Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change To Adopt New Initial and Continued Listing Standards To List Special Purpose Acquisition Companies, 15246-15251 [E8-5673]

Download as PDF 15246 Federal Register / Vol. 73, No. 56 / Friday, March 21, 2008 / Notices available for inspection and copying in the Commission’s Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the MSRB. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–MSRB–2008–02 and should be submitted on or before April 11, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 Florence E. Harmon, Deputy Secretary. [FR Doc. E8–5704 Filed 3–20–08; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–57499; File No. SR–NYSE– 2008–17] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change To Adopt New Initial and Continued Listing Standards To List Special Purpose Acquisition Companies mstockstill on PROD1PC66 with NOTICES Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on March 6, 2008, the New York Stock Exchange LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule changes as described in Items I, II and III below, which items have been substantially prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule changes from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Exchange’s Listed Company Manual (the ‘‘Manual’’) to adopt listing standards for special purpose companies formed for the purpose of raising capital in an initial public CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Aug<31>2005 18:33 Mar 20, 2008 Jkt 214001 102.01 Minimum Numerical Standards—Domestic Companies— Equity Listings * * * * * 102.01B A Company must demonstrate an aggregate market value of publicly-held shares of $60,000,000 for companies that list either at the time of their initial public offerings (‘‘IPO’’) (C) or as a result of spin-offs or under the Affiliated Company standard, and $100,000,000 for other companies (D). A company must have a closing price or, if listing in connection with an IPO, an IPO price per share of at least $4 at the time of initial listing. * * * * * 102.03 Minimum Numerical Standards—Domestic Companies—Debt Listings March 14, 2008. 9 17 offering and entering into an undetermined business combination. The filing also proposes the adoption of requirements that (i) any equity security listing on the Exchange must have a closing price or, if listing in connection with an initial public offering (‘‘IPO’’), an IPO price per share of at least $4 at the time of initial listing and (ii) convertible debt issuances listed on the Exchange must have an aggregate market value or principal amount of no less than $10,000,000. Proposed new language is italicized; proposed deletions are in brackets. * * * * * * * * * * Convertible Bonds Debt securities convertible into equity securities may be listed only if the underlying equity securities are subject to real-time last sale reporting in the United States. The convertible debt issue must have an aggregate market value or principal amount of no less than $10,000,000. * * * * * 102.06 Minimum Numerical Standards—Acquisition Companies The Exchange will consider on a caseby-case basis the appropriateness for listing of companies (‘‘acquisition companies’’ or ‘‘ACs’’) with no prior operating history that conduct an initial public offering of which at least 90% of the proceeds, together with the proceeds of any other concurrent sales of the AC’s equity securities, will be held in a trust account’’) controlled by an independent custodian until consummation of a business combination in the form of a merger, capital stock exchange, asset acquisition, stock purchase, PO 00000 Frm 00127 Fmt 4703 Sfmt 4703 reorganization, or similar business combination with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in trust (net of amounts disbursed to management for working capital purposes and excluding the amount of any deferred underwriting discount held in trust) (a ‘‘Business Combination’’). ACs must demonstrate an aggregate market value of $250,000,000 (A) and a market value of publicly-held shares of $200,000,000 (A) and must comply with the requirements of Section 102.01A. An AC must have a closing price or, if listing in connection with an IPO, an IPO price per share of at least $4 at the time of initial listing. (A) Shares held by directors, officers, or their immediate families and other concentrated holdings of 10 percent or more are excluded in calculating the number of publicly-held shares. For ACs that list at the time of their IPOs, if necessary, the Exchange will rely on a written commitment from the underwriter to represent the anticipated value of the AC’s offering in order to determine an AC’s compliance with this listing standard. Under the terms of its constitutive documents or by contract, any AC deemed suitable for listing will be subject to the following minimum requirements: • The Business Combination must be approved by a majority of the votes cast by public shareholders at a duly held shareholders meeting; • Each public shareholder voting against the Business Combination will have the right (‘‘Conversion Right’’) to convert its shares of common stock into a pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable, and amounts disbursed to management for working capital purposes), provided that the Business Combination is approved and consummated. It will be permissible for an AC to establish a limit (set no lower than 10% of the shares sold in the AC’s IPO) as to the maximum number of shares with respect to which any public shareholder, together with any affiliate of such shareholder or any person with whom such shareholder is acting as a ‘‘group’’ (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) may exercise Conversion Rights; • The AC cannot consummate its Business Combination if public shareholders owning in excess of a threshold amount (to be set no higher than 40%) of the shares of common stock issued in the AC’s initial public offering exercise their Conversion Rights E:\FR\FM\21MRN1.SGM 21MRN1 mstockstill on PROD1PC66 with NOTICES Federal Register / Vol. 73, No. 56 / Friday, March 21, 2008 / Notices in connection with such Business Combination; • The AC will be liquidated if no Business Combination has been consummated within a specified time period not to exceed three years. The Exchange will promptly commence delisting procedures with respect to any AC that fails to consummate its Business Combination within (i) the time period specified by its constitutive documents or by contract or (ii) three years, whichever is shorter; and • The AC’s founding shareholders must waive their rights to participate in any liquidation distribution with respect to all shares of common stock owned by each of them prior to the IPO or purchased in any private placement occurring in conjunction with the IPO, including the common stock underlying any founders’ warrants. In addition, the underwriters of the IPO must agree to waive their rights to any deferred underwriting discount deposited in the trust account in the event the AC liquidates prior to the completion of a Business Combination. In the event that AC securities are listed as units, the components of the units (other than common stock) will be required to meet the applicable initial listing standards for the security types represented by the components. In determining the suitability for listing of an AC, the Exchange will consider: • The experience and track record of management; • The amount of time permitted for the completion of the Business Combination prior to the mandatory dissolution of the AC; • The nature and extent of management compensation; • The extent of management’s equity ownership in the AC and any restrictions on management’s ability to sell AC stock; • The percentage of the contents of the trust account that must be represented by the fair market value of the Business Combination; • The percentage of voting publiclyheld shares whose votes are needed to approve the Business Combination; • The percentage of the proceeds of sales of the AC’s securities that is placed in the trust account; and • Such other factors as the Exchange believes are consistent with the goals of investor protection and the public interest. * * * * * VerDate Aug<31>2005 18:33 Mar 20, 2008 Jkt 214001 103.01 Minimum Numerical Standards Non-U.S. Companies Equity Listings Distribution 103.01A. A company must meet the following distribution [and] size, and price requirements: Number of shareholder, holders— 5,000 Worldwide of 100 or more shares. Number of shares publicly held—2.5 million Worldwide. Market value of publicly held shares (A)—$100 million Worldwide (B) or for companies listing under the Affiliated Company standard— $60 million Worldwide (B). (A) Shares held by directors, officers, or their immediate families and other concentrated holdings of 10 percent or more are excluded in calculating the number of publicly-held shares. If a company either has a significant concentration of stock, or if changing market forces have adversely impacted the public market value of a company which otherwise would qualify for listing on the Exchange such that its public market value is no more than 10 percent below $100,000,000, the Exchange will generally consider $100,000,000 in stockholders’ equity as an alternate measure of size and therefore, as an alternative basis to list the company. (B) For companies that list at the time of their initial public offerings (‘‘IPOs’’), if necessary, the Exchange will rely on a written commitment from the underwriter to represent the anticipated value of the company’s offering in order to determine a company’s compliance with this listing standard[s]. Similarly, for spin-offs, the Exchange will rely on a representation from the parent company’s investment banker (or other financial advisor) or transfer agent in order to estimate the market value based upon the as disclosed distribution ratio. For purposes of this paragraph, an IPO includes a spin-off and is an offering by an issuer which, immediately prior to its original listing, does not have a class of common stock registered under the Securities Exchange Act of 1934. An IPO includes a carve-out, which is defined for purposes of this paragraph as the initial offering of an equity security to the publicly traded company for an underlying interest in its existing business (may be subsidiary, division, or business unit). A company must have a closing price or, if listing in connection with an IPO, an IPO price per share of at least $4 at the time of initial listing. * * * * * 802.01B Numerical Criteria for Capital or Common Stock * PO 00000 * * Frm 00128 * Fmt 4703 * Sfmt 4703 15247 Criteria for REITs and Limited Partnerships The Exchange will promptly initiate suspension and delisting procedures with respect to REITs and Limited Partnerships if the average market capitalization of the entity over 30 consecutive trading days is below $25,000,000. The Exchange will promptly initiate suspension and delisting procedures with respect to a REIT if it fails to maintain its REIT status (unless the resultant entity qualifies for an original listing as a corporation). The Exchange will notify the REIT or limited partnership if the average market capitalization falls below $35,000,000 and will advise the REIT or limited partnership of the delisting standard. REITs and limited partnerships are not eligible to follow the procedures outlined in Sections 802.02 and 802.03. Criteria for Acquisition Companies (‘‘ACs’’) Prior to Consummation of Business Combination Prior to the consummation by a listed Acquisition Company (an ‘‘AC’’) of its Business Combination (as defined in Section 102.06), the Exchange will promptly initiate suspension and delisting procedures: (i) If the AC’s average aggregate global market capitalization is below $125,000,000 or the average aggregate global market capitalization attributable to its publicly-held shares is below $100,000,000, in each case over 30 consecutive trading days. An AC will not be eligible to follow the procedures outlined in Sections 802.02 and 802.03 with respect to this criterion, and any such AC will be subject to delisting procedures as set forth in Section 804. The Exchange will notify the AC if its average aggregate global market capitalization falls below $150,000,000 or the average aggregate global market capitalization attributable to its publicly-held shares falls below $125,000,000 and will advise the AC of the delisting standard. (ii) If the AC securities initially listed (either common equity securities or units, as the case may be), fall below the following distribution criteria: the number of total stockholders (A) is less than—400 OR the number of total stockholders (A) is less than—1,200 and average monthly trading volume is less than—100,000 shares (for most recent 12 months) OR E:\FR\FM\21MRN1.SGM 21MRN1 15248 Federal Register / Vol. 73, No. 56 / Friday, March 21, 2008 / Notices mstockstill on PROD1PC66 with NOTICES the number of publicly-held shares (B) is less than—600,000 (C). (A) The number of beneficial holders of stock held in the name of Exchange member organizations will be considered in addition to holders of record. (B) Shares held by directors, officers, or their immediate families and other concentrated holdings of 10% or more are excluded in calculating the number of publicly-held shares. (C) If the unit of trading is less than 100 shares, the requirement relating to the number of shares publicly held shall be reduced proportionately. In the case of AC securities traded as a unit, such securities will be subject to suspension and delisting if any of the component parts do not meet the applicable listing standards. However, if one or more of the components is otherwise qualified for listing, such component(s) may remain listed. For the purposes of determining whether an individual component satisfies the applicable distribution criteria, the units that are intact and freely separable into their component parts shall be counted toward the total numbers required for continued listing of the component. If a component is a warrant, it will be subject to the continued listing standards for warrants set forth in Section 802.01D, including a distribution requirement of 100 holders. Notwithstanding the foregoing, the Exchange will consider the suspension of trading in, or removal from listing of, any individual component or unit when, in the opinion of the Exchange, it appears that the extent of public distribution or the aggregate market value of such component or unit has become so reduced as to make continued listing on the Exchange inadvisable. In its review of the advisability of the continued listing of an individual component or unit, the Exchange will consider the trading characteristics of such component or unit and whether it would be in the public interest for trading to continue. (iii) If the AC fails to consummate its Business Combination within the time period specified by its constitutive documents or required by contract, or as provided by Section 102.06, whichever is shorter. At the Time of the Business Combination After shareholder approval of a Business Combination, the Exchange will consider whether the continued listing of the AC after consummation of the Business Combination will be in the best interests of the Exchange and the VerDate Aug<31>2005 18:33 Mar 20, 2008 Jkt 214001 public interest and will have the discretion to suspend and commence delisting proceedings with respect to the AC prior to consummation of the Business Combination. An AC will not be eligible to follow the procedures outlined in Sections 802.02 and 802.03 with respect to such a delisting determination, and any such AC will be subject to delisting procedures as set forth in Section 804. After Consummation of Business Combination After consummation of its Business Combination, a company that had originally listed as an AC will be subject to Section 801 and Section 802.01 in its entirety and will be subject to the continued listing standards applicable to companies that qualify to list under the Earnings Test as set forth above. ‘‘Back Door Listing’’ When a listed AC consummates its Business Combination, the Exchange will consider whether the Business Combination gives rise to a ‘‘back door listing’’ as described in Section 703.08(E). If the resulting company would not qualify for original listing, the Exchange will promptly initiate suspension and delisting of the AC. * * * * * II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The NYSE has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the Manual to adopt listing standards for acquisition companies (‘‘ACs’’). An AC is a special purpose company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more operating businesses or assets (a ‘‘Business Combination’’). The securities sold by PO 00000 Frm 00129 Fmt 4703 Sfmt 4703 the AC in its initial public offering are typically units, consisting of one share of common stock and one or more warrants (or a fraction of a warrant) to purchase common stock, that are separable at some point after the IPO. Management generally is granted a percentage of the AC’s equity and may be required to purchase additional shares in a private placement at the time of the AC’s IPO. While ACs are not uniform in their structure, the ACs that have come to market in recent times have generally provided the following investor protections: • Most of the proceeds of the IPO and any other concurrent sales of the AC’s equity securities are placed in a trust account controlled by an independent custodian and may only be released for (i) a shareholder-authorized Business Combination or (ii) a return of capital to the shareholders; • A Business Combination with one or more target businesses that together have a fair market value equal to a threshold percentage (typically 80%) of the assets in the trust account must be completed within a specified time frame (generally 18 months or two years), or the trust account must be liquidated and the shareholders must receive their pro rata share of its contents; and • The Business Combination must be approved by a majority of the votes cast by the public shareholders at a duly constituted shareholders meeting, and dissenting shareholders must have a right to have their shares redeemed according to a predetermined methodology. The AC cannot consummate its Business Combination if the holders of more than a specified percentage (typically 19.9%) of the shares request redemption. While the Exchange does not believe that all ACs are suitable for listing on the NYSE, it believes that there may be certain transactions where the quality of the sponsor and the size of the offering proceeds may make ACs suitable for NYSE listing. Initial Listing Standard The Exchange does not currently have a financial listing standard under which an AC conducting its IPO could qualify to list. ACs by their nature have no financial history, while all of the Exchange’s financial listing standards for operating companies require some period of operations prior to listing. As such, the Exchange proposes to adopt new Section 102.06 of the Manual, requiring ACs to demonstrate a total market value of $250,000,000 and a market value of publicly-held shares of E:\FR\FM\21MRN1.SGM 21MRN1 Federal Register / Vol. 73, No. 56 / Friday, March 21, 2008 / Notices $200,000,000.3 The standard would not require any prior operating history, but ACs would have to meet the same distribution criteria as all other IPOs, as set forth in Section 102.01A—400 holders of round lots and 1,100,000 publicly-held shares. All of the Exchange’s corporate governance requirements applicable to operating companies will apply to listed ACs. Under the terms of its constitutive documents or by contract, any AC deemed suitable for listing will be subject to the following minimum requirements: • At least 90% of the proceeds from the AC’s IPO and any other concurrent sales of the AC’s equity securities will be held in a trust account controlled by an independent custodian until consummation of the AC’s Business Combination; • The Business Combination must be approved by a majority vote of the votes cast by public shareholders at a duly held shareholders meeting; • Each public shareholder voting against the Business Combination will have the right (‘‘Conversion Right’’) to convert its shares of common stock into a pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable and amounts disbursed to management for working capital purposes), provided that the Business Combination is approved and consummated. It will be permissible under Section 102.06 for an AC to establish a limit (set no lower than 10% of the shares sold in the AC’s IPO) as to the maximum number of shares with respect to which any public shareholder, together with any affiliate of such shareholder or any person with whom such shareholder is acting as a ‘‘group’’ (as such term is used in Sections 13(d) 4 and 14(d) 5 of the Act) may exercise Conversion Rights; 6 • The AC cannot consummate its Business Combination if public shareholders owning in excess of a threshold amount (to be set no higher than 40%) of the shares of common stock issued in the AC’s initial public offering exercise their Conversion Rights mstockstill on PROD1PC66 with NOTICES 3 Shares held by directors, officers, or their immediate families and other concentrated holdings of 10 percent or more are excluded in calculating the number of publicly-held shares. For ACs that list at the time of their IPOs, if necessary, the Exchange will rely on a written commitment from the underwriter to represent the anticipated value of the AC’s offering in order to determine an AC’s compliance with this listing standard. 4 15 U.S.C. 78m(d). 5 15 U.S.C. 78n(d). 6 For example, an AC which sells 10,000,000 shares in its IPO could limit the exercise of Conversion Rights by any one holder to 10% of that amount, or a maximum of 1,000,000 shares. VerDate Aug<31>2005 18:33 Mar 20, 2008 Jkt 214001 in connection with such Business Combination; • The AC will be liquidated if the Business Combination has not been consummated within a specified time period not to exceed three years. The Exchange will promptly commence delisting procedures with respect to any AC that fails to consummate its Business Combination within (i) the time period specified by its constitutive documents or by contract, or (ii) three years, whichever is shorter; and • The AC’s founding shareholders must waive their rights to participate in any liquidation distribution with respect to all shares of common stock owned by each of them prior to the IPO or purchased in any private placement occurring in conjunction with the IPO, including the common stock underlying any founders’ warrants. In addition, the underwriters of the IPO must agree to waive their rights to any deferred underwriting discount deposited in the trust account in the event the AC liquidates prior to the completion of a Business Combination.7 In the event that AC securities are listed as units, the components of the units (other than common stock) will be required to meet the applicable initial listing standards for the security types represented by the components.8 The Exchange intends to consider proposed AC listings on a case-by-case basis and does not necessarily intend to list every AC that meets the minimum requirements for listing. In determining the suitability for listing of an AC, the Exchange will consider: • The experience and track record of management; • The amount of time permitted for the completion of the Business Combination prior to the mandatory dissolution of the AC; • The nature and extent of management compensation; • The extent of management’s equity ownership in the AC and any restrictions on management’s ability to sell AC stock; 7 In the event of liquidation, the pro rata share of the trust account to be paid to the holder of each publicly-held share would be calculated in accordance with the law of the AC’s state of incorporation. However, the actual amount paid to the public shareholders could vary depending on a variety of factors as disclosed in the AC’s IPO prospectus, such as liquidation expenses, indemnification obligations, etc. 8 If a component is a warrant, it will be subject to the initial listing standards for warrants set forth in Section 703.12. See telephone conversation between Steve L. Kuan, Special Counsel, Division of Trading and Markets, Commission, and John Carey, Assistant General Counsel, Office of the General Counsel, NYSE Euronext, on March 11, 2008. PO 00000 Frm 00130 Fmt 4703 Sfmt 4703 15249 • The percentage of the contents of the trust account that must be represented by the fair market value of the Business Combination; • The percentage of voting publiclyheld shares whose votes are needed to approve the Business Combination; • The percentage of the proceeds of sales of the AC’s securities that is placed in the trust account; and • Such other factors as the Exchange believes are consistent with the goals of investor protection and the public interest. Continued Listing Standard Applicable to ACs Prior to Business Combination Prior to the consummation by an AC of its Business Combination, the Exchange will promptly initiate suspension and delisting procedures: • If the AC’s average aggregate global market capitalization is below $125,000,000 or the average aggregate global market capitalization attributable to its publicly-held shares is below $100,000,000, in each case over 30 consecutive trading days. An AC will not be eligible to follow the procedures outlined in Sections 802.02 and 802.03 with respect to this criterion, and any such AC will be subject to delisting procedures as set forth in Section 804. The Exchange will notify the AC if its average aggregate global market capitalization falls below $150,000,000 or the average aggregate global market capitalization attributable to its publicly-held shares falls below $125,000,000 and will advise the AC of the delisting standard. • If the AC securities initially listed (either common equity securities or units, as the case may be), fall below the following distribution criteria: The number of total stockholders 9 is less than—400 OR The number of total stockholders 9 is less than—1,200 And average monthly trading volume is less than—100,000 shares (for most recent 12 months) OR The number of publicly-held shares 10 is less than—600,000.11 In the case of AC securities traded as a unit, such securities will be subject to suspension and delisting if any of the 9 The number of beneficial holders of stock held in the name of Exchange member organizations will be considered in addition to holders of record. 10 Shares held by directors, officers, or their immediate families and other concentrated holdings of 10% or more are excluded in calculating the number of publicly-held shares. 11 If the unit of trading is less than 100 shares, the requirement relating to the number of shares publicly held shall be reduced proportionately. E:\FR\FM\21MRN1.SGM 21MRN1 15250 Federal Register / Vol. 73, No. 56 / Friday, March 21, 2008 / Notices component parts do not meet the applicable listing standards. However, if one or more of the components is otherwise qualified for listing, such component(s) may remain listed. For the purposes of determining whether an individual component satisfies the applicable distribution criteria,12 the units that are intact and freely separable into their component parts shall be counted toward the total numbers required for continued listing of the component. Notwithstanding the foregoing, the Exchange will consider the suspension of trading in, or removal from listing of, any individual component or unit when, in the opinion of the Exchange, it appears that the extent of public distribution or the aggregate market value of such component or unit has become so reduced as to make continued listing on the Exchange inadvisable. In its review of the advisability of the continued listing of an individual component or unit, the Exchange will consider the trading characteristics of such component or unit and whether it would be in the public interest for trading to continue. • If the AC fails to consummate its Business Combination within the time period specified by its constitutive documents or required by contract, or three years, whichever is shorter. The continued listing standards set forth in Sections 801 (‘‘Policy’’), 802.01C (‘‘Price Criteria for Capital or Common Stock’’), 802.01D (‘‘Other Criteria’’) and 802.01E (‘‘SEC Annual Report Timely Filing Criteria’’) will also apply to listed ACs, in the same way those provisions apply to other equity securities. mstockstill on PROD1PC66 with NOTICES At the Time of the Business Combination After shareholder approval of a Business Combination, the Exchange will consider whether the continued listing of the AC after consummation of the Business Combination will be in the best interests of the Exchange and the public interest and will have the discretion to suspend and commence delisting proceedings with respect to the AC prior to consummation of the Business Combination. An AC will not be eligible to follow the procedures outlined in Sections 802.02 and 802.03 with respect to such a delisting determination, and any such AC will be subject to delisting procedures as set forth in Section 804. 12 If a component is a warrant, it will be subject to the continued listing standards for warrants set forth in Section 802.01D, including a continued distribution requirement of 100 holders. VerDate Aug<31>2005 18:33 Mar 20, 2008 Jkt 214001 Continued Listing Standard Applicable to ACs After Business Combination After consummation of its Business Combination, a company that had originally listed as an AC will be subject to Section 801 and Section 802.01 in its entirety and will be considered to be below compliance standards if it does not meet the continued listing standards applicable to operating companies listed under the Exchange’s Earnings Test as set forth in Section 802.01B of the Manual,13 i.e., if average global market capitalization over a consecutive 30-day period is less than $75,000,000, and, at the same time, stockholders’ equity is less than $75,000,000. Notwithstanding the foregoing, Section 802.01B provides that the Exchange will promptly initiate suspension and delisting procedures with respect to a company if that company is determined to have average global market capitalization over a consecutive 30-day trading period of less than $25,000,000. Section 802.01B provides that a company will not be eligible to follow the procedures outlined in Sections 802.02 and 802.03 with respect to this criterion. Application of ‘‘Back Door Listing’’ Rule to ACs Upon Consummation of Business Combination When a listed AC consummates its Business Combination, the Exchange will consider whether the Business Combination gives rise to a ‘‘back door listing’’ as described in Section 703.08(E) of the Manual, i.e., whether the transaction in the opinion of the Exchange constitutes an acquisition of the AC by an unlisted company. In applying its back door listing policy, the Exchange gives consideration to all factors, including changes in ownership of the listed company, changes in management, whether the size of the company being ‘‘acquired’’ is larger than the listed company, and whether the two businesses are related on a horizontal or a vertical basis. All circumstances will be considered collectively, and weight may be given to compensating factors. In a back door listing, the unlisted company is typically the larger entity, and frequently the unlisted company will be 13 Section 802.01B establishes separate continued listing standards for companies that qualified to list under each of the Exchange’s four separate initial listing standards for operating companies, i.e., the Earnings Test, the Valuation/Revenue with Cash Flow Test, the Pure Valuation/Revenue Test, and the Affiliated Company Test. As the Exchange cannot predict the standard that would be most appropriate to any specific AC after its Business Combination, we have decided to apply the continued listing standard applicable to companies listed under the Earnings Test to all post-Business Combination ACs. PO 00000 Frm 00131 Fmt 4703 Sfmt 4703 treated as the acquiror for accounting purposes. Where a transaction is determined to be a back door listing, Section 703.08(E) requires that the resulting company meet the standards for original listing. If the resulting company would not qualify for original listing, the Exchange will refuse to list additional shares of the AC for the transaction, and the AC will be delisted. If the Exchange does not determine that an AC’s Business Combination is a back door listing, the Exchange will not subject the AC to an original listing analysis at the time of the Business Combination, but rather will simply subject the post-Business Combination company to the continued listing standards for companies that originally listed under the Earnings Test. Minimum Closing Price Requirement for New Listings The filing also proposes the adoption of a requirement that any equity security listing on the Exchange, including AC securities, must have a closing price or, if listing in connection with an IPO, an IPO price per share of at least $4 at the time of initial listing. This price test would apply whether a company listed under the domestic company standards of Section 102.01 of the Manual or the standards set forth in Section 103.01 for non-U.S. companies. Minimum Value of New Listings of Convertible Debt The Exchange also proposes to adopt a requirement that any convertible debt issuance listed on the Exchange must at the time of listing have an aggregate market value or principal amount of no less than $10,000,000. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,14 in general, and furthers the objectives of Section 6(b)(5) of the Act,15 in particular, in that it is designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Exchange believes that the proposed listing standard is consistent with Section 6(b)(5) of the Act 16 in that it 14 15 15 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 16 Id. E:\FR\FM\21MRN1.SGM 21MRN1 Federal Register / Vol. 73, No. 56 / Friday, March 21, 2008 / Notices contains requirements in relation to the listing of ACs that provide adequate protections for investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve such proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: mstockstill on PROD1PC66 with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSE–2008–17 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSE–2008–17. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use VerDate Aug<31>2005 18:33 Mar 20, 2008 Jkt 214001 only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE–2008–17 and should be submitted on or before April 11, 2008. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Florence E. Harmon, Deputy Secretary. [FR Doc. E8–5673 Filed 3–20–08; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION Small Business Size Standards: Waiver of the Nonmanufacturer Rule U.S. Small Business Administration. ACTION: Notice of waiver of the Nonmanufacturer Rule for All Other Miscellaneous Electrical Equipment and Component Manufacturing product number 6210. AGENCY: SUMMARY: The U.S. Small Business Administration (SBA) is granting a waiver of the Nonmanufacturer Rule for All Other Miscellaneous Electrical Equipment and Component Manufacturing (Indoor and Outdoor Electrical Lighting Fixtures). The basis for waiver is that no small business manufacturers are supplying this class of product to the Federal government. The effect of a waiver would be to allow otherwise qualified regular dealers to 17 17 PO 00000 CFR 200.30–3(a)(12). Frm 00132 Fmt 4703 Sfmt 4703 15251 supply the products of any domestic manufacturer on a Federal contract set aside for small businesses; servicedisabled veteran-owned small businesses or SBA’s 8(a) Business Development Program. DATE: This waiver is effective April 7, 2008. FOR FURTHER INFORMATION CONTACT: Pamela M. McClam, Program Analyst, by telephone at (202) 205–7408; by FAX at (202) 481–4783; or by e-mail at Pamela.McClam@sba.gov. SUPPLEMENTARY INFORMATION: Section 8(a)(17) of the Small Business Act (Act), 15 U.S.C. 637(a)(17), requires that recipients of Federal contracts set aside for small businesses, service-disabled veteran-owned small businesses, or SBA’s 8(a) Business Development Program provide the product of a small business manufacturer or processor, if the recipient is other than the actual manufacturer or processor of the product. This requirement is commonly referred to as the Nonmanufacturer Rule. The SBA regulations imposing this requirement are found at 13 CFR 121.406 (b). Section 8(a)(17)(b)(iv) of the Act authorizes SBA to waive the Nonmanufacturer Rule for any ‘‘class of products’’ for which there are no small business manufacturers or processors available to participate in the Federal market. As implemented in SBA’s regulations at 13 CFR 121.1202(c), in order to be considered available to participate in the Federal market for a class of products, a small business manufacturer must have submitted a proposal for a contract solicitation or received a contract from the Federal government within the last 24 months. The SBA defines ‘‘class of products’’ based on six digit coding systems. The first coding system is the Office of Management and Budget North American Industry Classification System (NAICS). The second is the Product and Service Code required as a data entry field by the Federal Procurement Data System. The SBA received a request on February 19, 2008, to waive the Nonmanufacturer Rule for All Other Miscellaneous Electrical Equipment and Component Manufacturing (Indoor and Outdoor Electrical Lighting Fixtures). In response, on March 6, 2008, SBA published in the Federal Register a notice of intent to waive the Nonmanufacturer Rule for All Other Miscellaneous Electrical Equipment and Component Manufacturing (Indoor and Outdoor Electrical Lighting Fixtures). SBA explained in the notice that it was soliciting comments and sources of small business manufacturers of this E:\FR\FM\21MRN1.SGM 21MRN1

Agencies

[Federal Register Volume 73, Number 56 (Friday, March 21, 2008)]
[Notices]
[Pages 15246-15251]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-5673]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57499; File No. SR-NYSE-2008-17]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change To Adopt New Initial and 
Continued Listing Standards To List Special Purpose Acquisition 
Companies

March 14, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 6, 2008, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule changes as described in Items I, II 
and III below, which items have been substantially prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule changes from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's Listed Company Manual 
(the ``Manual'') to adopt listing standards for special purpose 
companies formed for the purpose of raising capital in an initial 
public offering and entering into an undetermined business combination. 
The filing also proposes the adoption of requirements that (i) any 
equity security listing on the Exchange must have a closing price or, 
if listing in connection with an initial public offering (``IPO''), an 
IPO price per share of at least $4 at the time of initial listing and 
(ii) convertible debt issuances listed on the Exchange must have an 
aggregate market value or principal amount of no less than $10,000,000.
    Proposed new language is italicized; proposed deletions are in 
brackets.
* * * * *

102.01 Minimum Numerical Standards--Domestic Companies--Equity Listings

* * * * *

102.01B

    A Company must demonstrate an aggregate market value of publicly-
held shares of $60,000,000 for companies that list either at the time 
of their initial public offerings (``IPO'') (C) or as a result of spin-
offs or under the Affiliated Company standard, and $100,000,000 for 
other companies (D). A company must have a closing price or, if listing 
in connection with an IPO, an IPO price per share of at least $4 at the 
time of initial listing.
* * * * *

102.03 Minimum Numerical Standards--Domestic Companies--Debt Listings

* * * * *
Convertible Bonds
    Debt securities convertible into equity securities may be listed 
only if the underlying equity securities are subject to real-time last 
sale reporting in the United States. The convertible debt issue must 
have an aggregate market value or principal amount of no less than 
$10,000,000.
* * * * *

102.06 Minimum Numerical Standards--Acquisition Companies

    The Exchange will consider on a case-by-case basis the 
appropriateness for listing of companies (``acquisition companies'' or 
``ACs'') with no prior operating history that conduct an initial public 
offering of which at least 90% of the proceeds, together with the 
proceeds of any other concurrent sales of the AC's equity securities, 
will be held in a trust account'') controlled by an independent 
custodian until consummation of a business combination in the form of a 
merger, capital stock exchange, asset acquisition, stock purchase, 
reorganization, or similar business combination with one or more 
operating businesses or assets with a fair market value equal to at 
least 80% of the net assets held in trust (net of amounts disbursed to 
management for working capital purposes and excluding the amount of any 
deferred underwriting discount held in trust) (a ``Business 
Combination'').
    ACs must demonstrate an aggregate market value of $250,000,000 (A) 
and a market value of publicly-held shares of $200,000,000 (A) and must 
comply with the requirements of Section 102.01A. An AC must have a 
closing price or, if listing in connection with an IPO, an IPO price 
per share of at least $4 at the time of initial listing.
    (A) Shares held by directors, officers, or their immediate families 
and other concentrated holdings of 10 percent or more are excluded in 
calculating the number of publicly-held shares. For ACs that list at 
the time of their IPOs, if necessary, the Exchange will rely on a 
written commitment from the underwriter to represent the anticipated 
value of the AC's offering in order to determine an AC's compliance 
with this listing standard.
    Under the terms of its constitutive documents or by contract, any 
AC deemed suitable for listing will be subject to the following minimum 
requirements:
     The Business Combination must be approved by a majority of 
the votes cast by public shareholders at a duly held shareholders 
meeting;
     Each public shareholder voting against the Business 
Combination will have the right (``Conversion Right'') to convert its 
shares of common stock into a pro rata share of the aggregate amount 
then on deposit in the trust account (net of taxes payable, and amounts 
disbursed to management for working capital purposes), provided that 
the Business Combination is approved and consummated. It will be 
permissible for an AC to establish a limit (set no lower than 10% of 
the shares sold in the AC's IPO) as to the maximum number of shares 
with respect to which any public shareholder, together with any 
affiliate of such shareholder or any person with whom such shareholder 
is acting as a ``group'' (as such term is used in Sections 13(d) and 
14(d) of the Exchange Act) may exercise Conversion Rights;
     The AC cannot consummate its Business Combination if 
public shareholders owning in excess of a threshold amount (to be set 
no higher than 40%) of the shares of common stock issued in the AC's 
initial public offering exercise their Conversion Rights

[[Page 15247]]

in connection with such Business Combination;
     The AC will be liquidated if no Business Combination has 
been consummated within a specified time period not to exceed three 
years. The Exchange will promptly commence delisting procedures with 
respect to any AC that fails to consummate its Business Combination 
within (i) the time period specified by its constitutive documents or 
by contract or (ii) three years, whichever is shorter; and
     The AC's founding shareholders must waive their rights to 
participate in any liquidation distribution with respect to all shares 
of common stock owned by each of them prior to the IPO or purchased in 
any private placement occurring in conjunction with the IPO, including 
the common stock underlying any founders' warrants. In addition, the 
underwriters of the IPO must agree to waive their rights to any 
deferred underwriting discount deposited in the trust account in the 
event the AC liquidates prior to the completion of a Business 
Combination.
    In the event that AC securities are listed as units, the components 
of the units (other than common stock) will be required to meet the 
applicable initial listing standards for the security types represented 
by the components.
    In determining the suitability for listing of an AC, the Exchange 
will consider:
     The experience and track record of management;
     The amount of time permitted for the completion of the 
Business Combination prior to the mandatory dissolution of the AC;
     The nature and extent of management compensation;
     The extent of management's equity ownership in the AC and 
any restrictions on management's ability to sell AC stock;
     The percentage of the contents of the trust account that 
must be represented by the fair market value of the Business 
Combination;
     The percentage of voting publicly-held shares whose votes 
are needed to approve the Business Combination;
     The percentage of the proceeds of sales of the AC's 
securities that is placed in the trust account; and
     Such other factors as the Exchange believes are consistent 
with the goals of investor protection and the public interest.
* * * * *

103.01 Minimum Numerical Standards Non-U.S. Companies Equity Listings 
Distribution

    103.01A. A company must meet the following distribution [and] size, 
and price requirements:
    Number of shareholder, holders--5,000 Worldwide of 100 or more 
shares.
    Number of shares publicly held--2.5 million Worldwide.
    Market value of publicly held shares (A)--$100 million Worldwide 
(B) or for companies listing under the Affiliated Company standard-- 
$60 million Worldwide (B).
    (A) Shares held by directors, officers, or their immediate families 
and other concentrated holdings of 10 percent or more are excluded in 
calculating the number of publicly-held shares. If a company either has 
a significant concentration of stock, or if changing market forces have 
adversely impacted the public market value of a company which otherwise 
would qualify for listing on the Exchange such that its public market 
value is no more than 10 percent below $100,000,000, the Exchange will 
generally consider $100,000,000 in stockholders' equity as an alternate 
measure of size and therefore, as an alternative basis to list the 
company.
    (B) For companies that list at the time of their initial public 
offerings (``IPOs''), if necessary, the Exchange will rely on a written 
commitment from the underwriter to represent the anticipated value of 
the company's offering in order to determine a company's compliance 
with this listing standard[s]. Similarly, for spin-offs, the Exchange 
will rely on a representation from the parent company's investment 
banker (or other financial advisor) or transfer agent in order to 
estimate the market value based upon the as disclosed distribution 
ratio. For purposes of this paragraph, an IPO includes a spin-off and 
is an offering by an issuer which, immediately prior to its original 
listing, does not have a class of common stock registered under the 
Securities Exchange Act of 1934. An IPO includes a carve-out, which is 
defined for purposes of this paragraph as the initial offering of an 
equity security to the publicly traded company for an underlying 
interest in its existing business (may be subsidiary, division, or 
business unit).
    A company must have a closing price or, if listing in connection 
with an IPO, an IPO price per share of at least $4 at the time of 
initial listing.
* * * * *


802.01B  Numerical Criteria for Capital or Common Stock

* * * * *

Criteria for REITs and Limited Partnerships

    The Exchange will promptly initiate suspension and delisting 
procedures with respect to REITs and Limited Partnerships if the 
average market capitalization of the entity over 30 consecutive trading 
days is below $25,000,000. The Exchange will promptly initiate 
suspension and delisting procedures with respect to a REIT if it fails 
to maintain its REIT status (unless the resultant entity qualifies for 
an original listing as a corporation).
    The Exchange will notify the REIT or limited partnership if the 
average market capitalization falls below $35,000,000 and will advise 
the REIT or limited partnership of the delisting standard. REITs and 
limited partnerships are not eligible to follow the procedures outlined 
in Sections 802.02 and 802.03.

Criteria for Acquisition Companies (``ACs'')

Prior to Consummation of Business Combination

    Prior to the consummation by a listed Acquisition Company (an 
``AC'') of its Business Combination (as defined in Section 102.06), the 
Exchange will promptly initiate suspension and delisting procedures:
    (i) If the AC's average aggregate global market capitalization is 
below $125,000,000 or the average aggregate global market 
capitalization attributable to its publicly-held shares is below 
$100,000,000, in each case over 30 consecutive trading days. An AC will 
not be eligible to follow the procedures outlined in Sections 802.02 
and 802.03 with respect to this criterion, and any such AC will be 
subject to delisting procedures as set forth in Section 804. The 
Exchange will notify the AC if its average aggregate global market 
capitalization falls below $150,000,000 or the average aggregate global 
market capitalization attributable to its publicly-held shares falls 
below $125,000,000 and will advise the AC of the delisting standard.
    (ii) If the AC securities initially listed (either common equity 
securities or units, as the case may be), fall below the following 
distribution criteria:

the number of total stockholders (A) is less than--400
OR
the number of total stockholders (A) is less than--1,200 and average 
monthly trading volume is less than--100,000 shares (for most recent 12 
months)
OR

[[Page 15248]]

the number of publicly-held shares (B) is less than--600,000 (C).
(A) The number of beneficial holders of stock held in the name of 
Exchange member organizations will be considered in addition to holders 
of record.
(B) Shares held by directors, officers, or their immediate families and 
other concentrated holdings of 10% or more are excluded in calculating 
the number of publicly-held shares.
(C) If the unit of trading is less than 100 shares, the requirement 
relating to the number of shares publicly held shall be reduced 
proportionately.
    In the case of AC securities traded as a unit, such securities will 
be subject to suspension and delisting if any of the component parts do 
not meet the applicable listing standards. However, if one or more of 
the components is otherwise qualified for listing, such component(s) 
may remain listed.
    For the purposes of determining whether an individual component 
satisfies the applicable distribution criteria, the units that are 
intact and freely separable into their component parts shall be counted 
toward the total numbers required for continued listing of the 
component. If a component is a warrant, it will be subject to the 
continued listing standards for warrants set forth in Section 802.01D, 
including a distribution requirement of 100 holders.
    Notwithstanding the foregoing, the Exchange will consider the 
suspension of trading in, or removal from listing of, any individual 
component or unit when, in the opinion of the Exchange, it appears that 
the extent of public distribution or the aggregate market value of such 
component or unit has become so reduced as to make continued listing on 
the Exchange inadvisable. In its review of the advisability of the 
continued listing of an individual component or unit, the Exchange will 
consider the trading characteristics of such component or unit and 
whether it would be in the public interest for trading to continue.
    (iii) If the AC fails to consummate its Business Combination within 
the time period specified by its constitutive documents or required by 
contract, or as provided by Section 102.06, whichever is shorter.

At the Time of the Business Combination

    After shareholder approval of a Business Combination, the Exchange 
will consider whether the continued listing of the AC after 
consummation of the Business Combination will be in the best interests 
of the Exchange and the public interest and will have the discretion to 
suspend and commence delisting proceedings with respect to the AC prior 
to consummation of the Business Combination. An AC will not be eligible 
to follow the procedures outlined in Sections 802.02 and 802.03 with 
respect to such a delisting determination, and any such AC will be 
subject to delisting procedures as set forth in Section 804.

After Consummation of Business Combination

    After consummation of its Business Combination, a company that had 
originally listed as an AC will be subject to Section 801 and Section 
802.01 in its entirety and will be subject to the continued listing 
standards applicable to companies that qualify to list under the 
Earnings Test as set forth above.

``Back Door Listing''

    When a listed AC consummates its Business Combination, the Exchange 
will consider whether the Business Combination gives rise to a ``back 
door listing'' as described in Section 703.08(E). If the resulting 
company would not qualify for original listing, the Exchange will 
promptly initiate suspension and delisting of the AC.
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of and basis for the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements may be examined at 
the places specified in Item IV below. The NYSE has prepared summaries, 
set forth in Sections A, B, and C below, of the most significant 
aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Manual to adopt listing 
standards for acquisition companies (``ACs'').
    An AC is a special purpose company formed for the purpose of 
effecting a merger, capital stock exchange, asset acquisition, stock 
purchase, reorganization or similar business combination with one or 
more operating businesses or assets (a ``Business Combination''). The 
securities sold by the AC in its initial public offering are typically 
units, consisting of one share of common stock and one or more warrants 
(or a fraction of a warrant) to purchase common stock, that are 
separable at some point after the IPO. Management generally is granted 
a percentage of the AC's equity and may be required to purchase 
additional shares in a private placement at the time of the AC's IPO.
    While ACs are not uniform in their structure, the ACs that have 
come to market in recent times have generally provided the following 
investor protections:
     Most of the proceeds of the IPO and any other concurrent 
sales of the AC's equity securities are placed in a trust account 
controlled by an independent custodian and may only be released for (i) 
a shareholder-authorized Business Combination or (ii) a return of 
capital to the shareholders;
     A Business Combination with one or more target businesses 
that together have a fair market value equal to a threshold percentage 
(typically 80%) of the assets in the trust account must be completed 
within a specified time frame (generally 18 months or two years), or 
the trust account must be liquidated and the shareholders must receive 
their pro rata share of its contents; and
     The Business Combination must be approved by a majority of 
the votes cast by the public shareholders at a duly constituted 
shareholders meeting, and dissenting shareholders must have a right to 
have their shares redeemed according to a predetermined methodology. 
The AC cannot consummate its Business Combination if the holders of 
more than a specified percentage (typically 19.9%) of the shares 
request redemption.
    While the Exchange does not believe that all ACs are suitable for 
listing on the NYSE, it believes that there may be certain transactions 
where the quality of the sponsor and the size of the offering proceeds 
may make ACs suitable for NYSE listing.
Initial Listing Standard
    The Exchange does not currently have a financial listing standard 
under which an AC conducting its IPO could qualify to list. ACs by 
their nature have no financial history, while all of the Exchange's 
financial listing standards for operating companies require some period 
of operations prior to listing. As such, the Exchange proposes to adopt 
new Section 102.06 of the Manual, requiring ACs to demonstrate a total 
market value of $250,000,000 and a market value of publicly-held shares 
of

[[Page 15249]]

$200,000,000.\3\ The standard would not require any prior operating 
history, but ACs would have to meet the same distribution criteria as 
all other IPOs, as set forth in Section 102.01A--400 holders of round 
lots and 1,100,000 publicly-held shares. All of the Exchange's 
corporate governance requirements applicable to operating companies 
will apply to listed ACs.
---------------------------------------------------------------------------

    \3\ Shares held by directors, officers, or their immediate 
families and other concentrated holdings of 10 percent or more are 
excluded in calculating the number of publicly-held shares. For ACs 
that list at the time of their IPOs, if necessary, the Exchange will 
rely on a written commitment from the underwriter to represent the 
anticipated value of the AC's offering in order to determine an AC's 
compliance with this listing standard.
---------------------------------------------------------------------------

    Under the terms of its constitutive documents or by contract, any 
AC deemed suitable for listing will be subject to the following minimum 
requirements:
     At least 90% of the proceeds from the AC's IPO and any 
other concurrent sales of the AC's equity securities will be held in a 
trust account controlled by an independent custodian until consummation 
of the AC's Business Combination;
     The Business Combination must be approved by a majority 
vote of the votes cast by public shareholders at a duly held 
shareholders meeting;
     Each public shareholder voting against the Business 
Combination will have the right (``Conversion Right'') to convert its 
shares of common stock into a pro rata share of the aggregate amount 
then on deposit in the trust account (net of taxes payable and amounts 
disbursed to management for working capital purposes), provided that 
the Business Combination is approved and consummated. It will be 
permissible under Section 102.06 for an AC to establish a limit (set no 
lower than 10% of the shares sold in the AC's IPO) as to the maximum 
number of shares with respect to which any public shareholder, together 
with any affiliate of such shareholder or any person with whom such 
shareholder is acting as a ``group'' (as such term is used in Sections 
13(d) \4\ and 14(d) \5\ of the Act) may exercise Conversion Rights; \6\
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78m(d).
    \5\ 15 U.S.C. 78n(d).
    \6\ For example, an AC which sells 10,000,000 shares in its IPO 
could limit the exercise of Conversion Rights by any one holder to 
10% of that amount, or a maximum of 1,000,000 shares.
---------------------------------------------------------------------------

     The AC cannot consummate its Business Combination if 
public shareholders owning in excess of a threshold amount (to be set 
no higher than 40%) of the shares of common stock issued in the AC's 
initial public offering exercise their Conversion Rights in connection 
with such Business Combination;
     The AC will be liquidated if the Business Combination has 
not been consummated within a specified time period not to exceed three 
years. The Exchange will promptly commence delisting procedures with 
respect to any AC that fails to consummate its Business Combination 
within (i) the time period specified by its constitutive documents or 
by contract, or (ii) three years, whichever is shorter; and
     The AC's founding shareholders must waive their rights to 
participate in any liquidation distribution with respect to all shares 
of common stock owned by each of them prior to the IPO or purchased in 
any private placement occurring in conjunction with the IPO, including 
the common stock underlying any founders' warrants. In addition, the 
underwriters of the IPO must agree to waive their rights to any 
deferred underwriting discount deposited in the trust account in the 
event the AC liquidates prior to the completion of a Business 
Combination.\7\
---------------------------------------------------------------------------

    \7\ In the event of liquidation, the pro rata share of the trust 
account to be paid to the holder of each publicly-held share would 
be calculated in accordance with the law of the AC's state of 
incorporation. However, the actual amount paid to the public 
shareholders could vary depending on a variety of factors as 
disclosed in the AC's IPO prospectus, such as liquidation expenses, 
indemnification obligations, etc.
---------------------------------------------------------------------------

    In the event that AC securities are listed as units, the components 
of the units (other than common stock) will be required to meet the 
applicable initial listing standards for the security types represented 
by the components.\8\
---------------------------------------------------------------------------

    \8\ If a component is a warrant, it will be subject to the 
initial listing standards for warrants set forth in Section 703.12. 
See telephone conversation between Steve L. Kuan, Special Counsel, 
Division of Trading and Markets, Commission, and John Carey, 
Assistant General Counsel, Office of the General Counsel, NYSE 
Euronext, on March 11, 2008.
---------------------------------------------------------------------------

    The Exchange intends to consider proposed AC listings on a case-by-
case basis and does not necessarily intend to list every AC that meets 
the minimum requirements for listing.
    In determining the suitability for listing of an AC, the Exchange 
will consider:
     The experience and track record of management;
     The amount of time permitted for the completion of the 
Business Combination prior to the mandatory dissolution of the AC;
     The nature and extent of management compensation;
     The extent of management's equity ownership in the AC and 
any restrictions on management's ability to sell AC stock;
     The percentage of the contents of the trust account that 
must be represented by the fair market value of the Business 
Combination;
     The percentage of voting publicly-held shares whose votes 
are needed to approve the Business Combination;
     The percentage of the proceeds of sales of the AC's 
securities that is placed in the trust account; and
     Such other factors as the Exchange believes are consistent 
with the goals of investor protection and the public interest.
Continued Listing Standard Applicable to ACs Prior to Business 
Combination
    Prior to the consummation by an AC of its Business Combination, the 
Exchange will promptly initiate suspension and delisting procedures:
     If the AC's average aggregate global market capitalization 
is below $125,000,000 or the average aggregate global market 
capitalization attributable to its publicly-held shares is below 
$100,000,000, in each case over 30 consecutive trading days. An AC will 
not be eligible to follow the procedures outlined in Sections 802.02 
and 802.03 with respect to this criterion, and any such AC will be 
subject to delisting procedures as set forth in Section 804. The 
Exchange will notify the AC if its average aggregate global market 
capitalization falls below $150,000,000 or the average aggregate global 
market capitalization attributable to its publicly-held shares falls 
below $125,000,000 and will advise the AC of the delisting standard.
     If the AC securities initially listed (either common 
equity securities or units, as the case may be), fall below the 
following distribution criteria:

The number of total stockholders \9\ is less than--400
OR
The number of total stockholders \9\ is less than--1,200
---------------------------------------------------------------------------

    \9\ The number of beneficial holders of stock held in the name 
of Exchange member organizations will be considered in addition to 
holders of record.
---------------------------------------------------------------------------

And average monthly trading volume is less than--100,000 shares (for 
most recent 12 months)
OR
The number of publicly-held shares \10\ is less than--600,000.\11\
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    \10\ Shares held by directors, officers, or their immediate 
families and other concentrated holdings of 10% or more are excluded 
in calculating the number of publicly-held shares.
    \11\ If the unit of trading is less than 100 shares, the 
requirement relating to the number of shares publicly held shall be 
reduced proportionately.
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    In the case of AC securities traded as a unit, such securities will 
be subject to suspension and delisting if any of the

[[Page 15250]]

component parts do not meet the applicable listing standards. However, 
if one or more of the components is otherwise qualified for listing, 
such component(s) may remain listed.
    For the purposes of determining whether an individual component 
satisfies the applicable distribution criteria,\12\ the units that are 
intact and freely separable into their component parts shall be counted 
toward the total numbers required for continued listing of the 
component.
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    \12\ If a component is a warrant, it will be subject to the 
continued listing standards for warrants set forth in Section 
802.01D, including a continued distribution requirement of 100 
holders.
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    Notwithstanding the foregoing, the Exchange will consider the 
suspension of trading in, or removal from listing of, any individual 
component or unit when, in the opinion of the Exchange, it appears that 
the extent of public distribution or the aggregate market value of such 
component or unit has become so reduced as to make continued listing on 
the Exchange inadvisable. In its review of the advisability of the 
continued listing of an individual component or unit, the Exchange will 
consider the trading characteristics of such component or unit and 
whether it would be in the public interest for trading to continue.
     If the AC fails to consummate its Business Combination 
within the time period specified by its constitutive documents or 
required by contract, or three years, whichever is shorter.
    The continued listing standards set forth in Sections 801 
(``Policy''), 802.01C (``Price Criteria for Capital or Common Stock''), 
802.01D (``Other Criteria'') and 802.01E (``SEC Annual Report Timely 
Filing Criteria'') will also apply to listed ACs, in the same way those 
provisions apply to other equity securities.
At the Time of the Business Combination
    After shareholder approval of a Business Combination, the Exchange 
will consider whether the continued listing of the AC after 
consummation of the Business Combination will be in the best interests 
of the Exchange and the public interest and will have the discretion to 
suspend and commence delisting proceedings with respect to the AC prior 
to consummation of the Business Combination. An AC will not be eligible 
to follow the procedures outlined in Sections 802.02 and 802.03 with 
respect to such a delisting determination, and any such AC will be 
subject to delisting procedures as set forth in Section 804.
Continued Listing Standard Applicable to ACs After Business Combination
    After consummation of its Business Combination, a company that had 
originally listed as an AC will be subject to Section 801 and Section 
802.01 in its entirety and will be considered to be below compliance 
standards if it does not meet the continued listing standards 
applicable to operating companies listed under the Exchange's Earnings 
Test as set forth in Section 802.01B of the Manual,\13\ i.e., if 
average global market capitalization over a consecutive 30-day period 
is less than $75,000,000, and, at the same time, stockholders' equity 
is less than $75,000,000. Notwithstanding the foregoing, Section 
802.01B provides that the Exchange will promptly initiate suspension 
and delisting procedures with respect to a company if that company is 
determined to have average global market capitalization over a 
consecutive 30-day trading period of less than $25,000,000. Section 
802.01B provides that a company will not be eligible to follow the 
procedures outlined in Sections 802.02 and 802.03 with respect to this 
criterion.
Application of ``Back Door Listing'' Rule to ACs Upon Consummation of 
Business Combination
    When a listed AC consummates its Business Combination, the Exchange 
will consider whether the Business Combination gives rise to a ``back 
door listing'' as described in Section 703.08(E) of the Manual, i.e., 
whether the transaction in the opinion of the Exchange constitutes an 
acquisition of the AC by an unlisted company. In applying its back door 
listing policy, the Exchange gives consideration to all factors, 
including changes in ownership of the listed company, changes in 
management, whether the size of the company being ``acquired'' is 
larger than the listed company, and whether the two businesses are 
related on a horizontal or a vertical basis. All circumstances will be 
considered collectively, and weight may be given to compensating 
factors. In a back door listing, the unlisted company is typically the 
larger entity, and frequently the unlisted company will be treated as 
the acquiror for accounting purposes. Where a transaction is determined 
to be a back door listing, Section 703.08(E) requires that the 
resulting company meet the standards for original listing. If the 
resulting company would not qualify for original listing, the Exchange 
will refuse to list additional shares of the AC for the transaction, 
and the AC will be delisted. If the Exchange does not determine that an 
AC's Business Combination is a back door listing, the Exchange will not 
subject the AC to an original listing analysis at the time of the 
Business Combination, but rather will simply subject the post-Business 
Combination company to the continued listing standards for companies 
that originally listed under the Earnings Test.
Minimum Closing Price Requirement for New Listings
    The filing also proposes the adoption of a requirement that any 
equity security listing on the Exchange, including AC securities, must 
have a closing price or, if listing in connection with an IPO, an IPO 
price per share of at least $4 at the time of initial listing. This 
price test would apply whether a company listed under the domestic 
company standards of Section 102.01 of the Manual or the standards set 
forth in Section 103.01 for non-U.S. companies.
Minimum Value of New Listings of Convertible Debt
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    \13\ Section 802.01B establishes separate continued listing 
standards for companies that qualified to list under each of the 
Exchange's four separate initial listing standards for operating 
companies, i.e., the Earnings Test, the Valuation/Revenue with Cash 
Flow Test, the Pure Valuation/Revenue Test, and the Affiliated 
Company Test. As the Exchange cannot predict the standard that would 
be most appropriate to any specific AC after its Business 
Combination, we have decided to apply the continued listing standard 
applicable to companies listed under the Earnings Test to all post-
Business Combination ACs.
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    The Exchange also proposes to adopt a requirement that any 
convertible debt issuance listed on the Exchange must at the time of 
listing have an aggregate market value or principal amount of no less 
than $10,000,000.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\14\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\15\ in particular, in that it 
is designed to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
The Exchange believes that the proposed listing standard is consistent 
with Section 6(b)(5) of the Act \16\ in that it

[[Page 15251]]

contains requirements in relation to the listing of ACs that provide 
adequate protections for investors and the public interest.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
    \16\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2008-17 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.


All submissions should refer to File Number SR-NYSE-2008-17. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSE-2008-17 and should be 
submitted on or before April 11, 2008.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-5673 Filed 3-20-08; 8:45 am]
BILLING CODE 8011-01-P