The SEC approved a NASDAQ proposal to require companies to publicly disclose a denial of their listing application by NASDAQ.
On February 13, 2015, the SEC approved a NASDAQ proposal to require companies to publicly disclose a denial of their listing application by NASDAQ. The rule change makes amendments to NASDAQ Rule 5205 to provide that a company that receives a determination denying its application for listing must make a public announcement within four business days in a press release or other Regulation FD compliant manner.
In its public announcement, a company must:
Disclose both receipt of the determination and the NASDAQ rules on which the determination is based.
Describe each specific basis and concern identified by NASDAQ in reaching its determination.
If a company does not make a public announcement within four business days or does not include all of the required information in its public announcement, NASDAQ will make a public announcement with the required information. Further, if a company appeals a determination under NASDAQ Rule 5815, the Hearings Panel will consider the company's failure to make a public announcement when considering whether to list the company.
The rule change also clarifies that a company may withdraw its application for initial listing at any time. While NASDAQ has always allowed a company to withdraw its application at any time, the rule change formally adds this to the NASDAQ rules. As a consequence, a company that is informed of NASDAQ's intent to deny its application could withdraw its application before the application is formally denied without triggering the disclosure requirements discussed above.