Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Align Certain Disclosure Requirements in Nasdaq's Corporate Governance Rules with Similar Disclosure Requirements in the Commission's Rules, 37388-37390 [2011-15964]
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37388
Federal Register / Vol. 76, No. 123 / Monday, June 27, 2011 / Notices
become effective pursuant to Section
19(b)(3)(A) of the Act 15 and Rule 19b–
4(f)(6) thereunder.16
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. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
A proposed rule change filed under
Rule 19b–4(f)(6) normally may not
become operative prior to 30 days after
the date of filing.17 However, Rule 19b–
4(f)(6)(iii) permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest.18
NASDAQ has requested that the
Commission waive the 30-day operative
delay so that the proposed rule change
may become effective and operative
immediately upon filing, pursuant to
Section 19(b)(3)(A) of the Act 19 and
Rule 19b–4(f)(6) 20 thereunder. The
Exchange believes that waiver of the
delayed operative date is appropriate
because the proposed rule change is
consistent with the original objective of
Rule 4763 (i.e., to permit the Exchange
to lift the short sale price test
restrictions before the end of a Short
Sale Period in the event of a clearly
erroneous triggering trade). Specifically,
the current rule only addresses
triggering transactions deemed to be
clearly erroneous executions under the
Exchange’s rules. The proposed change
would permit the Exchange to lift the
short sale price test restrictions before
the Short Sale Period ends, for covered
securities for which the Exchange is the
listing market, if the Exchange has been
informed by another exchange or SRO
that a transaction in the covered
security that occurred at the Trigger
Price was a clearly erroneous execution,
15 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
17 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b–4(f)(6)(iii) requires that a self regulatory
organization submit to the Commission written
notice of its intent to file the proposed rule change,
along with a brief description and text of the
proposed rule change, at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
18 Id.
19 15 U.S.C. 78s(b)(3)(A).
20 17 CFR 240.19b–4.
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16 17
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as determined by that exchange or SRO
under its rules.
The Exchange believes that this
proposal is ‘‘non-controversial’’ because
it merely seeks to implement additional
protections against the triggering of
short sale price test restrictions based on
transactions determined by an exchange
or SRO to be clearly erroneous
executions under the rules of that
exchange or SRO. For the foregoing
reasons, this rule filing qualifies for
immediate effectiveness as a
‘‘noncontroversial’’ rule change under
paragraph (f)(6) of Rule 19b–4.21
The Commission has considered the
Exchange’s request to waive the 30-day
operative delay, and hereby grants the
request.22 The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest, as it
will permit the Exchange to lift the short
sale price test restrictions of Rule 201,
in a covered security for which the
Exchange is the listing market, when
such restrictions were triggered by a
transaction that another exchange or
SRO has determined to be a clearly
erroneous execution, under the rules of
that exchange or SRO. For this reason,
the Commission designates the
proposed rule change to be operative
upon filing.
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 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 offices 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–2011–084, and
should be submitted on or before July
18, 2011.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change, as amended, is consistent with
the Act. Comments may be submitted by
any of the following methods:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Cathy H. Ahn,
Deputy Secretary.
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–NASDAQ–2011–084 on the
subject line.
SECURITIES AND EXCHANGE
COMMISSION
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–2011–084. This
file number should be included on the
subject line if e-mail is used.
21 17
CFR 240.19b–4(f)(6).
the purposes only of waiving the 30-day
operative delay of this proposal, the Commission
has considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
22 For
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[FR Doc. 2011–15916 Filed 6–24–11; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–64713; File No. SR–
NASDAQ–2011–082]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change to Align
Certain Disclosure Requirements in
Nasdaq’s Corporate Governance Rules
with Similar Disclosure Requirements
in the Commission’s Rules
June 21, 2011.
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 June 9,
2011, The NASDAQ Stock Market LLC
(‘‘Nasdaq’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
23 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 76, No. 123 / Monday, June 27, 2011 / Notices
the proposed rule change as described
in Items I and II below, which Items
have been prepared by Nasdaq. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6) thereunder.4
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 align certain
disclosure requirements in Nasdaq’s
corporate governance rules with similar
disclosure requirements in the
Commission’s rules. Nasdaq will
implement the proposed rule change
thirty days after the date of the filing.
The text of the proposed rule change is
below. Proposed new language is in
italics; proposed deletions are in
brackets.5
*
*
*
*
*
5605. Boards of Directors and
Committees.
(a) No change.
IM–5605. No change.
(b) Independent Directors
(1) Majority Independent Board
A majority of the board of directors
must be comprised of Independent
Directors as defined in Rule 5605(a)(2).
The Company, other than a Foreign
Private Issuer, must [disclose in its
annual proxy (or, if the Company does
not file a proxy, in its Form 10–K or 20–
F) those directors that the board of
directors has determined to be
independent under Rule 5605(a)(2).]
comply with the disclosure requirements
set forth in Item 407(a) of Regulation S–
K. A Foreign Private Issuer must
disclose in its next annual report (e.g.,
Form 20–F or 40–F) those directors that
the board of directors has determined to
be independent under Rule 5605(a)(2).
(A) No change.
IM–5605–1. No change.
(2) No change.
IM–5605–2. No change.
(c)—(e) No change.
*
*
*
*
*
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5615. Exemptions from Certain Corporate
Governance Requirements
This rule provides the exemptions
from the corporate governance rules
afforded to certain types of Companies,
and sets forth the phase-in schedules for
3 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
5 Changes are marked to the rule text that appears
in the electronic manual of Nasdaq found at
https://nasdaqomx.cchwallstreet.com.
4 17
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initial public offerings, Companies
emerging from bankruptcy and
Companies transferring from other
markets. This rule also describes the
applicability of the corporate
governance rules to controlled
companies and sets forth the phase-in
schedule afforded to Companies ceasing
to be controlled companies.
(a)—(b) No change.
(c) How the Rules Apply to a
Controlled Company
(1) No change.
(2) Exemptions Afforded to a
Controlled Company
A Controlled Company is exempt
from the requirements of Rules 5605(b),
(d) and (e), except for the requirements
of subsection (b)(2) which pertain to
executive sessions of Independent
Directors. A Controlled Company, other
than a Foreign Private Issuer, relying
upon this exemption must [disclose in
its annual meeting proxy statement (or,
if the Company does not file a proxy, in
its Form 10–K or 20–F) that it is a
Controlled Company and the basis for
that determination.] comply with the
disclosure requirements set forth in
Instruction 1 to Item 407(a) of
Regulation S–K. A Foreign Private Issuer
must disclose in its next annual report
(e.g., Form 20–F or 40–F) that it is a
Controlled Company and the basis for
that determination.
(3) No change.
*
*
*
*
*
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
Nasdaq proposes to make changes to
Rules 5605(b)(1) and 5615(c)(2) to align
certain disclosure requirements with the
applicable disclosure requirements of
Item 407(a) of Regulation S–K 6 and
6 17
PO 00000
incorporate those requirements into
Nasdaq rules.
Nasdaq currently requires a listed
company to disclose in its annual proxy
(or if the company does not file a proxy,
in its Form 10–K or 20–F) those
directors that the board of directors has
determined to be independent.7 Nasdaq
proposes to replace its current
disclosure requirement in Listing Rule
5605(b)(1) with a reference to the
disclosure requirement in Item 407(a) of
Regulation S–K, which requires similar
disclosure.8 As a result, a listed
company, other than a foreign private
issuer, that does not make the disclosure
required under Item 407(a) of
Regulation S–K will be out of
compliance with Nasdaq’s rules. A
foreign private issuer, which is not
subject to Item 407(a) of Regulation S–
K, will continue to be required to make
the disclosure in its annual report.
Nasdaq believes that the disclosure
requirements in current Nasdaq Listing
Rule 5605(b)(1) and Item 407(a) of
Regulation S–K are substantially similar
and, to the extent they differ, Item
407(a) requires more disclosure.9 As a
result, incorporating these additional
disclosure requirements from Item
407(a) of Regulation S–K into Nasdaq’s
rules will avoid duplication and
confusion and enhance overall
disclosures by its listed companies.
Nasdaq also currently requires a
company to disclose that it is a
controlled company, the basis for that
determination, and that it is relying on
the exemption for a controlled company
from the requirements to have a
majority independent board and
independent director oversight of
executive officer compensation and
director nominations.10 Nasdaq
proposes to replace this disclosure
requirement with a reference to the
disclosure requirement in Instruction 1
to Item 407(a) of Regulation S–K, which
requires similar disclosure.11 As a
7 Nasdaq
Listing Rule 5605(b)(1).
17 CFR 229.407(a) (requiring a company to,
among other things, identify each director that is
independent and explain the factors considered by
the board in making its independence
determination).
9 Id. Differences include where Item 407(a)(2) of
Regulation S–K requires specific disclosures when
a registrant uses its own definitions when
determining whether directors and director
nominees are independent and where Item 407(a)(3)
of Regulation S–K requires specific disclosures of
any transactions, relationships or arrangements not
disclosed pursuant to Item 404 of Regulation S–K
that were considered by the board in determining
independence.
10 Nasdaq Listing Rule 5615(c)(2).
11 See 17 CFR 229.407(a) (in instruction 1,
requiring a company that is relying on an
exemption to disclose the exemption relied upon
8 See
CFR 229.407(a).
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37390
Federal Register / Vol. 76, No. 123 / Monday, June 27, 2011 / Notices
result, a controlled company, other than
a foreign private issuer, that does not
make the disclosure required under
Instruction 1 to Item 407(a) of
Regulation S–K will be out of
compliance with Nasdaq’s rules. A
foreign private issuer, which is not
subject to Item 407(a) of Regulation S–
K, will continue to be required to make
the disclosure in its annual report.
Nasdaq believes that the disclosure
requirements in current Nasdaq Listing
Rule 5615(c)(2) and Instruction 1 to Item
407(a) of Regulation S–K are
substantially similar.12
Nasdaq believes that the proposed
changes will avoid duplication and
confusion, given that the current Nasdaq
disclosure requirements are duplicative
of the disclosure required by Item
407(a), and will facilitate compliance for
listed companies while continuing to
provide transparency to investors. As a
result of the changes, Nasdaq rules will
be harmonized with the applicable
disclosure requirements of Item 407(a)
of Regulation S–K without substantively
lessening any of Nasdaq’s regulatory
requirements for listed companies.
mstockstill on DSK4VPTVN1PROD with NOTICES
2. Statutory Basis
Nasdaq believes that the proposed
rule change is consistent with the
provisions of Section 6 of the Act,13 in
general and with Section 6(b)(5) of the
Act,14 in particular. The proposed rule
change would remove disclosure
requirements in Nasdaq’s rules that are
similar to Commission disclosure
requirements and provide cross
references to Commission requirements.
Nasdaq believes the proposed
amendments are consistent with the
protection of investors and the public
interest, as they simply harmonize
Nasdaq’s disclosure requirements with
those of the Commission and, therefore,
do not substantively lessen Nasdaq’s
regulatory requirements for listed
companies. As such, the proposed rule
change is designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, 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.
and explain the basis for concluding that such
exemption is applicable).
12 Id.
13 15 U.S.C. 78f.
14 15 U.S.C. 78f(b)(5).
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16:51 Jun 24, 2011
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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
Because the foregoing proposed rule
does not (i) Significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate if
consistent with the protection of
investors and the public interest,
provided that the self-regulatory
organization has given the Commission
written notice of its intent to file the
proposed rule change, along with a brief
description and text of the proposed
rule change, at least five business days
prior to the date of filing of the
proposed rule change or such shorter
time as designated by the
Commission,15 the proposed rule
change has become effective pursuant to
Section 19(b)(3)(A) of the Act 16 and
Rule 19b–4(f)(6) thereunder.17
At any time within 60 days of the
filing of such 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, as amended, is consistent with
the Act. Comments may be submitted by
any of the following methods:
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASDAQ–2011–082 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–2011–082. 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 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 Nasdaq. 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–2011–082 and
should be submitted on or before July
18, 2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011–15964 Filed 6–24–11; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
Electronic Comments
[Disaster Declaration #12580 and #12581]
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
Mississippi Disaster Number MS–
00048
U.S. Small Business
Administration.
AGENCY:
15 The
Exchange has satisfied this requirement.
16 15 U.S.C. 78s(b)(3)(A).
17 17 CFR 240.19b–4(f)(6).
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18 17
E:\FR\FM\27JNN1.SGM
CFR 200.30–3(a)(12).
27JNN1
]]>Agencies
[Federal Register Volume 76, Number 123 (Monday, June 27, 2011)]
[Notices]
[Pages 37388-37390]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-15964]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64713; File No. SR-NASDAQ-2011-082]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Align Certain Disclosure Requirements in Nasdaq's Corporate Governance
Rules with Similar Disclosure Requirements in the Commission's Rules
June 21, 2011.
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 June 9, 2011, The NASDAQ Stock Market LLC (``Nasdaq'') filed with
the Securities and Exchange Commission (``Commission'')
[[Page 37389]]
the proposed rule change as described in Items I and II below, which
Items have been prepared by Nasdaq. The Exchange filed the proposal as
a ``non-controversial'' proposed rule change pursuant to Section
19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
Nasdaq proposes to align certain disclosure requirements in
Nasdaq's corporate governance rules with similar disclosure
requirements in the Commission's rules. Nasdaq will implement the
proposed rule change thirty days after the date of the filing. The text
of the proposed rule change is below. Proposed new language is in
italics; proposed deletions are in brackets.\5\
---------------------------------------------------------------------------
\5\ Changes are marked to the rule text that appears in the
electronic manual of Nasdaq found at https://nasdaqomx.cchwallstreet.com.
---------------------------------------------------------------------------
* * * * *
5605. Boards of Directors and Committees.
(a) No change.
IM-5605. No change.
(b) Independent Directors
(1) Majority Independent Board
A majority of the board of directors must be comprised of
Independent Directors as defined in Rule 5605(a)(2). The Company, other
than a Foreign Private Issuer, must [disclose in its annual proxy (or,
if the Company does not file a proxy, in its Form 10-K or 20-F) those
directors that the board of directors has determined to be independent
under Rule 5605(a)(2).] comply with the disclosure requirements set
forth in Item 407(a) of Regulation S-K. A Foreign Private Issuer must
disclose in its next annual report (e.g., Form 20-F or 40-F) those
directors that the board of directors has determined to be independent
under Rule 5605(a)(2).
(A) No change.
IM-5605-1. No change.
(2) No change.
IM-5605-2. No change.
(c)--(e) No change.
* * * * *
5615. Exemptions from Certain Corporate Governance Requirements
This rule provides the exemptions from the corporate governance
rules afforded to certain types of Companies, and sets forth the phase-
in schedules for initial public offerings, Companies emerging from
bankruptcy and Companies transferring from other markets. This rule
also describes the applicability of the corporate governance rules to
controlled companies and sets forth the phase-in schedule afforded to
Companies ceasing to be controlled companies.
(a)--(b) No change.
(c) How the Rules Apply to a Controlled Company
(1) No change.
(2) Exemptions Afforded to a Controlled Company
A Controlled Company is exempt from the requirements of Rules
5605(b), (d) and (e), except for the requirements of subsection (b)(2)
which pertain to executive sessions of Independent Directors. A
Controlled Company, other than a Foreign Private Issuer, relying upon
this exemption must [disclose in its annual meeting proxy statement
(or, if the Company does not file a proxy, in its Form 10-K or 20-F)
that it is a Controlled Company and the basis for that determination.]
comply with the disclosure requirements set forth in Instruction 1 to
Item 407(a) of Regulation S-K. A Foreign Private Issuer must disclose
in its next annual report (e.g., Form 20-F or 40-F) that it is a
Controlled Company and the basis for that determination.
(3) No change.
* * * * *
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
Nasdaq proposes to make changes to Rules 5605(b)(1) and 5615(c)(2)
to align certain disclosure requirements with the applicable disclosure
requirements of Item 407(a) of Regulation S-K \6\ and incorporate those
requirements into Nasdaq rules.
---------------------------------------------------------------------------
\6\ 17 CFR 229.407(a).
---------------------------------------------------------------------------
Nasdaq currently requires a listed company to disclose in its
annual proxy (or if the company does not file a proxy, in its Form 10-K
or 20-F) those directors that the board of directors has determined to
be independent.\7\ Nasdaq proposes to replace its current disclosure
requirement in Listing Rule 5605(b)(1) with a reference to the
disclosure requirement in Item 407(a) of Regulation S-K, which requires
similar disclosure.\8\ As a result, a listed company, other than a
foreign private issuer, that does not make the disclosure required
under Item 407(a) of Regulation S-K will be out of compliance with
Nasdaq's rules. A foreign private issuer, which is not subject to Item
407(a) of Regulation S-K, will continue to be required to make the
disclosure in its annual report.
---------------------------------------------------------------------------
\7\ Nasdaq Listing Rule 5605(b)(1).
\8\ See 17 CFR 229.407(a) (requiring a company to, among other
things, identify each director that is independent and explain the
factors considered by the board in making its independence
determination).
---------------------------------------------------------------------------
Nasdaq believes that the disclosure requirements in current Nasdaq
Listing Rule 5605(b)(1) and Item 407(a) of Regulation S-K are
substantially similar and, to the extent they differ, Item 407(a)
requires more disclosure.\9\ As a result, incorporating these
additional disclosure requirements from Item 407(a) of Regulation S-K
into Nasdaq's rules will avoid duplication and confusion and enhance
overall disclosures by its listed companies.
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\9\ Id. Differences include where Item 407(a)(2) of Regulation
S-K requires specific disclosures when a registrant uses its own
definitions when determining whether directors and director nominees
are independent and where Item 407(a)(3) of Regulation S-K requires
specific disclosures of any transactions, relationships or
arrangements not disclosed pursuant to Item 404 of Regulation S-K
that were considered by the board in determining independence.
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Nasdaq also currently requires a company to disclose that it is a
controlled company, the basis for that determination, and that it is
relying on the exemption for a controlled company from the requirements
to have a majority independent board and independent director oversight
of executive officer compensation and director nominations.\10\ Nasdaq
proposes to replace this disclosure requirement with a reference to the
disclosure requirement in Instruction 1 to Item 407(a) of Regulation S-
K, which requires similar disclosure.\11\ As a
[[Page 37390]]
result, a controlled company, other than a foreign private issuer, that
does not make the disclosure required under Instruction 1 to Item
407(a) of Regulation S-K will be out of compliance with Nasdaq's rules.
A foreign private issuer, which is not subject to Item 407(a) of
Regulation S-K, will continue to be required to make the disclosure in
its annual report. Nasdaq believes that the disclosure requirements in
current Nasdaq Listing Rule 5615(c)(2) and Instruction 1 to Item 407(a)
of Regulation S-K are substantially similar.\12\
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\10\ Nasdaq Listing Rule 5615(c)(2).
\11\ See 17 CFR 229.407(a) (in instruction 1, requiring a
company that is relying on an exemption to disclose the exemption
relied upon and explain the basis for concluding that such exemption
is applicable).
\12\ Id.
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Nasdaq believes that the proposed changes will avoid duplication
and confusion, given that the current Nasdaq disclosure requirements
are duplicative of the disclosure required by Item 407(a), and will
facilitate compliance for listed companies while continuing to provide
transparency to investors. As a result of the changes, Nasdaq rules
will be harmonized with the applicable disclosure requirements of Item
407(a) of Regulation S-K without substantively lessening any of
Nasdaq's regulatory requirements for listed companies.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\13\ in general and with Section
6(b)(5) of the Act,\14\ in particular. The proposed rule change would
remove disclosure requirements in Nasdaq's rules that are similar to
Commission disclosure requirements and provide cross references to
Commission requirements. Nasdaq believes the proposed amendments are
consistent with the protection of investors and the public interest, as
they simply harmonize Nasdaq's disclosure requirements with those of
the Commission and, therefore, do not substantively lessen Nasdaq's
regulatory requirements for listed companies. As such, the proposed
rule change is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, 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.
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\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(5).
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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
Because the foregoing proposed rule does not (i) Significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days from the date on which it was filed, or such shorter time as
the Commission may designate if consistent with the protection of
investors and the public interest, provided that the self-regulatory
organization has given the Commission written notice of its intent to
file the proposed rule change, along with a brief description and text
of the proposed rule change, at least five business days prior to the
date of filing of the proposed rule change or such shorter time as
designated by the Commission,\15\ the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6) thereunder.\17\
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\15\ The Exchange has satisfied this requirement.
\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of such 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, as amended, 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-2011-082 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-2011-082. 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 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 Nasdaq. 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-2011-082 and
should be submitted on or before July 18, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-15964 Filed 6-24-11; 8:45 am]
BILLING CODE 8011-01-P
