, that interpretation is not transparent from the rule. As such, Nasdaq proposes to revise these provisions such that notice will instead be required prior to ‘‘issuing’’ the securities, consistent with the requirements in paragraphs (B) and (C) of those rules.6 In addition, Nasdaq proposes to modify the timing requirement contained in Rules 4310(c)(17)(A) and 4320(e)(15)(A) as it relates to companies relying on the exception to shareholder approval for inducement grants to new employees contained in Rule 5 See supra note 3. believes that this is also consistent with the requirements of other marketplaces. See, e.g., New York Stock Exchange LLC (‘‘NYSE’’) Listed Company Manual Section 703.01(B) (requiring subsequent listing applications to be filed at least two weeks before the company wishes the NYSE to take action upon the application) and American Stock Exchange LLC (‘‘Amex’’) Company Guide Sections 303(b) and 331 (requiring a company to submit an additional listing application at least one to two weeks in advance of the date on which Amex’s approval is needed). 6 Nasdaq E:\FR\FM\10APN1.SGM 10APN1 19542 Federal Register / Vol. 73, No. 70 / Thursday, April 10, 2008 / Notices 4350(i)(1)(A)(iv).7 Because these grants can be made at the time the employment offer is accepted, companies may not be able to provide 15 days advance notice. Instead, the proposed rule would require notification no later than five calendar days after entering into the agreement to issue the securities. Nasdaq also proposes to amend Rules 4310(c)(17) and 4320(e)(15) to clarify that the notifications required by these rules must be made on a Listing of Additional Shares (‘‘LAS’’) Notification Form and to provide transparency to the consequences of failing to timely file LAS notifications. Specifically, depending on the circumstances, Nasdaq may issue a Staff Determination (pursuant to the Rule 4800 Series) that is a public reprimand letter or a delisting determination. In determining whether to issue a Staff Determination, and whether such a Staff Determination would be a delisting determination or a public reprimand letter, Nasdaq would consider whether the issuer has demonstrated a pattern of late filings, the length of such filing delays, the reason for the delays, whether the issuer has been contacted concerning previous violations, whether the underlying transactions were themselves noncompliant, and whether the issuer has taken steps to assure that future violations will not occur. Finally, in connection with this change, Nasdaq notes that it also intends to adopt a process whereby it will notify companies when the LAS review process has been completed. At present, Nasdaq does not routinely inform a company when it has completed its review. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,8 in general, and with Section 6(b)(5) of the Act,9 in particular, in that the proposal is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mstockstill on PROD1PC66 with NOTICES 7 Rule 4350(i)(1)(A)(iv) allows an exception to the requirement to obtain shareholder approval for equity compensation for certain ‘‘issuances to a person not previously an employee or director of the company, or following a bona fide period of non-employment, as an inducement material to the individual’s entering into employment with the company.’’ 8 15 U.S.C. 78f. 9 15 U.S.C. 78f(b)(5). VerDate Aug<31>2005 16:48 Apr 09, 2008 Jkt 214001 mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The proposed rule change is designed to simplify and provide transparency to the operation of Nasdaq’s notification requirements. B. Self-Regulatory Organization’s Statement on Burden on Competition Nasdaq does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: (A) By order approve such proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of Nasdaq. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– NASDAQ–2008–017 and should be submitted on or before May 1, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Florence E. Harmon, Deputy Secretary. [FR Doc. E8–7508 Filed 4–9–08; 8:45 am] BILLING CODE 8011–01–P IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NASDAQ–2008–017 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NASDAQ–2008–017. This file number should be included on the subject line if e-mail is used. To help the PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–57617; File No. SR–NYSE– 2008–25] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Pilot Program for Providing Liquidity on the NYSE BondsSM System April 4, 2008. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on March 31, 2008, the New York Stock Exchange LLC ( ‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items 10 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\10APN1.SGM 10APN1

Agencies

[Federal Register Volume 73, Number 70 (Thursday, April 10, 2008)]
[Notices]
[Pages 19540-19542]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-7508]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57616; File No. SR-NASDAQ-2008-017]


Self-Regulatory Organizations; the NASDAQ Stock Market LLC; 
Notice of Filing of Proposed Rule Change To Clarify the Listing of 
Additional Shares Notification Process

April 3, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 6, 2008, The NASDAQ Stock Market LLC (``Nasdaq'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I, II, and III below, which Items 
have been substantially prepared by Nasdaq. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to clarify the process concerning notifications of 
the listing of additional shares.\3\ The text of the proposed rule 
change is below. Proposed new language is in italics; proposed 
deletions are in brackets.\4\
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    \3\ The Commission notes that as part of the proposed rule 
filing, the Exchange submitted a revised Listing of Additional 
Shares Notification Form conforming the instructions on the Form to 
the proposed rule changes herein.
    \4\ Changes are marked to the rule text that appears in the 
electronic manual of Nasdaq found at https://www.complinet.com/
nasdaq.
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* * * * *
4310. Listing Requirements for Domestic and Canadian Securities
    To qualify for listing in Nasdaq, a security of a domestic or 
Canadian issuer shall satisfy all applicable requirements contained in 
paragraphs (a), (b), and (c) hereof. Issuers that meet these 
requirements, but that are not listed on the Nasdaq Global Market, are 
listed on the Nasdaq Capital Market.
    (a)-(b) No change.
    (c) In addition to the requirements contained in paragraph (a) and 
(b) above, and unless otherwise indicated, a security shall satisfy the 
following criteria for listing on Nasdaq:
    (1)-(16) No change.
    (17) [The issuer shall be] A listed company is required to notify 
Nasdaq [on the appropriate form no later than] at least 15 calendar 
days prior to:

[[Page 19541]]

    (A)(i) establishing or materially amending a stock option plan, 
purchase plan or other equity compensation arrangement pursuant to 
which stock may be acquired by officers, directors, employees, or 
consultants without shareholder approval.
    (ii) Nasdaq recognizes that when an issuer makes an equity grant to 
induce an individual to accept employment, as permitted by the 
exception contained in Rule 4350(i)(1)(A)(iv), it may not be practical 
to provide the advance notice otherwise required by this Rule. 
Therefore, when an issuer relies on that exception to make such an 
inducement grant without shareholder approval, it is sufficient to 
notify Nasdaq about the grant and the use of the exception no later 
than five calendar days after entering into the agreement to issue the 
securities; or
    (B)-(C) No change.
    (D) [entering into] issuing any common stock, or any security 
convertible into common stock in a transaction that may result in the 
potential issuance of common stock, [(or securities convertible into 
common stock)] greater than 10% of either the total shares outstanding 
or the voting power outstanding on a pre-transaction basis.
    The notifications required by this paragraph must be made on the 
Notification Form: Listing of Additional Shares and Nasdaq encourages 
companies to file this form as soon as practicable, even if all of the 
relevant terms are not yet known. Nasdaq reviews these forms to 
determine compliance with applicable Nasdaq rules, including the 
shareholder approval requirements. Therefore, if a company fails to 
file timely the form required by this paragraph, Nasdaq may issue a 
Staff Determination (pursuant to the Rule 4800 Series) that is either a 
public reprimand letter or a delisting determination.
    (18)-(30) No change.
    (d) No change.
4320. Listing Requirements for Non-Canadian Foreign Securities and 
American Depositary Receipts
    To qualify for listing on Nasdaq, a security of a non-Canadian 
foreign issuer, an American Depositary Receipt (ADR) or similar 
security issued in respect of a security of a foreign issuer shall 
satisfy the requirements of paragraphs (a), (b), and (e) of this Rule. 
Issuers that meet these requirements, but that are not listed on the 
Nasdaq Global Market, are listed on the Nasdaq Capital Market.
    (a)-(d) No change.
    (e) In addition to the requirements contained in paragraphs (a) and 
(b), the security shall satisfy the criteria set out in this subsection 
for listing on Nasdaq. In the case of ADRs, the underlying security 
will be considered when determining the ADR's qualification for initial 
or continued listing on Nasdaq.
    (1)-(14) No change.
    (15) The issuer of any class of securities listed on Nasdaq, except 
for American Depositary Receipts, [shall be] is required to notify 
Nasdaq [on the appropriate form no later than] at least 15 calendar 
days prior to:
    (A)(i) establishing or materially amending a stock option plan, 
purchase plan or other equity compensation arrangement pursuant to 
which stock may be acquired by officers, directors, employees, or 
consultants without shareholder approval.
    (ii) Nasdaq recognizes that when an issuer makes an equity grant to 
induce an individual to accept employment, as permitted by the 
exception contained in Rule 4350(i)(1)(A)(iv), it may not be practical 
to provide the advance notice otherwise required by this Rule. 
Therefore, when an issuer relies on that exception to make such an 
inducement grant without shareholder approval, it is sufficient to 
notify Nasdaq about the grant and the use of the exception no later 
than five calendar days after entering into the agreement to issue the 
securities; or
    (B)-(C) No change.
    (D) [entering into] issuing any common stock, or any security 
convertible into common stock in a transaction that may result in the 
potential issuance of common stock, [(or securities convertible into 
common stock)] greater than 10% of either the total shares outstanding 
or the voting power outstanding on a pre-transaction basis.
    The notifications required by this paragraph must be made on the 
Notification Form: Listing of Additional Shares and Nasdaq encourages 
companies to file this form as soon as practicable, even if all of the 
relevant terms are not yet known. Nasdaq reviews these forms to 
determine compliance with applicable Nasdaq rules, including the 
shareholder approval requirements. Therefore, if a company fails to 
file timely the form required by this paragraph, Nasdaq may issue a 
Staff Determination (pursuant to the Rule 4800 Series) that is either a 
public reprimand letter or a delisting determination.
    (16)-(26) No change.
    (f) No change.
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, Nasdaq included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. Nasdaq has prepared summaries, set forth in Sections A, 
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Nasdaq Rules 4310(c)(17) and 4320(e)(15) require a company to 
provide 15 days notice prior to issuing securities in certain specified 
situations. These notifications allow Nasdaq to make compliance 
determinations regarding stock issuances that are potentially subject 
to the shareholder approval rules.
    Nasdaq proposes to clarify the timing requirement contained in 
Rules 4310(c)(17)(D) and 4320(e)(15)(D).\5\ At present, the rules 
provide that notifications under these subparagraphs are required prior 
to ``entering into'' a described transaction. However, while Nasdaq has 
treated this requirement as being satisfied if the company files the 
required notification 15 days before issuing the securities, that 
interpretation is not transparent from the rule. As such, Nasdaq 
proposes to revise these provisions such that notice will instead be 
required prior to ``issuing'' the securities, consistent with the 
requirements in paragraphs (B) and (C) of those rules.\6\
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    \5\ See supra note 3.
    \6\ Nasdaq believes that this is also consistent with the 
requirements of other marketplaces. See, e.g., New York Stock 
Exchange LLC (``NYSE'') Listed Company Manual Section 703.01(B) 
(requiring subsequent listing applications to be filed at least two 
weeks before the company wishes the NYSE to take action upon the 
application) and American Stock Exchange LLC (``Amex'') Company 
Guide Sections 303(b) and 331 (requiring a company to submit an 
additional listing application at least one to two weeks in advance 
of the date on which Amex's approval is needed).
---------------------------------------------------------------------------

    In addition, Nasdaq proposes to modify the timing requirement 
contained in Rules 4310(c)(17)(A) and 4320(e)(15)(A) as it relates to 
companies relying on the exception to shareholder approval for 
inducement grants to new employees contained in Rule

[[Page 19542]]

4350(i)(1)(A)(iv).\7\ Because these grants can be made at the time the 
employment offer is accepted, companies may not be able to provide 15 
days advance notice. Instead, the proposed rule would require 
notification no later than five calendar days after entering into the 
agreement to issue the securities.
---------------------------------------------------------------------------

    \7\ Rule 4350(i)(1)(A)(iv) allows an exception to the 
requirement to obtain shareholder approval for equity compensation 
for certain ``issuances to a person not previously an employee or 
director of the company, or following a bona fide period of non-
employment, as an inducement material to the individual's entering 
into employment with the company.''
---------------------------------------------------------------------------

    Nasdaq also proposes to amend Rules 4310(c)(17) and 4320(e)(15) to 
clarify that the notifications required by these rules must be made on 
a Listing of Additional Shares (``LAS'') Notification Form and to 
provide transparency to the consequences of failing to timely file LAS 
notifications. Specifically, depending on the circumstances, Nasdaq may 
issue a Staff Determination (pursuant to the Rule 4800 Series) that is 
a public reprimand letter or a delisting determination. In determining 
whether to issue a Staff Determination, and whether such a Staff 
Determination would be a delisting determination or a public reprimand 
letter, Nasdaq would consider whether the issuer has demonstrated a 
pattern of late filings, the length of such filing delays, the reason 
for the delays, whether the issuer has been contacted concerning 
previous violations, whether the underlying transactions were 
themselves non-compliant, and whether the issuer has taken steps to 
assure that future violations will not occur.
    Finally, in connection with this change, Nasdaq notes that it also 
intends to adopt a process whereby it will notify companies when the 
LAS review process has been completed. At present, Nasdaq does not 
routinely inform a company when it has completed its review.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\8\ in general, and with Section 
6(b)(5) of the Act,\9\ in particular, in that the proposal is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest. The proposed rule change is 
designed to simplify and provide transparency to the operation of 
Nasdaq's notification requirements.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2008-017 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2008-017. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Room on official 
business days between the hours of 10 a.m. and 3 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal office of Nasdaq. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NASDAQ-2008-017 and should be submitted on or before May 
1, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-7508 Filed 4-9-08; 8:45 am]
BILLING CODE 8011-01-P
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