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]
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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
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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
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102.01 Minimum Numerical
Standards—Domestic Companies—
Equity Listings
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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.
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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.
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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.
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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,
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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
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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.
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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.
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802.01B Numerical Criteria for Capital or
Common Stock
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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
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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
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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.
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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
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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
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$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
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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.
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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.
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• 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.
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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.
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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 (https://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 (https://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.
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\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.
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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\
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\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.
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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\
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\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.
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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\
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\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.
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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
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\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.
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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 (https://
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 (https://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
