Generally, under Nasdaq Rule 5810(b), a company listed on Nasdaq that receives a notification of deficiency, a Staff Delisting Determination or a Public Reprimand Letter (collectively, a “Deficiency Notice”) from Nasdaq is required to make a public announcement disclosing receipt of such notice and the Nasdaq Rule(s) upon which the Deficiency Notice is based. Generally, a company can satisfy its obligation to make a public announcement by filing a Form 8-K with the disclosure required by Item 3.01. However, if the Deficiency Notice relates to the requirement to file a periodic report, the company is required to issue a press release, in addition to filing any Form 8-K required by SEC rules.
As described in its proposed rule changes filed with the SEC, Nasdaq is concerned that companies are not disclosing information sufficient to allow the public to understand the deficiency that led to the Deficiency Notice and the underlying basis of the deficiency. To address these concerns, Nasdaq proposes modifying Rules 5250(b)(2) and 5810(b) and IM-5810-1 to require that a company receiving a Deficiency Notice describe in its public disclosure “each specific basis and concern identified by Nasdaq in reaching its determination that the [c]ompany does not meet the listing standard.” In addition, Nasdaq proposes modifying IM-5810-1 and adding Rule 5840(l) to provide Nasdaq clear authority to make a public announcement, including by press release, describing a Deficiency Notice or other event involving a company’s listing or trading on Nasdaq. These amendments would permit Nasdaq to make a public announcement of the notice if the company does not do so or the company’s announcement does not include all of the required information. New Rule 5840(l) would permit Nasdaq to make a public announcement even when the company has not failed to do so.