How do NASDAQs shareholder approval rules apply to strategic partnerships or stock-for-stock swaps between companies?
When a listed company and another company enter into a strategic partnership and exchange shares, the transaction should be analyzed under Listing Rule 5635(a). Thus, for these types of transactions, companies will generally be prohibited from issuing shares that equal or exceed 20% of the total shares outstanding or total votes outstanding on a pre-transaction basis without first obtaining shareholder approval, without regard to the price at which the shares are issued.
