Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change To Amend IM-5101-2 To Provide Acquisition Companies the Option To Hold a Tender Offer in Lieu of a Shareholder Vote on a Proposed Acquisition, 68846-68848 [2010-28247]
Download as PDF
<![CDATA[
68846
Federal Register / Vol. 75, No. 216 / Tuesday, November 9, 2010 / Notices
public interest.13 The Commission notes
that the proposal is designed to conform
C2’s rules to the rules of the CBOE, and
does not raise any new regulatory
issues. For these reasons, the
Commission designates the proposed
rule change as operative upon filing.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
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:
wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
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–C2–2010–008 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–C2–2010–008. 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 Web site viewing and
printing in the Commission’s Public
13 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
VerDate Mar<15>2010
15:18 Nov 08, 2010
Jkt 223001
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 the 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–C2–
2010–008 and should be submitted on
or before November 30, 2010 in the
Federal Register.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–28246 Filed 11–8–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–63239; File No. SR–
NASDAQ–2010–137]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing of Proposed Rule Change To
Amend IM–5101–2 To Provide
Acquisition Companies the Option To
Hold a Tender Offer in Lieu of a
Shareholder Vote on a Proposed
Acquisition
November 3, 2010.
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 October
22, 2010, The NASDAQ Stock Market
LLC (‘‘Nasdaq’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by Nasdaq. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
Nasdaq proposes to provide
acquisition companies an option to hold
a tender offer in lieu of a shareholder
vote on a proposed acquisition.
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
Proposed new language is in italics;
proposed deletions are in [brackets].3
IM–5101–2. Listing of Companies Whose
Business Plan is to Complete One or More
Acquisitions
Generally, Nasdaq will not permit the
initial or continued listing of a Company that
has no specific business plan or that has
indicated that its business plan is to engage
in a merger or acquisition with an
unidentified company or companies.
However, in the case of a Company whose
business plan is to complete an initial public
offering and engage in a merger or acquisition
with one or more unidentified companies
within a specific period of time, Nasdaq will
permit the listing if the Company meets all
applicable initial listing requirements, as
well as the conditions described below.
(a)–(c) No change.
(d) Until the Company has satisfied the
condition in paragraph (b) above, if the
Company holds a shareholder vote on a
business combination for which the
Company must file and furnish a proxy or
information statement subject to Regulation
14A or 14C under the Act in advance of the
shareholder meeting, the[each] business
combination must be approved by a majority
of the shares of common stock voting at the
meeting at which the combination is being
considered. If a shareholder vote on the
business combination is held,
[(e) Until the Company has satisfied the
condition in paragraph (b) above,] public
Shareholders voting against a business
combination must have the right to convert
their shares of common stock into a pro rata
share of the aggregate amount then in the
deposit account (net of taxes payable and
amounts distributed to management for
working capital purposes) if the business
combination is approved and consummated.
A Company may establish a limit (set no
lower than 10% of the shares sold in the IPO)
as to the maximum number of shares with
respect to which any 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 Act), may exercise
such conversion rights. For purposes of this
paragraph [(e)] (d), public Shareholder
excludes officers and directors of the
Company, the Company’s sponsor, the
founding Shareholders of the Company, and
any Family Member or affiliate of any of the
foregoing persons, or the beneficial holder of
more than 10% of the total shares
outstanding.
Until the Company completes a business
combination where all conditions in
paragraph (b) above are met, the Company
must notify Nasdaq on the appropriate form
about each proposed business combination.
Following each business combination, the
combined Company must meet the
requirements for initial listing. If the
Company does not meet the requirements for
initial listing following a business
combination or does not comply with one of
3 Changes are marked to the rule text that appears
in the electronic manual of Nasdaq found at
https://nasdaqomx.cchwallstreet.com.
E:\FR\FM\09NON1.SGM
09NON1
Federal Register / Vol. 75, No. 216 / Tuesday, November 9, 2010 / Notices
the requirements set forth above, Nasdaq will
issue a Staff Delisting Determination under
Rule 5810 to delist the Company’s securities.
(e) Until the Company has satisfied the
condition in paragraph (b) above, if a
shareholder vote on the business
combination is not held for which the
Company must file and furnish a proxy or
information statement subject to Regulation
14A or 14C under the Act, the Company must
provide all Shareholders with the
opportunity to redeem all their shares for
cash equal to their pro rata share of the
aggregate amount then in the deposit account
(net of taxes payable and amounts
distributed to management for working
capital purposes), pursuant to Rule 13e–4
and Regulation 14E under the Act, which
regulate issuer tender offers. The Company
must file tender offer documents with the
Commission containing substantially the
same financial and other information about
the business combination and the
redemption rights as would be required
under Regulation 14A of the Act, which
regulates the solicitation of proxies. Until the
Company completes a business combination
where all conditions in paragraph (b) above
are met, the Company must notify Nasdaq on
the appropriate form about each proposed
business combination. Following each
business combination, the combined
Company must meet the requirements for
initial listing. If the Company does not meet
the requirements for initial listing following
a business combination or does not comply
with one of the requirements set forth above,
Nasdaq will issue a Staff Delisting
Determination under Rule 5810 to delist the
Company’s securities.
*
*
*
*
*
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
Nasdaq 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. Nasdaq has prepared
summaries, set forth in Sections A, B,
and C below, of the most significant
aspects of such statements.
wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
In March 2009, Nasdaq adopted rules
to permit the listing of companies
whose business plan was to complete an
initial public offering and engage in a
merger or acquisition with one or more
unidentified companies within a
specific period of time (‘‘Acquisition
Companies’’ or ‘‘SPACs’’).4 These listing
4 IM–5101–2.
VerDate Mar<15>2010
15:18 Nov 08, 2010
Jkt 223001
requirements included additional
protections designed to protect investors
from certain risks unique to this type of
company, including that the Acquisition
Company obtain a vote of shareholders
prior to consummating any acquisition
and offer shareholders voting against the
acquisition the ability to redeem their
shares in exchange for a pro rata share
of the cash held by the Acquisition
Company.5 Similar protections have
been voluntarily adopted by other
Acquisition Companies that have not
listed on Nasdaq.
As a result of the required vote, in a
number of cases, hedge funds and other
activist investors acquired an interest in
an Acquisition Company and used their
ability to vote against a proposed
acquisition as leverage to obtain
additional consideration not available to
other shareholders. For example, they
may negotiate the sale of their stake to
an affiliate of the Acquisition
Company’s management for a price
higher than their pro rata share of the
deposit account. In other cases, the
withheld votes caused the proposed
acquisition to fail altogether. In order to
prevent this type of ‘‘greenmail,’’ recent
Acquisition Companies, which went
public and did not list on an exchange,
adopted a modified structure under
which they would not seek a vote on the
acquisition, unless otherwise required
by law. Instead, these Acquisition
Companies would conduct a
redemption offer pursuant to Rule 13e–
4 and Regulation 14E under the Act
after the public announcement and prior
to the completion of the business
combination, enabling shareholders
who are opposed to the transaction to
tender their shares in exchange for a pro
rata share of the cash held by the
Acquisition Company. This is the same
outcome available to public
Shareholders who vote against the
acquisition pursuant to Nasdaq’s
existing rule.
Under this new alternative,
shareholders would still maintain the
ability to ‘‘vote with their feet’’ if they
oppose a proposed transaction and
would, as just noted, also obtain their
pro rata share of the Acquisition
Company’s cash through the tender offer
pursuant to Rule 13e–4 and Regulation
14E under the Act. As such, Nasdaq
5 The Listing Rules also require that at least 90%
of the gross proceeds from the SPAC’s initial public
offering and any concurrent sale of equity securities
must be deposited in a trust account; that within
36 months of the effectiveness of the SPAC’s IPO
registration statement, the SPAC must complete one
or more business combinations having an aggregate
fair market value of at least 80% of the value of the
deposit account; and, that each business
combination must be approved by a majority of the
SPAC’s independent directors.
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
68847
believes that the protections provided
by the existing rule would continue to
be available. Further, this tender offer
alternative would help prevent
shareholders who support the
acquisition and elect to retain their
shares from being denied the benefits of
the transaction by the actions of the
activist investors. Accordingly, Nasdaq
proposes to modify IM–5201–2 to allow
an Acquisition Company to conduct a
tender offer for all shares of all
Shareholders 6 in exchange for a pro rata
share of the cash held in trust by the
Acquisition Company in compliance
with Rule 13e–4 and Regulation 14E
under the Act instead of soliciting a
shareholder vote.
In addition, the proposed rule change
would require an Acquisition Company
that is not subject to the Commission’s
proxy rules to conduct a tender offer for
shares in exchange for a pro rata share
of the cash held in trust by the
Acquisition Company in compliance
with Rule 13e–4 and Regulation 14E
under the Act and provide information
similar to that required by the
Commission’s proxy rules, even if the
Acquisition Company seeks a
shareholder vote. This change will
assure that investors, in all cases, get
comparable information about the
proposed transaction.
Last, Nasdaq is amending paragraph
(d) of IM–5101–2 to include within the
definition of ‘‘public Shareholder,’’ for
purposes of the paragraph, the
beneficial holder of more than 10% of
the total shares outstanding. The term
‘‘public Shareholder’’ was meant to
closely mirror the defined term ‘‘Public
Holders,’’ but to also include
Acquisition Company-specific
classifications as well. Public Holders is
defined by the Listing Rules as holders
of a security that includes both
beneficial holders and holders of record,
but does not include any holder who is,
either directly or indirectly, an
Executive Officer, director, or the
beneficial holder of more than 10% of
the total shares outstanding.7
Accordingly, Nasdaq is making the rule
clear by adding language consistent
with the definition of Public Holders.
2. Statutory Basis
Nasdaq believes that the proposed
rule change is consistent with the
provisions of Section 6 of the Act,8 in
general and with Section 6(b)(5) of the
6 The term ‘‘Shareholder’’ is defined broadly by
Rule 5005(a)(37) as ‘‘a record or beneficial owner of
a security listed or applying to list.’’
7 Rule 5005(a)(34).
8 15 U.S.C. 78f.
E:\FR\FM\09NON1.SGM
09NON1
68848
Federal Register / Vol. 75, No. 216 / Tuesday, November 9, 2010 / Notices
Act,9 in particular in that it is designed
to prevent fraudulent and manipulative
acts and practices, 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
proposed rule change is consistent with
these requirements in that it provides an
alternative mechanism for an
acquisition vehicle to complete a
transaction in a manner that minimizes
the disruptive effect of certain
shareholders, while maintaining
protections which are designed to
protect investors and the public interest
and prevent fraudulent and
manipulative acts and practices.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Nasdaq does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
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
wwoods2 on DSK1DXX6B1PROD with NOTICES_PART 1
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate 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 or disapprove
the 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
SMALL BUSINESS ADMINISTRATION
• 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–NASDAQ–2010–137 on the
subject line.
[Disaster Declaration #12353 and #12354]
Paper Comments
SUMMARY:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Florence E. Harmon,
Deputy Secretary.
BILLING CODE 8025–01–M
North Carolina Disaster Number NC–
00030
U.S. Small Business
Administration.
ACTION: Amendment 2.
AGENCY:
This is an amendment of the
Presidential declaration of a major
• Send paper comments in triplicate
disaster for the State of North Carolina
to Elizabeth M. Murphy, Secretary,
(FEMA–1942–DR), dated 10/14/2010.
Securities and Exchange Commission,
Incident: Severe Storms, Flooding,
100 F Street, NE., Washington, DC
and Straight-line Winds associated with
20549–1090.
remnants of Tropical Storm Nicole.
Incident Period: 09/27/2010 through
All submissions should refer to File
10/01/2010.
Number SR–NASDAQ–2010–137. This
DATES: Effective Date: 11/01/2010.
file number should be included on the
Physical Loan Application Deadline
subject line if e-mail is used. To help the
Date: 12/13/2010.
Commission process and review your
EIDL Loan Application Deadline Date:
comments more efficiently, please use
07/14/2011.
only one method. The Commission will
post all comments on the Commission’s ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Internet Web site (https://www.sec.gov/
Administration, Processing and
rules/sro.shtml). Copies of the
Disbursement Center, 14925 Kingsport
submission, all subsequent
Road, Fort Worth, TX 76155.
amendments, all written statements
FOR FURTHER INFORMATION CONTACT: A.
with respect to the proposed rule
Escobar, Office of Disaster Assistance,
change that are filed with the
U.S. Small Business Administration,
Commission, and all written
409 3rd Street, SW., Suite 6050,
communications relating to the
Washington, DC 20416.
proposed rule change between the
SUPPLEMENTARY INFORMATION: The notice
Commission and any person, other than
of the Presidential disaster declaration
those that may be withheld from the
for the State of North Carolina, dated
public in accordance with the
10/14/2010 is hereby amended to
provisions of 5 U.S.C. 552, will be
include the following areas as adversely
available for Web site viewing and
affected by the disaster:
printing in the Commission’s Public
Primary Counties: (Physical Damage
Reference Room, 100 F Street, NE.,
and Economic Injury Loans): Camden,
Washington, DC 20549, on official
Martin, New Hanover, Washington.
business days between the hours of
Contiguous Counties: (Physical Damage
10 a.m. and 3 p.m. Copies of such filing
and Economic Injury Loans):
also will be available for inspection and
North Carolina: Currituck,
copying at the principal office of the
Pasquotank.
Exchange. All comments received will
Virginia: Chesapeake City, Suffolk
be posted without change; the
City.
Commission does not edit personal
All other information in the original
identifying information from
declaration remains unchanged.
submissions. You should submit only
(Catalog of Federal Domestic Assistance
information that you wish to make
Numbers 59002 and 59008)
available publicly. All submissions
should refer to File Number SR–
James E. Rivera,
NASDAQ–2010–137 and should be
Associate Administrator for Disaster
submitted on or before November 30,
Assistance.
2010 in the Federal Register.
[FR Doc. 2010–28200 Filed 11–8–10; 8:45 am]
[FR Doc. 2010–28247 Filed 11–8–10; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #12370 and #12371]
California Disaster #CA–00160
U.S. Small Business
Administration.
AGENCY:
9 15
U.S.C. 78f(b)(5).
VerDate Mar<15>2010
15:18 Nov 08, 2010
10 17
Jkt 223001
PO 00000
CFR 200.30–3(a)(12).
Frm 00101
Fmt 4703
Sfmt 4703
E:\FR\FM\09NON1.SGM
09NON1
]]>Agencies
[Federal Register Volume 75, Number 216 (Tuesday, November 9, 2010)]
[Notices]
[Pages 68846-68848]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-28247]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63239; File No. SR-NASDAQ-2010-137]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing of Proposed Rule Change To Amend IM-5101-2 To Provide
Acquisition Companies the Option To Hold a Tender Offer in Lieu of a
Shareholder Vote on a Proposed Acquisition
November 3, 2010.
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 October 22, 2010, The NASDAQ Stock Market LLC (``Nasdaq'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by Nasdaq. The Commission is publishing this notice
to solicit comments on the proposed rule change 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 the
Substance of the Proposed Rule Change
Nasdaq proposes to provide acquisition companies an option to hold
a tender offer in lieu of a shareholder vote on a proposed acquisition.
Proposed new language is in italics; proposed deletions are in
[brackets].\3\
---------------------------------------------------------------------------
\3\ Changes are marked to the rule text that appears in the
electronic manual of Nasdaq found at https://nasdaqomx.cchwallstreet.com.
---------------------------------------------------------------------------
IM-5101-2. Listing of Companies Whose Business Plan is to Complete One
or More Acquisitions
Generally, Nasdaq will not permit the initial or continued
listing of a Company that has no specific business plan or that has
indicated that its business plan is to engage in a merger or
acquisition with an unidentified company or companies.
However, in the case of a Company whose business plan is to
complete an initial public offering and engage in a merger or
acquisition with one or more unidentified companies within a
specific period of time, Nasdaq will permit the listing if the
Company meets all applicable initial listing requirements, as well
as the conditions described below.
(a)-(c) No change.
(d) Until the Company has satisfied the condition in paragraph
(b) above, if the Company holds a shareholder vote on a business
combination for which the Company must file and furnish a proxy or
information statement subject to Regulation 14A or 14C under the Act
in advance of the shareholder meeting, the[each] business
combination must be approved by a majority of the shares of common
stock voting at the meeting at which the combination is being
considered. If a shareholder vote on the business combination is
held,
[(e) Until the Company has satisfied the condition in paragraph
(b) above,] public Shareholders voting against a business
combination must have the right to convert their shares of common
stock into a pro rata share of the aggregate amount then in the
deposit account (net of taxes payable and amounts distributed to
management for working capital purposes) if the business combination
is approved and consummated. A Company may establish a limit (set no
lower than 10% of the shares sold in the IPO) as to the maximum
number of shares with respect to which any 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 Act), may exercise such conversion
rights. For purposes of this paragraph [(e)] (d), public Shareholder
excludes officers and directors of the Company, the Company's
sponsor, the founding Shareholders of the Company, and any Family
Member or affiliate of any of the foregoing persons, or the
beneficial holder of more than 10% of the total shares outstanding.
Until the Company completes a business combination where all
conditions in paragraph (b) above are met, the Company must notify
Nasdaq on the appropriate form about each proposed business
combination. Following each business combination, the combined
Company must meet the requirements for initial listing. If the
Company does not meet the requirements for initial listing following
a business combination or does not comply with one of
[[Page 68847]]
the requirements set forth above, Nasdaq will issue a Staff
Delisting Determination under Rule 5810 to delist the Company's
securities.
(e) Until the Company has satisfied the condition in paragraph
(b) above, if a shareholder vote on the business combination is not
held for which the Company must file and furnish a proxy or
information statement subject to Regulation 14A or 14C under the
Act, the Company must provide all Shareholders with the opportunity
to redeem all their shares for cash equal to their pro rata share of
the aggregate amount then in the deposit account (net of taxes
payable and amounts distributed to management for working capital
purposes), pursuant to Rule 13e-4 and Regulation 14E under the Act,
which regulate issuer tender offers. The Company must file tender
offer documents with the Commission containing substantially the
same financial and other information about the business combination
and the redemption rights as would be required under Regulation 14A
of the Act, which regulates the solicitation of proxies. Until the
Company completes a business combination where all conditions in
paragraph (b) above are met, the Company must notify Nasdaq on the
appropriate form about each proposed business combination. Following
each business combination, the combined Company must meet the
requirements for initial listing. If the Company does not meet the
requirements for initial listing following a business combination or
does not comply with one of the requirements set forth above, Nasdaq
will issue a Staff Delisting Determination under Rule 5810 to delist
the Company's securities.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, Nasdaq 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. Nasdaq 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
In March 2009, Nasdaq adopted rules to permit the listing of
companies whose business plan was to complete an initial public
offering and engage in a merger or acquisition with one or more
unidentified companies within a specific period of time (``Acquisition
Companies'' or ``SPACs'').\4\ These listing requirements included
additional protections designed to protect investors from certain risks
unique to this type of company, including that the Acquisition Company
obtain a vote of shareholders prior to consummating any acquisition and
offer shareholders voting against the acquisition the ability to redeem
their shares in exchange for a pro rata share of the cash held by the
Acquisition Company.\5\ Similar protections have been voluntarily
adopted by other Acquisition Companies that have not listed on Nasdaq.
---------------------------------------------------------------------------
\4\ IM-5101-2.
\5\ The Listing Rules also require that at least 90% of the
gross proceeds from the SPAC's initial public offering and any
concurrent sale of equity securities must be deposited in a trust
account; that within 36 months of the effectiveness of the SPAC's
IPO registration statement, the SPAC must complete one or more
business combinations having an aggregate fair market value of at
least 80% of the value of the deposit account; and, that each
business combination must be approved by a majority of the SPAC's
independent directors.
---------------------------------------------------------------------------
As a result of the required vote, in a number of cases, hedge funds
and other activist investors acquired an interest in an Acquisition
Company and used their ability to vote against a proposed acquisition
as leverage to obtain additional consideration not available to other
shareholders. For example, they may negotiate the sale of their stake
to an affiliate of the Acquisition Company's management for a price
higher than their pro rata share of the deposit account. In other
cases, the withheld votes caused the proposed acquisition to fail
altogether. In order to prevent this type of ``greenmail,'' recent
Acquisition Companies, which went public and did not list on an
exchange, adopted a modified structure under which they would not seek
a vote on the acquisition, unless otherwise required by law. Instead,
these Acquisition Companies would conduct a redemption offer pursuant
to Rule 13e-4 and Regulation 14E under the Act after the public
announcement and prior to the completion of the business combination,
enabling shareholders who are opposed to the transaction to tender
their shares in exchange for a pro rata share of the cash held by the
Acquisition Company. This is the same outcome available to public
Shareholders who vote against the acquisition pursuant to Nasdaq's
existing rule.
Under this new alternative, shareholders would still maintain the
ability to ``vote with their feet'' if they oppose a proposed
transaction and would, as just noted, also obtain their pro rata share
of the Acquisition Company's cash through the tender offer pursuant to
Rule 13e-4 and Regulation 14E under the Act. As such, Nasdaq believes
that the protections provided by the existing rule would continue to be
available. Further, this tender offer alternative would help prevent
shareholders who support the acquisition and elect to retain their
shares from being denied the benefits of the transaction by the actions
of the activist investors. Accordingly, Nasdaq proposes to modify IM-
5201-2 to allow an Acquisition Company to conduct a tender offer for
all shares of all Shareholders \6\ in exchange for a pro rata share of
the cash held in trust by the Acquisition Company in compliance with
Rule 13e-4 and Regulation 14E under the Act instead of soliciting a
shareholder vote.
---------------------------------------------------------------------------
\6\ The term ``Shareholder'' is defined broadly by Rule
5005(a)(37) as ``a record or beneficial owner of a security listed
or applying to list.''
---------------------------------------------------------------------------
In addition, the proposed rule change would require an Acquisition
Company that is not subject to the Commission's proxy rules to conduct
a tender offer for shares in exchange for a pro rata share of the cash
held in trust by the Acquisition Company in compliance with Rule 13e-4
and Regulation 14E under the Act and provide information similar to
that required by the Commission's proxy rules, even if the Acquisition
Company seeks a shareholder vote. This change will assure that
investors, in all cases, get comparable information about the proposed
transaction.
Last, Nasdaq is amending paragraph (d) of IM-5101-2 to include
within the definition of ``public Shareholder,'' for purposes of the
paragraph, the beneficial holder of more than 10% of the total shares
outstanding. The term ``public Shareholder'' was meant to closely
mirror the defined term ``Public Holders,'' but to also include
Acquisition Company-specific classifications as well. Public Holders is
defined by the Listing Rules as holders of a security that includes
both beneficial holders and holders of record, but does not include any
holder who is, either directly or indirectly, an Executive Officer,
director, or the beneficial holder of more than 10% of the total shares
outstanding.\7\ Accordingly, Nasdaq is making the rule clear by adding
language consistent with the definition of Public Holders.
---------------------------------------------------------------------------
\7\ Rule 5005(a)(34).
---------------------------------------------------------------------------
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\8\ in general and with Section
6(b)(5) of the
[[Page 68848]]
Act,\9\ in particular in that it is designed to prevent fraudulent and
manipulative acts and practices, 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 proposed rule change is
consistent with these requirements in that it provides an alternative
mechanism for an acquisition vehicle to complete a transaction in a
manner that minimizes the disruptive effect of certain shareholders,
while maintaining protections which are designed to protect investors
and the public interest and prevent fraudulent and manipulative acts
and practices.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.
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 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate 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 or disapprove the 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-NASDAQ-2010-137 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2010-137. 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 Web site
viewing and printing 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-
NASDAQ-2010-137 and should be submitted on or before November 30, 2010
in the Federal Register.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
---------------------------------------------------------------------------
\10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-28247 Filed 11-8-10; 8:45 am]
BILLING CODE 8011-01-P
