Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Amend the Fifth Amended and Restated Bylaws of the Exchange's Parent Corporation, Cboe Global Markets, Inc., 51117-51124 [2020-18099]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 85, Number 161 (Wednesday, August 19, 2020)]
[Notices]
[Pages 51117-51124]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18099]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89550; File No. SR-CboeBZX-2020-060]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To Amend the Fifth Amended and 
Restated Bylaws of the Exchange's Parent Corporation, Cboe Global 
Markets, Inc.

August 13, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on July 30, 2020, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule

[[Page 51118]]

change as described in Items I, II, and III below, which Items have 
been prepared by the Exchange. The Commission is publishing this notice 
to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to 
amend the Fifth Amended and Restated Bylaws (the ``Parent Bylaws'') of 
its parent corporation, Cboe Global Markets, Inc. (``Cboe'' or the 
``Parent''). The text of the proposed amendments to the Parent Bylaws 
is provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

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 Exchange 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 Exchange 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The proposed rule change amends the Parent Bylaws to improve the 
governance processes of Cboe, which is organized under the laws of the 
State of Delaware, and to make certain provisions more consistent with 
the Delaware General Corporation Law (``DGCL''). The proposed rule 
change also makes clarifying and cleanup changes to the Parent Bylaws.
Proposed Changes to Article 2--Stockholders
    The majority of the proposed changes are being made to amend 
Section 2.11 (Nomination of Directors) and Section 2.12 (Notice of 
Business at Annual Meetings) and are generally designed to provide the 
Board with the most information and advance notice possible in 
connection with business and nominations at annual and special 
meetings. Additionally, the Exchange notes the proposed changes reflect 
the most up-to-date disclosure requirement practices. The proposed 
changes also combine the existing separate provisions for director 
nominations and stockholder proposals into one provision. Particularly, 
the proposed rule change combines current Sections 2.11 and 2.12 into 
one provision: Proposed Section 2.11 titled ``Notice of Business and 
Nomination of Directors at Meetings of Stockholders.'' \3\ 
Specifically, the proposed rule change delineates proposed Section 2.11 
into paragraph (a) governing notice requirements for annual meetings, 
paragraph (b) governing notice requirements for special meetings,\4\ 
and paragraph (c), which provides for other general procedures and 
practices in connection with notices. The proposed delineation does not 
alter the process or definition of either type of meeting, but instead 
provides for significantly more detailed written notice requirements as 
well as updates to the manner and timeliness of notices.
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    \3\ The proposed rule change also updates the subsequent section 
numbering (current 2.13 through 2.16) to reflect this change 
(proposed 2.12 through 2.15).
    \4\ See Section 2.3 of the Parent Bylaws for a description of 
Special Meetings.
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    First, the proposed change to Section 2.11(a)(i) relocates the 
provisions regarding ``properly brought'' business from current Section 
2.12, and streamlines such provisions to clearly state that the only 
business that will be conducted at an annual meeting of the 
stockholders is business that has properly been brought before the 
meeting and specifies to be ``properly brought'' such business must be 
included in the Corporation's notice of the meeting and brought 
pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, (the 
``Exchange Act'') (or any successor provision of law) and included in 
the Corporation's properly brought business. It also proposes to 
specify the a precise time that the notices must be made by (i.e., 
delivered to or mailed and received by the Secretary of the 
Corporation), which is not later than 5:00 p.m. Eastern Time on the 
90th day nor earlier than the 120th day (which are the time frames 
currently in place) prior to such annual meeting.
    Next, the proposed rule change adds greater detail regarding the 
requirements for proper written notice. Particularly, for notice for 
stockholder proposals for business other than nominations, (proposed 
Section 2.11(a)(iii)(A)), the proposed rule change provides that such 
notice must essentially set forth the same information that would be 
disclosed in a proxy statement, including:
     A reasonably brief description of the business desired to 
be brought before the meeting; the text of the proposal or business 
(including the text of any resolutions proposed for consideration and, 
in the event that such business includes a proposal to amend the 
Certificate of Incorporation or the Bylaws of the Corporation, the 
language of the proposed amendment);
     the reasons for conducting such business at the meeting; a 
complete and accurate description of any material interest in such 
business of such stockholder and any Stockholder Associated Person, 
individually or in the aggregate, including any anticipated benefit to 
the stockholder and any Stockholder Associated Person therefrom; and
     all other information relating to such proposed business 
that would be required to be disclosed in a proxy statement or other 
filing required to be made by the stockholder or any Stockholder 
Associated Person in connection with the solicitation of proxies in 
support of such proposed business pursuant to Regulation 14A under the 
Exchange Act.
    Regarding proposed proper written notice for director nominations 
(proposed Section 2.11(a)(iii)(B)), the notice must include:
     The name, age, business address and residence address of 
such nominee, (``Proposed Nominee'') (which, the Exchange notes is 
currently the case);
     the principal occupation or employment of such nominee 
(which, the Exchange notes is currently the case);
     a completed written questionnaire with respect to the 
background and qualifications of such Proposed Nominee, which must be 
completed in a form required by the Corporation and provided to such 
stockholder within ten days of receiving such request;
     the Proposed Nominee's executed written consent to being 
named in the proxy statement for the meeting as a director nominee;
     the Proposed Nominee's completed written representation 
and agreement, which must be completed in a form required by the 
Corporation and provided to such stockholder within ten days of 
receiving such request. Importantly, the Proposed Nominee must 
represent and agree (1) to a ``Voting Commitment'' that the Proposed 
Nominee is not and will not become party to any agreement,

[[Page 51119]]

arrangement or understanding with, and has not given any commitment or 
assurance to, any person or entity as to how such Proposed Nominee, if 
elected as a director, will act or vote on any issue or question (that 
has not been disclosed to the Corporation). or any Voting Commitment 
that could limit or interfere with the Proposed Nominee's ability to 
comply with fiduciary duties under applicable law, (2) that the 
Proposed Nominee is not and will not become a party to any agreement, 
arrangement, or understanding with any person or entity other than the 
Corporation with respect to any direct or indirect compensation, 
reimbursement, or indemnification in connection with service or action 
as a director that has not been disclosed to the Corporation, (3) would 
comply with all applicable rules of the exchange and Corporation and 
fiduciary duties under state law, (4) would comply with certain 
Articles of Incorporation with respect to activities related to any of 
the Exchanges, (5) intends to serve a full term if elected, and (6) 
will provide true and correct information in communications to the 
Corporation and its stockholders and will not omit material information 
or provide misleading information;
     a description of all direct and indirect compensation and 
other material monetary agreements, arrangements and understandings 
during the past three years, and any other material relationships; and
     any other information that would be required to be 
disclosed statement or other filing required to be made in connection 
with solicitations of proxies for election of directors in a contested 
election pursuant to Section 14 of the Exchange Act (which, the 
Exchange notes is currently the case).
    As to the stockholder providing notice, any Stockholder Associated 
Person and any Proposed Nominee, (proposed Section 2.11(a)(iii)(C)) the 
proposed proper written notice must provide:
     Name and address of such person (as they appear on the 
Corporation's books, if applicable) (which, the Exchange notes is 
currently the case);
     class (which is currently the case) or series and number 
of shares of capital stock of the Corporation (``Shares'') which are, 
directly or indirectly, owned beneficially and/or of record by such 
person, the dates such shares were acquired and the investment intent 
of such acquisition;
     the name of each nominee holder for, and any pledge by 
such person or any number of, securities of the Corporation owned 
beneficially, but not of record;
     short interest, including a definition of what constitutes 
short interest, wherein a person shall be deemed to have a short 
interest in a security if such person, directly or indirectly, through 
any contract, arrangement, understanding, or relationship or otherwise 
has an opportunity to profit or share in profit derived from decreased 
value of the subject security;
     a description of any agreement, arrangement or 
understanding, whether written or oral, (including any derivative or 
short positions, profit interests, options, warrants, convertible 
securities, stock appreciation or similar rights, hedging transactions, 
and borrowed or loaned shares (which, the Exchange notes, is currently 
the case) or similar rights with an exercise or conversion privilege or 
a settlement payment or mechanism at a price related to any class or 
series of capital stock of the Corporation or with a value derived in 
whole or in part from the value of any class or series of capital stock 
of the Corporation (a ``Derivative Instrument'')), in order to mitigate 
loss to, manage risk or benefit of share price changes for, or increase 
or decrease voting power with respect to Shares;
     any rights to dividends on the Shares owned beneficially 
by such person;
     any proportionate interest \5\ in Shares or Derivative 
Instruments by a general or limited partnership or similar entity in 
which such person (1) is a general partner or beneficially owns an 
interest in a general partner, or (2) is the manager, managing member, 
or beneficially owns an interest in such management, of a limited 
liability company or similar entity;
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    \5\ Interest referred to throughout the proposed stockholder 
proper written notice may be direct or indirect.
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     any substantial interest (including, without limitation, 
any existing or prospective commercial, business or contractual 
relationship with the Corporation), by security holdings or otherwise, 
in the Corporation or any of its affiliates;
     a complete and accurate description of all agreements, 
arrangements or understandings, written or oral, and formal or 
informal, between or among the stockholder providing notice and any of 
the Stockholder Associated Persons (collectively, the 
``Stockholders''), or the Stockholders with any Proposed Nominee and 
any other person in connection with (1) any proxy, contract, 
arrangement, understanding or relationship where either of the 
Stockholders have the right to vote any Shares, (2) that such 
individuals may have reached with any stockholder of the Corporation 
regarding how such stockholder will vote its shares, take other action 
in support of any Proposed Nominee, or other action by either of the 
Stockholders, and (3) any other agreements that would be required to be 
disclosed by either of the Stockholders or any other person or entity 
pursuant to a Schedule 13D filed pursuant to the Exchange Act
     a complete and accurate description of any performance-
related fees to which such person may be entitled as a result of any 
increase or decrease in the value of Shares or any Derivative 
Instruments;
     any investment strategy or objective of those who are not 
an individual and a copy of the prospectus (and other like documents);
     a complete and accurate description of any pending or 
threatened legal proceeding in which such person is a party or 
participant involving the Corporation;
     if any agreement, arrangement or understanding has been 
made to increase or decrease the voting power of such person with 
respect to any Shares; and
     any other information relating to such person that would 
be required to be disclosed in a proxy statement or other filing 
required to be made in connection with solicitations of proxies for 
such business or the election of any Proposed Nominee, or is otherwise 
required, pursuant to Section 14 of the Exchange Act.
    Further, regarding proposed proper written notice, proposed Section 
2.11(a)(iii)(D) simplifies the language in connection with the current 
requirement that the Stockholders must represent if they intend to 
deliver a proxy statement and/or form of proxy to holders to approve or 
adopt the proposed business, elect the Proposed Nominee, and/or 
otherwise solicit proxies or votes from stockholders in support of such 
proposed business or Proposed Nominee, making it easier to understand.
    Proposed Section 2.11(a)(iii)(E) provides for the current 
requirement that the stockholder providing notice must represent that 
it is a holder of record of stock of the Corporation entitled to vote 
at such meeting and intends to appear in person, and adds that ``in 
person'' may be virtually, in the case of a meeting held solely by 
means of remote communication) or by proxy at the meeting to bring such 
proposed business and/or nominate one or more Proposed Nominee.

[[Page 51120]]

    Proposed Section 2.11(a)(iii)(F) requires that proper written 
notice include an acknowledgment that the Corporation does not have to 
present the business or nomination being brought at the meeting by the 
stockholder proposing such, if such stockholder does not appear. The 
proposed rule change also adds that, in addition to the proper written 
notice information, the Corporation may require any Proposed Nominee to 
furnish certain other information as the Corporation may reasonably 
require to determine the eligibility or independence of a Proposed 
Nominee.
    Proposed Section 2.11(b), which, as stated, delineates the 
provisions governing special meetings of stockholders, amends the 
procedures governing advance notice of director nominations at a 
special meeting called by the Board for the election of directors. 
Currently, notices of a special meeting must be made not less than 
ninety (90) days nor more than one hundred twenty (120) days prior to 
the anniversary date of the immediately preceding annual meeting of 
stockholders; provided, however, that if the annual meeting is not held 
within thirty (30) days before or more than seventy (70) days after 
such anniversary date, then such nomination shall have been delivered 
to or mailed and received by the Secretary not later than the close of 
business on the 10th day following the date on which public 
announcement of the annual meeting date was made. The proposed rule 
change updates this notice procedure to mirror the same procedural 
language in proposed Section 2.11(a)(ii) (maintaining the same 90- to 
120-day notice requirement), but updates the timing requirements to 
remove the language regarding the 30-day and 70-day time frames around 
the anniversary date and provides that, if public announcement of the 
special meeting and the nominees proposed by the Board of Directors to 
be elected at such meeting is first made less than ninety (90) days 
prior to the date of the special meeting, notice must be made the tenth 
(10th) day following the day on which such public announcement is first 
made. The Exchange believes this proposed timing provision simplifies 
the timing requirement, making it easier to understand and follow, and 
also provides ample time to provide notice in advance to stockholders 
of any scheduled special meeting. Proposed Section 2.11(b) also 
provides that proper written notice of a special meeting must comply 
with the requirements, as proposed, laid out in Section 2.11(a)(iii).
    Proposed Section 2.11(c) provides, generally, for other procedures 
and practices in connection with notices, as well as certain defined 
terms. Proposed Section 2.11(c)(i) provides that a stockholder 
providing notice must update any notice, if necessary, so that the 
information provided or required to be provided in a notice is be true 
and correct (A) as of the record date for determining the stockholders 
entitled to receive notice of the meeting and (B) as of the date that 
is ten business days prior to the meeting (or any postponement, 
adjournment or recess thereof). If an update is required to be made as 
of the record date for determining the stockholders entitled to receive 
notice of the meeting then the notice of update must be made not later 
than five business days after the record date for determining the 
stockholders entitled to receive notice of such meeting. If an update 
is required to be made as of the date that is ten business days prior 
to the meeting (or any postponement, adjournment or recess thereof), 
then the notice of update must be made no later than seven business 
days prior to the date for the meeting, if practicable, or, if not 
practicable, on the first practicable date prior to the meeting or any 
adjournment, recess or postponement thereof Proposed Section 
2.11(c)(ii) provides that if any information submitted pursuant to 
Section 2.11 is inaccurate in any respect, such information may be 
deemed not to have been provided in accordance with the Parent Bylaws. 
As proposed, the stockholder providing the notice has an obligation to 
notify the Secretary in writing at the principal executive offices of 
the Corporation of any inaccuracy or change in any such information 
within two business days of becoming aware of such inaccuracy or 
change. Additionally, within seven days upon delivery of a written 
request by the Secretary, the Board of Directors (or a duly authorized 
committee thereof), any such stockholder is obliged to provide: (A) 
Written verification, reasonably satisfactory to the Board of 
Directors, any committee thereof or any authorized officer of the 
Corporation, to demonstrate the accuracy of any information submitted 
by the stockholder pursuant to Section 2.11, and (B) a written update 
of any information pursuant to Section 2.11 as of an earlier date. If 
the stockholder fails to provide such written verification within such 
period, the information as to which written verification was requested 
may be deemed not to have been provided in accordance with Section 
2.11. Proposed Section 2.11(c)(iii) provides that a stockholder 
providing notice must also comply with all applicable requirements of 
State law and all applicable requirements of the Exchange Act and the 
rules and regulations thereunder, however, references to the Exchange 
Act and its rules and regulations will not limit the requirements 
applicable to stockholder proposals or director nominations pursuant to 
Section 2.11. Proposed Section 2.11(c)(iv) updates current language 
governing failure for the proposing stockholder to appear by adding 
that virtual appearances are acceptable when such meeting is being held 
remotely, as well as the flexibility for the Corporation to waive the 
appearance requirement. The rule change updates this provision and adds 
this flexibility in light of the ongoing Covid-19 pandemic and the 
consequential remote working status for many companies, including Cboe. 
Proposed Section 2.11(c)(v) adds the definition of key terms, along 
with current definitions, for clarity. Specifically, the proposed rule 
change defines an ``affiliate'' and ``associate'' as having the 
respective meanings set forth in Rule 12b-2 under the Exchange Act and 
``Stockholder Associated Person'' to mean: Any person who is a member 
of a ``group'' (used in Rule 13d-5 under the Exchange Act) with or 
otherwise acting in concert with such stockholder providing notice; any 
beneficial owner of shares of stock of the Corporation owned of record 
or beneficially by such stockholder (other than a stockholder that is a 
depositary); any person that directly, or indirectly through one or 
more intermediaries, controls, or is controlled by, or is under common 
control with, such stockholder or such Stockholder Associated Person 
and beneficially owns, directly or indirectly, shares of stock of the 
Corporation; any person that directly, or indirectly through one or 
more intermediaries, controls such stockholder or any Stockholder 
Associated Person; and any participant (as defined in paragraphs 
(a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A, or any 
successor instructions) with such stockholder or other Stockholder 
Associated Person in respect of any proposals or nominations, as 
applicable.
    The Exchange notes that many of the proposed rule changes to 
proposed Section 2.11 are consistent with the bylaws of Cboe's peer 
financial market/services corporations, Nasdaq, Inc (``Nasdaq''),\6\ 
Intercontinental Exchange

[[Page 51121]]

(``ICE''),\7\ and/or the CME Group, Inc. (``CME''),\8\ including:
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    \6\ See By-laws of Nasdaq, Inc., available at https://listingcenter.nasdaq.com/assets/RuleBook/NASDAQ/rules/Nasdaq_Inc_Corporate_Organization_Nasdaq_Inc.pdf.
    \7\ See Eighth Amended and Restated Bylaws of Intercontinental 
Exchange, Inc., available at https://s2.q4cdn.com/154085107/files/doc_downloads/intercontinental_exchange/bylaws-eighth-amended.pdf.
    \8\ See Fifteenth Amended and Restated Bylaws of CME Group Inc., 
available at https://www.cmegroup.com/rulebook/files/CME-Bylaws.pdf.
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     The proposed disclosures required under Regulation 14A for 
proposed business other than director nominations; director 
questionnaires;
     consent to be named in the proxy statement as a director 
nominee;
     a Voting Commitment;
     disclosure of compensation arrangements in connection with 
service as a director;
     agreement to comply with applicable regulations, 
organizational documents and policies;
     representation of intent to serve a full term; commitment 
to provide true and correct facts and to not omit material facts;
     nominee disclosures for contested elections under Section 
14;
     required disclosure by a proposing stockholder's 13D group 
members and related parties;
     disclosure of rights to dividends, short interest, 
interests held through controlled partnerships or LLCs, and in the 
Company other than Company common stock;
     disclosure of agreements/arrangements in connection with 
conferring proxy authority, with any other stockholder regarding voting 
or supporting the proposal/nominee, with increasing or decreasing 
voting power, and agreements required to be disclosed on Schedule 13D;
     disclosure of performance-related fees related to the 
Company's performance;
     disclosure of investment strategy and inclusion of 
prospectus/offering memorandum;
     disclosure of pending or threatened litigation;
     Special meeting provisions;
     Obligation to update and correct disclosures; and
     Express obligation to appear to present the proposal/
nominee.
    Additionally, the proposed rule change moves language currently in 
Section 2.10 providing that the number of nominees for director may not 
exceed the number of directors to be elected at any meeting to proposed 
Section 2.11(a) (annual meetings) and Section 2.11(b) (special 
meetings), therefore adding clarity to the updated Section 2.11 format 
that this provision continues to apply for both annual and special 
meetings. The proposed rule change to Section 2.10 also simplifies 
current language that provides an election may proceed if proper notice 
is made and received and adds language that nominations may be 
withdrawn on or prior to the tenth day before the date the Corporation 
first mails its notice of meeting for such election.
    The proposed rule change also amends Section 2.1 (Place of 
Meetings) by removing language that requires stockholder meetings to be 
held at the principal place of business of the Company if no location 
is designated. The Exchange believes that it is appropriate for the 
Board to retain both control and flexibility over the location and 
timing of stockholder meetings. The proposed rule change amends Section 
2.2 (Annual Meeting) and Section 2.3 (Special Meeting) to provide that 
the Board may postpone, reschedule or cancel any previously-scheduled 
annual meeting or special meeting, respectively. The proposed rule 
change also updates Section 2.7 (Adjournments) to provide that only the 
presiding person of a stockholder meeting can adjourn the meeting in 
the absence of a quorum. The proposed changes are intended to provide 
the Board the flexibility to postpone, recess, reschedule or cancel a 
stockholder meeting. The Exchange also notes that the proposed rule 
changes to Sections 2.2, 2.3, and 2.7 are consistent with the bylaws of 
Cboe's peer corporation, Nasdaq.\9\
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    \9\ See supra note 6.
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    The proposed rule change also makes updates to reflect the current 
best corporate governance practices to certain Sections under Article 
2. In particular, it updates the language in Section 2.5 (Voting List) 
regarding who is required to prepare the voting list. Section 2.5 
currently provides that officer who has charge of the stock ledger 
prepares the voting list and the proposed rule change updates this to 
provide that the Corporation prepares the voting list. The proposed 
rule change is consistent with the DGCL and reflects current best 
practice. The proposed rule change also amends current Section 2.13 
(Organization) (proposed Section 2.12), which currently states that 
that the Board of Directors may appoint any stockholder to act as 
chairman of any meeting in the absence of the Chairman of the Board, to 
instead provide that that the Board of Directors may appoint any 
director of the Corporation to act as chairman of any meeting in the 
absence of the Chairman of the Board. Also, current Section 2.16 
(Conduct of Meetings) (proposed Section 2.15) makes certain changes to 
expand the procedural authority of the presiding officer of any 
stockholder meeting, including the right to recess and/or adjourn 
meetings for any or no reason, and the determination of when the polls 
will open and close for any given matter to be voted on at the meeting, 
the removal of any stockholder or individual who refuses to comply with 
meeting procedures, rules, or guidelines, the restrictions on the use 
of audio and/or video recording devices and cell phones. This is 
consistent with best practice and ensures that the presiding officer 
has the flexibility to take measures, as needed, that ensure meetings 
are conducted in the most appropriate manner.
Proposed Changes to Article 3--Directors
    The proposed rule change amends Section 3.5 (Vacancies) to provide 
that that vacancies on the Board may be filled exclusively by a 
majority of the directors. The Exchange notes that stockholders have a 
common law right under Delaware law to fill director vacancies, unless 
the Company's Charter or Bylaws explicitly give the Board exclusive 
authority, therefore, the proposed change is designed to make this 
right exclusive to the Board. The proposed rule change is consistent 
with the bylaws of Cboe's peer corporations, Nasdaq and ICE.\10\ The 
proposed rule change to Section 3.10 (Special Meetings) would allow 
special meetings of the Board to be called with less than 24 hours' 
notice. Currently, Section 3.10 requires at least 24 hours' notice to 
directors of special Board meetings. However, there may be 
circumstances that necessitate an emergency meeting of the Board with 
less than 24 hours' notice (e.g., in relation to a pending 
transaction), and therefore, the proposed changes would allow notice on 
a shorter time frame if necessary and appropriate under the 
circumstances. The proposed changes to Section 3.13 (Action by Consent) 
updates language regarding routine filing of consents following an 
action by the Board. Specifically, the proposed change updates the 
consents to reflect the same electronic form as minutes are maintained, 
which is consistent with recent amendments to the DGCL, reflects 
current best practice.
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    \10\ See supra notes 6 and 7.
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    The proposed change also adds Section 3.15 (Emergency Bylaws). 
Specifically, the proposed Section 3.15 provides that, notwithstanding 
anything to the contrary in the Certificate of

[[Page 51122]]

Incorporation or these Bylaws, in the event there is any emergency, 
disaster or catastrophe, as referred to in Section 110 of the DGCL, or 
other similar emergency condition (each, an ``emergency''), and a 
quorum of the Board of Directors cannot readily be convened for action, 
this Section 3.15 shall apply, including:
     Any director or Chief Executive Officer, President, Chief 
Operating Officer, Chief Financial Officer, Treasurer or Secretary of 
the Corporation may call a meeting of the Board of Directors by any 
feasible means and with such advance notice as circumstances permit in 
the judgment of the person calling the meeting. Neither the business to 
be transacted nor the purpose of any such meeting need be specified in 
the notice thereof.
     One-third (\1/3\) of the directors shall constitute a 
quorum, which may in all cases act by majority vote.
     Directors may take action to appoint one or more of the 
director or directors to membership on any standing or temporary 
committees of the Board of Directors as they deem advisable. Directors 
may also take action to designate one or more of the officers of the 
Corporation to serve as directors of the Corporation while this Section 
3.15 applies.
     To the extent that it considers it practical to do so, the 
Board of Directors shall manage the business of the Corporation during 
an emergency in a manner that is consistent with the Certificate of 
Incorporation and Bylaws. It is recognized, however, that in an 
emergency it may not always be practical to act in this manner and this 
Section 3.15 is intended to and does hereby empower the Board of 
Directors with the maximum authority possible under the DGCL, and all 
other applicable law, to conduct the interim management of the affairs 
of the Corporation in an emergency in what it considers to be in the 
best interests of the Corporation.
     No director, officer or employee acting in good faith in 
accordance with this Section 3.15 or otherwise pursuant to Section 110 
of the DGCL shall be liable except for willful misconduct.
     This Section 3.15 shall continue to apply until such time 
following the emergency when it is feasible for at least a majority of 
the directors of the Corporation immediately prior to the emergency to 
resume management of the business of the Corporation.
     The Board of Directors may modify, amend or add to the 
provisions of this Section 3.15 in order to make any provision that may 
be practical or necessary given the circumstances of the emergency.
     The provisions of this Section 3.15 shall be subject to 
repeal or change by further action of the Board of Directors or by 
action of the stockholders, but no such repeal or change shall modify 
the provisions of paragraph (e) of this Section 3.15 with regard to 
action taken prior to the time of such repeal or change.
    The Exchange notes that these proposed changes are largely 
consistent with the DGCL and are designed to allow the Board and the 
Corporation to continue to function in the case of an emergency, such 
as a pandemic or an act of terrorism. The Exchange believes the ongoing 
COVID-19 pandemic, as well as similar potential events, demonstrate the 
need for Emergency Bylaws and notes that a number of companies are 
adopting (or at least considering) emergency bylaws to relax Board 
requirements when directors may be unavailable due to emergency 
conditions, such as the pandemic.
Proposed Changes to Article 4--Committees
    The proposed rule change to Section 4.1 (Designation of Committees) 
adds language that provides the Board with additional rights in their 
ability to designate committees and committee alternates and specifies 
that such committees may exercise all powers and authority of the Board 
in the management of the business. Specifically, the proposed language 
provides that the Board of Directors may designate one or more 
committees, each committee to consist of one or more of the directors 
of the Corporation. The Board of Directors may designate one or more 
directors as alternate members of any committee, who may replace any 
absent or disqualified member at any meeting of the committee. In the 
absence or disqualification of a member of the committee, the member or 
members thereof present at any meeting and not disqualified from 
voting, whether or not he, she or they constitute a quorum, may 
unanimously appoint another member of the Board of Directors to act at 
the meeting in place of any such absent or disqualified member. Any 
such committee, to the extent permitted by law and to the extent 
provided in the resolution of the Board of Directors, shall have and 
may exercise all the powers and authority of the Board of Directors in 
the management of the business and affairs of the Corporation, and may 
authorize the seal of the Corporation, if any, to be affixed to all 
papers which may require it. The proposed rule change provides 
additional detail regarding the specific authority of the Board to 
designate members of the committees and their general powers and 
authority to manage the Corporation, as well as the power invested in 
the voting members regarding the appointment of a member of the Board 
to act in a circumstance of disqualification. The proposed language is 
consistent with the DGCL and reflects current best practice.
    The proposed rule changes to Section 4.2 (The Executive Committee) 
removes language that lists out specific actions or matters that are 
not to be handled by the Executive Committee under Delaware law, 
including amending the Certificate of Incorporation, adopting an 
agreement of merger or consolidation, approving a sale, lease or 
exchange of all or substantially all of the Corporation's property and 
assets, or approval of a dissolution of the Corporation or revocation 
of a dissolution. The proposed change, instead, replaces this list with 
reference to matters under the DGCL to be submitted to stockholders for 
approval. The Exchange believes that the proposed change, while being 
consistent with the DGCL, removes ambiguous and potentially 
unnecessarily limiting language that lists the circumstances that could 
not be handled by the Executive Committee that required stockholder 
approval and replaces it with broader reference to the DGCL.
    The proposed change to Section 4.5 (The Nominating and Governance 
Committee) reduces the minimum size requirement of the Nominating and 
Governance Committee (``N&G Committee'') from a minimum of five members 
to three members. This proposed rule change is intended to provide the 
Board additional flexibility when populating the N&G Committee and is 
consistent with the minimum number of members required on other Board 
committees.\11\
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    \11\ See e.g., Sections 4.3 and 4.4 of the Parent Bylaws.
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Proposed Changes to Article 8--Notices
    The proposed rule change in Section 8.1 (Notices) replaces language 
in paragraph (e) that requires that stockholders opt-in to email notice 
with language that instead allows stockholders to opt-out of email 
notice or not receive email notice if such notice is prohibited by the 
DGCL. The proposed rule change also updates Section 8.2 (Electronic 
Notice) to reflect this change. The proposed rule change also removes 
the provision in Section 8.1 paragraph (c) which provides that notice 
may be given by messenger or

[[Page 51123]]

overnight courier service if the delivery method does not require 
payment of the messenger or courier service fee to deliver the notice 
by the person to whom the notice is addressed. The proposed rule change 
then adds to paragraph (c) that notice is deemed to have been given via 
this method at the earlier of when the notice is received or left at 
the stockholder's or director's address. The proposed change is 
consistent with the DGCL.
Proposed Rule Changes to Article 11 (Forum for Adjudication of 
Disputes)
    The proposed rule changes to Article 11 add clarifying provisions 
and additional detail regarding the exclusive forum. The proposed 
changes are designed to update the exclusive forum bylaw to reflect 
current best practices. Specifically, the proposed rule change adds 
that, among the existing actions listed, the Court of Chancery of the 
State of Delaware will be the sole and exclusive forum for any action 
asserting an ``internal corporate claim'' (defined in the DGCL). The 
proposed rule change also provides that, in the event that the Delaware 
Court of Chancery lacks subject matter jurisdiction over any such 
action or proceeding, the sole and exclusive forum for such action or 
proceeding shall be another State or Federal court located within the 
State of Delaware. The proposed rule change provides that any person or 
entity purchasing or otherwise acquiring any interest in shares of 
capital stock of the Corporation is deemed to have notice of and 
consented to the provisions of Article 1, including exclusive personal 
jurisdiction in the Delaware Court or Chancery and having service of 
process made, even if an action (within the scope of Article 11) is 
filed in a court other than a court located within the State of 
Delaware. Additionally, the proposed rule change makes clear that the 
existence of any prior consent to, or selection of, an alternative 
forum by the Corporation shall not act as a waiver of the Corporation's 
ongoing consent right in Article 11 and that failure to enforce the 
foregoing provisions would cause the Corporation irreparable harm and 
the Corporation is entitled to equitable relief, including injunctive 
relief and specific performance, to enforce Article 11. It also 
clarifies that a claim may be made against the Corporation or any 
current or former director, officer, other employee, agent or 
stockholder of the Corporation, and may arise pursuant to the 
Certificate of Incorporation or these Bylaws, in addition to the DCGL. 
The proposed rule change is in line with current best practice, and, 
additionally, the bylaws of Cboe's peer, CME,\12\ currently provide for 
similar language related to foreign actions and specific performance.
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    \12\ See supra note 8.
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    Finally, the proposed rule change makes non-substantive edits 
throughout the above listed Articles of the Parent Bylaws, including 
updating paragraph lettering and numbering, simplifying language in 
order to better align it with plain English, update the terms Board of 
Directors and Exchange Act to be uniform throughout the bylaws (e.g., 
as opposed to just ``Board'', or ``Securities and Exchange Act'', and 
the other versions of the Act's name).
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\13\ Specifically, the Exchange believes the proposed rule change 
is consistent with Section 6(b)(1) of the Act,\14\ which provides that 
the Exchange be organized and have the capacity to be able to carry out 
the purposes of the Act and to enforce compliance by the Exchange's 
Trading Permit Holders and persons associated with its Trading Permit 
Holders with the Act, the rules and regulations thereunder, and the 
rules of the Exchange.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(1).
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    In particular, the Exchange believes the proposed changes overall 
are designed to improve the governance process of Cboe, as well as 
update the Parent Bylaws, where applicable, to reflect and track the 
DCGL and current best practices. Moreover, the Exchange does not 
believe the proposed rule changes are controversial and indeed are 
common among public companies, including its peers, Nasdaq, ICE and 
CME.
    Particularly, the proposed rule changes to proposed Section 2.11 in 
connection with providing notice regarding business and director 
nominations at annual and special meetings, will enable the Exchange to 
continue to be organized and have the capacity to be able to carry out 
the purposes of the Act, because such proposed changes are generally 
designed to strengthen these provisions by requiring notices (including 
updates to notices) to disclose to the Board more detailed information 
than currently required. In this manner, the proposed detailed 
disclosure requirements would provide the Board with substantially more 
information by which they may make complete and informed decisions and 
most appropriately address business before the Board. The Exchange also 
believes that the proposed rule changes in connection with timely 
notice, including the 10 days' advanced notice of director nominations 
(via the required director questionnaire), procedures governing advance 
notice of director nominations at a special meeting, an obligation to 
update and correct the notice up to 7 days prior to a meeting, and 
updated timing regarding the 10-day notice of a special meeting less 
than 90 days from the scheduled meeting, will allow the Board the 
appropriate time needed to consider and prepare to address all 
business, nominations, and other issues to be presented before it. As 
such, the proposed rule changes will ensure that the Board is able to 
continue to oversee the orderly operation of the corporation, including 
the Exchange, in a manner the it deems most appropriate. Additionally, 
and as listed in detail above, the vast majority of the proposed notice 
requirements are consistent with the bylaws of Cboe's peer 
corporations, CME, ICE, and/or Nasdaq, as well as in line with current 
best practices. The proposed changes are also all consistent with the 
DCGL.
    Moreover, the proposed changes are intended to provide the Board 
with additional flexibility and more appropriate governance procedures 
in addressing various circumstances, which will enable the Exchange to 
continue to be organized and have the capacity to be able to carry out 
the purposes of the Act. In particular, the proposed rule changes would 
allow the Board to retain both control and flexibility over the 
location and timing of stockholder meetings, would allow the Board to 
postpone, recess, reschedule or cancel a stockholder meeting, would 
allow only the presiding person of a stockholder meeting to adjourn and 
reset a stockholder meeting date in the absence of quorum, would allow 
for shorter notice in order for the Board to call a special meeting, 
would allow the Board and the Corporation to continue to function 
(including remotely) in the case of an emergency, such as the ongoing 
COVID-19 pandemic, and would provide the Board with increased 
flexibility in populating the Nomination and Governance Committee. Each 
of these proposed changes is designed to assist the Exchange in most 
effectively and efficiently managing evolving corporate matters as they 
arise, many of which are highly complex and may be time

[[Page 51124]]

sensitive. Additionally, as indicated above, a majority of the proposed 
changes align certain Sections in the Parent Bylaws with current best 
practices and with the DCGL (as well as a change in accordance with 
Delaware common law) and are also consistent with bylaw provisions of 
Cboe's peer corporations. Accordingly, the Exchange believes the 
proposed changes are widely accepted as appropriate governance 
measures.
    Lastly, the proposed nonsubstantive changes to the Parent Bylaws 
provide additional clarity within the Parent Bylaws and make them 
easier to understand. By making certain provisions read more in plain 
English, updating paragraph lettering and numbering, making certain 
terms uniform and simplifying language throughout, the proposed 
nonsubstantive changes benefit investors by providing more clarity and 
reduced complexity within the Parent Bylaws and making the Parent Bylaw 
[sic] better organized and easier to follow thus reducing potential 
investor confusion.

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. The proposed rule change is 
not intended to address competitive issues but rather is concerned 
solely with updating the Parent Bylaws to reflect the changes described 
above.

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

    The Exchange neither solicited nor received comments on the 
proposed rule change.

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 Exchange consents, the Commission will:
    A. By order approve or disapprove 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 email to [email protected]. Please include 
File Number SR-CboeBZX-2020-060 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CboeBZX-2020-060. This 
file number should be included on the subject line if email 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 website (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 website 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 10:00 a.m. and 
3:00 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-CboeBZX-2020-060 and should be submitted 
on or before September 9, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-18099 Filed 8-18-20; 8:45 am]
BILLING CODE 8011-01-P