Capital Markets & Securities Law Watch

On December 11, 2024, in Alliance for Fair Board Recruitment v. SEC, the Fifth Circuit Court of Appeals (the Court) held that the Securities and Exchange Commission (the SEC) did not have the authority to approve The Nasdaq Stock Exchange’s (Nasdaq) board diversity rule (the Rule).

On August 20, 2024, the U.S. Securities and Exchange Commission (SEC) announced an increase to the registration fee payable in connection with a public offering of securities.

Nasdaq has several rules that address the delisting of companies whose share price falls below $1.

On July 15, 2024, Nasdaq formally submitted a proposed rule change to the Securities and Exchange Commission (SEC) relating to the suspension and delisting of special purpose acquisition companies (SPACs). 

On April 11, 2024, the New York Stock Exchange (NYSE) filed a proposed rule change with the Securities and Exchange Commission, proposing a new subsection of Rule 123D that alters the rules governing the halting and resumption of trading in a security undergoing a reverse stock split. 

Under its current rule, the New York Stock Exchange (NYSE) commences delisting procedures against a listed special purpose acquisition company (SPAC) if it fails to complete a business combination within 36 months of its initial listing date, regardless of whether it has entered into a definitive agreement for a business combination.

As discussed in prior blog posts, on June 9, 2023, the Securities and Exchange Commission (the SEC) approved listing standards promulgated by the New York Stock Exchange (NYSE) and Nasdaq Stock Market (Nasdaq) regarding the recovery of erroneously awarded incentive-based compensation, referred to as “clawbacks.” 

On May 19, 2021, the Securities and Exchange Commission (SEC) approved the Nasdaq Stock Market LLC’s (Nasdaq) proposal to allow companies to directly list their equity securities on the exchange without an underwriter. The rule allows direct listings with a capital raise (DLCRs). Following the SEC’s approval, there was discussion over whether more consideration should be given to the pricing range limitation mechanism associated with DLCRs. In December 2021, the SEC announced an amendment to the proposed rule change, with the aim of addressing the concerns surrounding Listing Rule IM-5315-2 and more clearly aligning the rule with existing SEC rules.

On December 2, 2021, the Securities and Exchange Commission (the SEC) announced new final rules implementing the submission and disclosure requirements of the Holding Foreign Companies Accountable Act (the HFCAA) enacted in December 2020. The final rules apply to companies that the SEC identifies as having filed an annual report with an audit report issued by a registered public-accounting firm that is located in a foreign jurisdiction and that the Public Company Accounting Oversight Board (the PCAOB) is unable to inspect or investigate (such companies, Commission-Identified Issuers).

On August 6, 2021, the Securities and Exchange Commission (SEC) approved a Nasdaq proposal to amend its listing rules intended to increase diversity on corporate boards of directors.

On July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council of the People's Republic of China jointly issued “Opinions on Strictly Cracking Down on Illegal Securities Activities in accordance with the Law” (Opinions) signaling that the country will step up its supervision of domestic firms listed both onshore and offshore.

On May 19, 2021, the Securities and Exchange Commission (SEC) approved the Nasdaq Stock Market LLC’s (Nasdaq) proposal to allow companies to directly list their equity securities on the exchange without a traditional underwritten offering.

On December 22, 2020, the Securities and Exchange Commission (the SEC) approved the New York Stock Exchange’s (the NYSE) proposal to allow private companies to conduct a primary registered offering as part of a direct listing on the NYSE without conducting a firm commitment underwritten offering (a Primary Direct Floor Listing). Capital Markets & Securities Law Watch previously discussed the NYSE’s proposal on September 1, 2020.

On December 1, 2020, the Nasdaq Stock Market LLC (Nasdaq) filed a proposal with the Securities and Exchange Commission (SEC) to adopt new listing rules related to board diversity and disclosure.

Following our recent post on Nasdaq’s proposed rules intended to impose stricter requirements on companies looking to go public or be listed on Nasdaq that have their businesses principally administered in certain jurisdictions defined by Nasdaq as “Restrictive Markets” (including China) or whose auditors’ qualifications raise concerns and the Senate’s recently passed bill to delist companies that have not had PCAOB inspections of their auditors for three consecutive years, the White House, the Secretary of State, and the Chairman of the SEC have taken actions or released statements in support of the goals of these proposals.

In May 2020, Nasdaq filed three proposals with the Securities and Exchange Commission (SEC) intended to address concerns about companies that have their businesses principally administered in certain jurisdictions defined by Nasdaq as “Restrictive Markets” (including China) looking to go public or become listed on Nasdaq. The proposals relate to auditors, initial listing criteria for foreign companies, and management’s qualifications.

U.S. and global market conditions have experienced market-wide declines as a result of the COVID-19 pandemic. In light of these unprecedented circumstances, many companies are struggling to remain in compliance with the price-based continued listing standards of the New York Stock Exchange (the NYSE) and The Nasdaq Stock Market LLC (Nasdaq).

In response to the economic fallout of COVID-19, the New York Stock Exchange (NYSE) and Nasdaq are issuing new proposals and guidance to listed companies.