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(2) In addition to satisfying all of Nasdaq's other initial listing requirements, a Reverse Merger Company will only be approved for listing if, at the time of approval, it has: (A) timely filed all required periodic financial reports with the Commission or Other Regulatory Authority (Forms 10-Q, 10-K or 20-F) for the prior year, including at least one annual report. As of the date of the proposed Reverse Merger Rule, only NASDAQ has proposed such requirements for reverse merger companies. has announced that liquidation has been authorized by its board of directors and that it is committed to proceed, even though the Company's securities otherwise meet all enumerated criteria for continued listing on Nasdaq. Reverse Mergers: A Basic Primer - Wilson Bradshaw LLP A reverse merger company will no longer be subject to the requirements of Nasdaq Rule 5110(c) once it has satisfied the one-year trading requirement discussed above and has filed at least four annual reports with the SEC or other regulatory authority containing all required audited financial statements for a full fiscal year commencing after filing the information described in the first bullet point set forth above.In addition, any reverse merger company must also meet all other applicable Nasdaq listing requirements for initial listing, including the minimum price requirement and the requirement contained in Rule 5210(e) that the company not be delinquent in its filing obligation with the SEC or other regulatory authority.NYSEThe SEC also approved rule changes proposed by the NYSE that impose additional listing requirements for a company that has become public through a reverse merger.The NYSE would treat as a reverse merger any transaction whereby an operating company becomes an Exchange Act-reporting company by combining (directly or indirectly) with a shell company which is an Exchange Act-reporting company, whether through a reverse merger, exchange offer or otherwise.A reverse merger would not include the acquisition of an operating company by an NYSE-listed company which qualified for initial listing under Section 102.06 of the NYSE Listed Company Manual (Manual).In determining whether a company is a shell company, the NYSE will consider, among other factors: The company surviving the reverse merger would not be eligible for listing on the NYSE unless the combined entity had, immediately preceding the filing of the initial listing application, complied with the following requirements of Section 102.01F of the Manual: The NYSE would have the discretion to impose more stringent requirements than those set forth above. This review may include activities taking place while the Company is listed on Nasdaq or an exchange that imposes corporate governance The Commission notes that this proposed rule change replaced a previous proposed rule change filed by Nasdaq regarding additional listing standards for Reverse Merger companies, which had included an exception for a Reverse Merger company that was listing in connection with a substantial firm commitment, underwritten public offering. (b) Within 36 months of the effectiveness of its IPO registration statement, or such shorter period that the company specifies in its registration statement, the Company must complete one or more business combinations having an aggregate The definition of round lot holder now refers to a holder of a normal unit of trading (generally, 100 shares) of unrestricted securities. Unrestricted securities means any securities that are not restricted securities. Overview Of The New Nasdaq Listing Requirements. Montana Passes 9th Comprehensive Consumer Privacy Law in the U.S. NLRB General Counsel Now Targeting Noncompetes for Nonmanagerial and Michigan Court of Appeals Broadens Potential Exposure to Securities NLRB General Counsel Issues Memo Targeting Noncompete Agreements for Ninth Circuit Declines To Aggregate Loans For Usury Exemption. by an "insured depository institution," as that term is defined in Section 3(c)(2) of the Federal Deposit Insurance Act or in a separate bank account established by a registered broker or dealer (collectively, a "deposit account"). Nasdaq, therefore, in addition to applying the enumerated criteria set forth in the Rule 5000 Series, has broad discretionary authority over the initial and continued listing of securities in Nasdaq in order to maintain the quality of and public confidence Such a company would have to meet the stock price requirement of Section 102.01B and not be delinquent in its filings with the SEC.In addition to meeting the criteria set forth above, a company that was formed by a reverse merger would be required to comply with one of the initial listing standards for operating companies set forth in Section 102.01C or 103.01B of the Manual and the applicable distribution, stock price and market value requirements of Sections 102.01A and 102.01B of the Manual (in the case of companies listing pursuant to Section 102.01) and Section 103.01A (in the case of companies listing pursuant to Section 103.01).For further information, please contactTimothy M.Sullivanor your regularHinshaw attorney. the combined Company must meet the requirements for initial listing. IRS Issues Reminder that Claims Under Health and Dependent Care FSAS U.S. Executive Branch Update June 2, 2023. Merger contingency - Some companies enter into merger agreements but require that the party being acquired have at least a certain stock price level. The Reverse Merger Rule simply creates an objective barrier to application for reverse merger companies that do not apply in connection with a firm commitment, underwritten offering. to continue the listing of such a Company during a bankruptcy reorganization, the Company shall nevertheless be required to satisfy all requirements for initial listing, including the payment of initial listing fees, upon emerging from bankruptcy proceedings. Nasdaq now believes it is appropriate to allow a former Reverse Merger Company to qualify for initial listing under any applicable listing standard, including the Alternative Price Requirement, after satisfying the seasoning period required by the Reverse Merger Rules. A reverse merger occurs when a privately-held business buys a publicly-held shell company. to protect investors and the public interest. In addition, pursuant to its discretionary authority, Nasdaq will review the Company's past corporate governance activities. Nasdaq routinely required Reverse Merger companies to file with the SEC at least one Form 10-K with audited financial statements covering periods subsequent to . These reports would be considered timely if they are filed within the time required, including any extensions. IRS Issues Proposed Regulations for Energy Projects Located in Low- Court Holds State Owned LLCs Are Not "Political Subdivisions Supreme Court Ends Protection for Most Wetlands In The U.S.But Not ANSES Calls for the EC to Adopt a More Protective Definition of Minnesota Worker Safety Legislation for Meatpacking and Warehouse NLRB General Counsel Says Noncompete Agreements Violate Federal Labor New Antidumping and Countervailing Duty Petitions on Certain Paper Supreme Court Narrows Scope of Waters Protected by the Clean Water Court Affirmed a Judgment That a Will Was Invalid Due to Mental At least two Supreme Court Justices think there's a limit to Part II: With New DAO Law on the Books, Utah Joins Race with Wyoming EEOC Issues Nonbinding Guidance on Permissible Employer Use of AAFCO Comments on the Pet Food Institutes Proposed New Federalized NLRB Memorandum GC23-08: "Non-Compete Agreements that Violate China: MOU of ETF Products Between China and Singapore Exchanges. Kubient's actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to (i) the risk that the . The private entity is eliminated and the shell company becomes the sole remaining entity. In light of these facts, we believe that fewer private companies may choose to pursue reverse listing transactions unless the target Nasdaq companies have sufficient cash on hand to avoid the need to file an S-4 registration statement or the private company has sufficient resources to complete a lengthier transaction. The company will need to work with its auditor on an ongoing basis, which should give the auditor several chances to review financial statements. 11 min read. Neither Narrow Proposed Claim Construction nor Work Product Claim Are Some Tokens Securities? Supreme Court Clarifies that Subjective (Not Objective) Knowledge of Montanas Comprehensive Privacy Law Signed by the Governor. Pennsylvania AG Targets Rent-to-Own Company for Alleged Deceptive and Heart-to-Heart on Reduction to Practice: When It Comes to Testing, Hairy Situation: Trademark Act Doesnt Provide Consumer Standing, Summer State/Local Law Round-Up, Part 2 of 2 (US). Background to the Rule Changes. In the past 5 years, we have witnessed many companies focused on emerging technologies, such as life sciences companies, seek to go public through reverse listing transactions, given the lower cost and expedited timeline such transactions offer in comparison to an initial public offering. Ask Insurance Unpacking Averages: Understanding the Potential for Bias in a Sepsis CMS Proposing Major Changes to Medicaid Drug Rebate Program, The CROWN Act: Unbraiding the Legal Issues for Employers. FTC to Scrutinize Commercial Use of Biometric Information Moving (Australia) Debt Ceilings Apply Outside of the US. 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