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Frequently Asked Questions
  Staff Interpretation Letter 2003-24
Identification Number 995
Rule 4350(a):  NASDAQ will provide exemptions to the extent that a rule requires any foreign issuer to do any act that is contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or the rule is contrary to generally accepted business practices in the issuer’s country of domicile.
 
Rule 4350(i)(1)(A):  Each issuer shall require shareholder approval … when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees, or consultants.
 
Relevant Facts:  A Canadian company intends to implement a Restricted Share Long-Term Incentive Plan (the Plan”), whereby the company’s president and chief executive officer may acquire subordinate voting stock of the company.  The company’s independent compensation and corporate governance committee will approve the awards under the Plan.  To implement the Plan, the company will form a new corporation that will purchase the Plan’s shares in either the open market or in privately negotiated transactions, using the company’s funds.  The shares would then be offered to the company’s president and chief executive officer at a discount to market as determined by the independent compensation and corporate governance committee.  The company requests an exemption from Listing Rule 4350(i)(1)(A), which would require shareholder approval for the proposed Plan, based on Listing Rule 4350(a).
 
Issue:  Is the company eligible for an exemption from the shareholder approval rules?
 
Determination:  The company’s home country counsel represented that the company is not required to obtain shareholder approval for the Plan by its governing statute or by the rules and policies of the company’s home country marketplace, the Toronto Stock Exchange.  Moreover, Canadian counsel represented that it would be contrary to generally accepted business practices for a Canadian company to seek approval from shareholders for a plan of this type, where such approval is not required.  Based on these representations, NASDAQ granted the requested exemptions to Listing Rule 4350(i)(1)(A).
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 995
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