On May 4, 2020, the SEC granted immediate effectiveness to a Nasdaq rule change exempting specified private placements from a shareholder approval requirement under its listing standards. The standards require a listed company to obtain shareholder approval before issuing in a private placement common stock equaling 20% or more of the shares outstanding at less than the “minimum price,” as determined under Nasdaq rules.  However, given the time needed to secure shareholder approval, compliance with the requirement could prevent companies from obtaining cash needed to pay employees or to address other critical needs.

The rule change is subject to various conditions, including that the company must enter into a binding agreement covering the issuance by June 30, 2020 and must issue the new shares within 30 calendar days following the date of the binding agreement. In addition, the company must demonstrate that the need for the issuance relates to COVID-19 and that it has undertaken a process to ensure that the transaction represents the best available terms.  The exception does not apply to issuances related to executive compensation, changes of control, and acquisitions of other companies.

The exemption is similar to, but more extensive than, action taken in April by the New York Stock Exchange, discussed in a previous Gunster posting.

If you have any questions, please contact Gunster securities law and corporate governance practice leader Bob Lamm. For more information on SEC actions relating to COVID-19, please see Gunster’s COVID-19 Resources and Insights Page.

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This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.

About Gunster

Gunster, Florida’s law firm for business, provides full-service legal counsel to leading organizations and individuals from its 12 offices statewide. Established in 1925, the firm has expanded, diversified and evolved, but always with a singular focus: Florida and its clients’ stake in it. A magnet for business-savvy attorneys who embrace collaboration for the greatest advantage of clients, Gunster’s growth has not been at the expense of personalized service but because of it. The firm serves clients from its offices in Boca Raton, Fort Lauderdale, Jacksonville, Miami, Orlando, Palm Beach, Stuart, Tallahassee, Tampa, Vero Beach, and its headquarters in West Palm Beach. With more than 240 attorneys and consultants, and over 240 committed support staff, Gunster is ranked among the National Law Journal’s list of the 500 largest law firms and has been recognized as one of the Top 100 Diverse Law Firms by Law360. More information about its practice areas, offices and insider’s view newsletters is available at


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