The Nasdaq Stock Market is contemplating whether its rules on shareholder approval need to change.
The exchange says that it is looking at whether its rules — which generally require companies to obtain shareholder approval before issuing securities for various reasons, such as an acquisition, to pay compensation, or for certain private placements — needed to be revised.
It first adopted those rules back in 1990, and says that while these rules “provide crucial investor protections”, the markets and securities laws have evolved significantly over the past 25 years.
“Over that time other investor protection mechanisms have been put in place, including, for example, requirements for majority independent boards and stronger corporate governance practices by listed companies. As a result, certain provisions of the shareholder approval rules may no longer be necessary for their original shareholder protection purpose and the need to structure transactions around these provisions could result in unnecessary costs,” it says.
As a result, Nasdaq has decided that it’s time to review whether the shareholder approval rules can be updated, without sacrificing the investor protection they provide.
The exchange is soliciting public comments, which are due by Feb. 15, 2016.