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[Federal Register Volume 89, Number 229 (Wednesday, November 27, 2024)]
[Notices]
[Pages 93691-93693]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27761]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101693; File No. SR-NASDAQ-2024-068]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Deadline for a Listed Company To Notify Nasdaq of a Reverse 
Stock Split

November 21, 2024.
    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 November 8, 2024, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III, below, which Items have been prepared by the 
Exchange. 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

    The Exchange proposes to modify its listing standards related to 
notification and disclosure of reverse stock splits to the Exchange. 
The proposed rule change will become operative on January 30, 2025.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

    In its filing with the Commission, the Exchange included statements

[[Page 93692]]

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. The Exchange 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
    On June 21, 2023, Nasdaq filed with the Commission a proposed rule 
change related to notification and disclosure of reverse stock 
splits.\3\ On November 1, 2023, the Commission approved the proposed 
rule changes.\4\ On March 1, 2024, Nasdaq adopted an additional change 
to the rule and Company Event Notification Form to further clarify the 
requirements.\5\ Nasdaq is now proposing to amend the deadline for a 
company to notify Nasdaq of a reverse stock split from 5 business days 
to 10 calendar days in order to conform to the requirements of SEC Rule 
10b-17 of the Act.\6\
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    \3\ See Securities Exchange Act Release No. 98014 (July 28, 
2023), 88 FR 51376 (August 3, 2023) (proposing SR-Nasdaq-2023-025).
    \4\ See Securities Exchange Act Release No. 98843 (November 1, 
2023), 88 FR 76867 (November 7, 2023) (approving SR-Nasdaq-2023-
025).
    \5\ See Securities Exchange Act Release No. 99734 (March 14, 
2024), 89 FR 19905 (March 20, 2024).
    \6\ 17 CFR 240.10b-17.
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    Specifically, Rule 10b-17(a)(2) and (b) of the Act, require issuers 
to provide notice to FINRA (formerly the National Association of 
Securities Dealers, Inc.) no later than 10 calendar days prior to the 
date of record to participate in a stock split or reverse stock split, 
unless the impacted security is traded on a national securities 
exchange with a substantially comparable requirement to those set forth 
in Rule 10b-17(b)(1).\7\
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    \7\ 17 CFR 240.10b-17(a)(2), (b)(1) and (b)(3).
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    Currently, Rule 5250(e)(7) and IM-5250-3 require a company 
conducting a reverse stock split to notify Nasdaq about certain details 
of the reverse stock split by submitting a complete Company Event 
Notification Form and a draft of the disclosure required by Rule 
5250(b)(4) at least 5 business days (no later than 12:00 p.m. ET) prior 
to the anticipated market effective date, which includes all the 
information required by Rule 10b-17 applicable to reverse stock splits.
    It has come to Nasdaq's attention that Nasdaq's current rule may 
not be considered substantially comparable to the 10 calendar-day prior 
notice required in Rule 10b-17 of the Act. Accordingly, Nasdaq is 
proposing to amend the deadline for a company to notify Nasdaq of a 
reverse stock split from no later than 12:00 p.m. ET 5 business days to 
10 calendar days prior to the anticipated market effective date of the 
reverse stock split to ensure that Rule 5250(e)(7) and IM-5250-3 are 
substantially comparable to Rule 10b-17 and, therefore, that companies 
are compliant with Rule 10b-17 when they give notice under those 
rules.\8\ Nasdaq is not amending the requirement to provide public 
disclosure under Rule 5250(b)(4) at least 2 business days (no later 
than 12:00 p.m. ET) prior to the anticipated market effective date. 
Nasdaq still believes that this timeframe provides sufficient notice to 
the public about reverse stock splits.\9\
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    \8\ For example, if a company desires to effect a reverse stock 
split with a market effective date of Monday, September 23, the 
company would have to provide Nasdaq with a draft of the disclosure 
required by proposed Rule 5250(b)(4) and a complete Company Event 
Notification Form by 12:00 p.m. ET on Friday, September 13, and 
provide the public disclosure by 12:00 p.m. ET by Thursday, 
September 19. Note that this example presumes that there are no 
holidays during these dates. If a company withdraws and re-submits a 
Company Event Notification Form, the 10 calendar day period would be 
measured from the date the company re-submitted the form (rather 
than the date of the first submission).
    \9\ See supra note 3.
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    Nasdaq is also submitting an updated Company Event Notification 
Form as Exhibit 3 to the rule filing. Nasdaq is making conforming 
changes to the Form to reflect that the deadline for submission is 10 
calendar days, rather than 5 business days.
    In order to provide companies that have already planned action for 
a reverse stock split under the current rule's timeframe with the 
ability to effect their reverse stock split under that schedule, the 
proposed rule change will become operative on January 30, 2025.\10\ 
Nasdaq believes that this delayed operative date will allow sufficient 
time for market participants to adjust to the new time frame. For 
example, a company may have already scheduled a shareholder meeting or 
submitted a preliminary or final proxy statement to the Commission with 
a view towards effecting a reverse stock split based on the currently 
required five-day notice period. Nasdaq believes this delayed operative 
date will reduce potential confusion for companies and investors about 
the transition and allow companies to appropriately plan for the 
change.
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    \10\ For example, a company may have already scheduled a 
shareholder meeting or submitted a preliminary or final proxy 
statement to the Commission with a view towards effecting a reverse 
stock split during a compliance period under the Nasdaq Listing 
Rules. The additional time to provide 10 calendar days advance 
notice of the reverse stock split, instead of the currently required 
five business-day notice period, could prevent the company from 
regaining compliance during the compliance period.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\11\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\12\ in particular, in that it is designed to 
promote just and equitable principles of trade, 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, by aligning its rules related to notification of reverse 
stock splits with the notification requirements of Rule 10b-17 of the 
Act.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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    The proposal amends Rule 5250(e)(7) and IM-5250-3 to require a 
company to submit a complete Company Event Notification Form and a 
draft of the disclosure required by Rule 5250(b)(4) at least 10 
calendar days (no later than 12:00 p.m. ET) prior to the anticipated 
market effective date, rather than 5 business days, and provides 
conforming updates to the Company Event Notification Form. Nasdaq 
believes that this will align Nasdaq's rules with the requirements of 
Rule 10b-17 under the Act, and will thereby help promote clarity, 
transparency and consistency for market participants and companies. 
Nasdaq also believes that the delayed operative date of the proposed 
rule change is consistent with Section 6(b)(5) of the Act in that it 
will allow sufficient time for market participants to adjust to the new 
time frame and will thereby help to reduce potential confusion for 
companies and investors.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed change is designed 
to align an existing rule and related Company Event Notification Form 
with the requirements of Rule 10b-17 of the Act and, therefore, Nasdaq 
believes that the proposed change will not impose a burden on 
competition.

[[Page 93693]]

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

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change does not: (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \13\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or 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 email to [email protected]. Please include 
file number SR-NASDAQ-2024-068 on the subject line.

Paper Comments

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

All submissions should refer to file number SR-NASDAQ-2024-068. This 
file number should be included on the subject line if email 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 website (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 website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549 on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-NASDAQ-2024-068 and should 
be submitted on or before December 18, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-27761 Filed 11-26-24; 8:45 am]
BILLING CODE 8011-01-P
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