SEC Approves Changes to NASDAQ Press Release Procedures
Legal Alerts
4.06.10
The NASDAQ Stock Market LLC recently filed proposed rule changes to modify certain of its press release requirements for listed companies. The SEC approved the changes on March 15, 2010. Previously, Nasdaq required listed companies to disclose certain information through a press release or the news media. The modified rules eliminate the requirement to file a press release in certain situations where the company is already required to disclose the information in a filing with the SEC.
The SEC believes that the changes will minimize duplicative disclosures while still requiring companies to disseminate necessary information to the public in a broad and inclusive manner. The amendments are effective immediately.
Form 8-K Disclosures. The rule changes allow companies to make the following disclosures either by filing a Form 8-K,when required by SEC rules, or issuing a press release:
- Receipt of a notice that the company does not meet a listing standard (Rule 5250(b)(3)), that the staff has determined to delist the company (Rule 5810(b)) or that the company has received a Public Reprimand Letter (Rule 5840(k)). A company that is late in filing a required periodic report with the SEC, however, is still required to issue a press release announcing that it has received such a notice, and the company would not be permitted to fulfill this requirement by only filing a Form 8-K.
- Receipt of an exception to the shareholder approval requirements because compliance would jeopardize the company's financial viability (Rule 5635(f)). A company that receives a shareholder approval exception, however, is still required under Rule 5635 to mail a notice to all shareholders at least 10 days before issuing securities in reliance on the exception.
- Any changes in the terms of a listed unit (Rule 5225(a)(3)).
Nasdaq still requires a company to make public disclosures through a press release in situations where a Form 8-K is not required to be filed. The amendments, however, did not change the requirement that a company file a press release regarding its voluntary delisting (Rule 5840(j)).
Foreign Private Issuer Interim Financial Results. The prior rules required foreign private issuers to disclose interim financial results in a press release and on a Form 6-K. Nasdaq eliminated the requirement that this information be published in a press release, while maintaining the requirement that it be disclosed on a Form 6-K.
Audit Opinion — Going Concern Qualification. Nasdaq also eliminated the requirement that a company must issue a press release announcing the receipt of an audit opinion expressing doubt about the ability of the company to continue as a going concern (Rule 5250(b)(2)). In this regard, the SEC noted that the audit opinion is required to be provided in a company's annual filing, which must also be distributed to shareholders under the SEC's proxy rules, and made available to all shareholders under the Nasdaq rules. If a company fails to include the audit opinion in its annual report, however, Nasdaq will consider the filing deficient and move to delist the company.
Streamlined Notification Procedures. Nasdaq also clarified in each of the rule changes that notification of these disclosures should be made to the Nasdaq MarketWatch Department through Nasdaq's electronic disclosure submission system at least ten minutes prior to the notification to the public, rather than notifying multiple Nasdaq departments as required under the prior rules.
For more information, please contact Robert Murphy at 202-906-8721, Rick McDonald at 248-203-0859, or Mark Metz at 313-568-5434.
As part of our service to you, we regularly compile short reports on new and interesting developments in public company matters and the issues these developments raise. Please recognize that these reports do not constitute legal advice and that we do not attempt to cover all such developments. Readers should seek specific legal advice before acting with regard to the subjects mentioned here. Rules of certain state supreme courts may consider this advertising and require us to advise you of such designation. Your comments on this newsletter, or on any Dykema publication, are always welcome. © 2010 Dykema Gossett PLLC.
