Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.; Order Approving Proposed Rule Change To Amend LTSE Rule 14.501 To Specify the Process for Enforcing Compliance With LTSE Rule 14.425 for Listed Companies, 14511-14513 [2021-05340]
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Federal Register / Vol. 86, No. 49 / Tuesday, March 16, 2021 / Notices
superseded by this Amendment No. 1.
In response to the OIP, the Council of
Institutional Investors (‘‘CII’’) submitted
a comment letter dated January 7,
2021.17 Simultaneous to the submission
of this Amendment No. 1, the Exchange
is submitting a comment letter in
response to the Commission’s OIP. That
comment letter addresses the issues
raised in the CII comment letter.
III. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change, as modified by Amendment No.
1, is consistent with the Act. Comments
may be submitted by any of the
following methods:
jbell on DSKJLSW7X2PROD with NOTICES
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2020–062 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–NASDAQ–2020–062. 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–NASDAQ–2020–062, and
should be submitted on or before April
6, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–05345 Filed 3–15–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91287; File No. SR–LTSE–
2021–01]
Self-Regulatory Organizations; LongTerm Stock Exchange, Inc.; Order
Approving Proposed Rule Change To
Amend LTSE Rule 14.501 To Specify
the Process for Enforcing Compliance
With LTSE Rule 14.425 for Listed
Companies
March 10, 2021.
I. Introduction
On January 19, 2021, Long-Term
Stock Exchange, Inc. (‘‘LTSE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
amend Rule 14.501(d)(2)(A)(iii) to
specify the process for enforcing
compliance with LTSE Rule 14.425,
which requires each listed company of
the Exchange to adopt and publish
‘‘Long-Term Policies’’ as set forth in the
rule. The proposed rule change was
published for comment in the Federal
Register on February 4, 2021.3 No
comment letters were received in
response to the Notice. This order
approves the proposed rule change.
II. Description of the Proposed Rule
Change
The Exchange proposes to amend
Rule 14.501(d)(2)(A)(iii) to specify the
process under LTSE Rule Series 14.500
18 17
17 See
Letter from Jeffrey P. Mahoney, Council of
Institutional Investors Letter to Secretary, Securities
and Exchange Commission (January 7, 2021). CII
also raised concerns with the SPAC structure that
are outside the scope of Nasdaq’s proposal.
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16:52 Mar 15, 2021
Jkt 253001
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 91019
(January 29, 2021), 86 FR 8243 (February 4, 2021)
(‘‘Notice’’).
1 15
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14511
for enforcing compliance with LTSE
Rule 14.425, which requires listed
Companies 4 to adopt and publish LongTerm Policies consistent with a defined
set of principles (the ‘‘Principles’’)
articulated in LTSE Rule 14.425(b).5 As
the Exchange states, LTSE Rule
14.425(a) requires Companies to adopt
and publish the following policies: A
Long-Term Stakeholder Policy; a LongTerm Strategy Policy; a Long-Term
Compensation Policy; a Long-Term
Board Policy; and a Long-Term Investor
Policy (collectively, the ‘‘Policies’’).6
LTSE Rule 14.425(b) establishes that
Companies have flexibility in
developing what they believe to be
appropriate policies for their businesses
on condition that each of the Policies
must be consistent with the Principles.7
Under LTSE Rule 14.425(c), Companies
also are required to review their Policies
at least annually, make them publicly
available free of charge on or through
their websites, and provide related
disclosures in certain filings with the
Commission.8 In addition, the Exchange
has represented to the Commission that
it will enforce the provisions of LTSE
Rule 14.425 by ensuring that each
Company has addressed all of the
requirements enumerated for each of the
prescribed Policies, consistent with the
Principles, and that each Company has
made the Policies publicly available
without cost.9
Currently, LTSE states that it enforces
the provisions of LTSE Rule 14.425
through a number of rules in the LTSE
Rulebook.10 The Exchange notes that,
under LTSE Rule 14.101, the Exchange
may at all times exercise its broad
discretionary authority to suspend or
delist Companies based on any event,
condition, or circumstance that exists or
4 ‘‘Company’’ means the issuer of a security listed
or applying to list on the Exchange. For purposes
of Chapter 14 of the LTSE Rules, the term
‘‘Company’’ includes an issuer that is not
incorporated, such as, for example, a limited
partnership. See LTSE Rule 14.002(a)(5).
5 See Notice, supra note 3, at 8244. LTSE Rule
Series 14.500 sets forth the procedures of the
Exchange relating to a Company’s failure to meet
the listing standards in Chapter 14 of the
Exchange’s rules, which comprises the corporate
governance standards set forth in Rule Series
14.400, including Rule 14.425 regarding Long-Term
Policies.
6 See id. See also Securities Exchange Act Release
No. 86722 (August 21, 2019), 84 FR 44952 (August
27, 2019) (SR–LTSE–2019–01) (‘‘Long-Term
Policies Approval Order’’) (Order Approving
Proposed Rule Change To Adopt Rule 14.425,
Which Would Require Companies Listed on the
Exchange To Develop and Publish Certain LongTerm Policies).
7 See Notice, supra note 3, at 8244.
8 See id.
9 See id. See also Long-Term Policies Approval
Order, supra note 6, at 44954.
10 See Notice, supra note 3, at 8244.
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Federal Register / Vol. 86, No. 49 / Tuesday, March 16, 2021 / Notices
occurs that makes initial or continued
listing of the securities on the Exchange
inadvisable or unwarranted in the
opinion of the Exchange to protect
investors and the public interest, among
other objectives.11 Under LTSE Rule
14.500(a), LTSE staff is responsible for
identifying deficiencies that may lead to
delisting.12 Under LTSE Rule 14.410, a
Company is required to provide the
Exchange with prompt notification after
an Executive Officer of the Company
becomes aware of any noncompliance
by the Company with the LTSE Rule
Series 14.400, which includes Rule
14.425.13 Under LTSE Rule 14.207(a)(1),
the Exchange may request any
additional information or
documentation, public or non-public,
deemed necessary to make a
determination regarding a Company’s
continued listing, and a Company may
be denied continued listing if it fails to
provide such information within a
reasonable period of time.14 In addition,
the Exchange states that it plans to
monitor Company compliance with
Rule 14.425 annually and on an ad hoc
basis.15
Finally, LTSE Rule 14.501 sets forth
the provisions regarding the Exchange’s
process for notifying Companies
regarding different types of deficiencies
and their corresponding
consequences.16 The Exchange states
that there are four types of Company
deficiency notifications that the
Exchange may issue pursuant to LTSE
Rule 14.501(a): (i) Staff Delisting
Determinations, which are notifications
of deficiencies that, unless appealed,
subject the Company to immediate
suspension and delisting; (ii)
notifications of deficiencies for which
the Company may submit a plan of
compliance (‘‘Plan of Compliance’’) for
staff review; (iii) notifications of
deficiencies for which a Company is
entitled to an automatic cure or
compliance period; and (iv) Public
Reprimand Letters.17 LTSE Rule
14.501(d) identifies the deficiencies that
fall within each of these four
categories,18 and provides that in the
case of a deficiency not specified in
LTSE Rule 14.501(d)(1)–(4), LTSE staff
will issue either a Staff Delisting
Determination or a Public Reprimand
Letter.19
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11 See
id. at 8245.
id. at 8244.
13 See id.
14 See id.
15 See id. at 8244 n.6.
16 See id. at 8244.
17 See id.
18 See id.
19 See id. at 8244 n.7.
12 See
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16:52 Mar 15, 2021
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The Exchange proposes to amend
LTSE Rule 14.501(d)(2)(A)(iii) to specify
that deficiencies relating to LTSE Rule
14.425 would be included among those
for which a Company may submit a Plan
of Compliance for staff review.20 The
Exchange states that this would be
similar to how other corporate
governance rules are handled generally
in LTSE Rule 14.501(d)(2)(A)(iii).21
Under LTSE Rule 14.501(d)(2)(C), a
Company has 45 calendar days to
submit a plan to regain compliance.22
According to the Exchange, LTSE staff
may extend this deadline for up to an
additional five calendar days upon good
cause shown and may request such
additional information from the
Company as is necessary to make a
determination regarding whether to
grant such an extension.23 The
Exchange asserts that this time period
appropriately balances the interests of
the Exchange in ensuring compliance
with its listing standards with the
application of principles-based listing
standards by the Company.24
According to the Exchange, the
process for reviewing such a Plan of
Compliance is set forth in LTSE Rule
14.501(d)(2)(B) and would be
unchanged by this proposal.25 Under
that provision, the Exchange may
provide the Company with up to 180
days to regain compliance (with certain
exceptions), issue a Staff Delisting
Determination letter, or issue a Public
20 See id. at 8244. The proposed rule change
would also remove two erroneous ‘‘or’’s in LTSE
Rule 14.501(d)(2)(A)(iii). See id. at 8244 n.8.
21 See id. (citing LTSE Rules 14.408(a) (Meetings
of Shareholders), 14.408(c) (Quorum),
14.411(Review of Related Party Transactions),
14.412 (Shareholder Approval), 14.406 (Code of
Conduct), 14.407(a)(4)(D) (Partner Meetings of
Limited Partners), 14.407(a)(4)(E) (Quorum of
Limited Partnerships), 14.407(a)(4)(G) (Related
Party Transactions of Limited Partnerships), 14.413
(Voting Rights), and 14.414 (Internal Audit
Function)).
22 See id. at 8244.
23 See id.
24 See id. The Exchange also states that,
notwithstanding the mandated period to submit a
Plan of Compliance and regain compliance under
LTSE Rule 14.501(d)(2), as set forth in LTSE Rule
14.501(c) and repeated in LTSE Rule 14.207(b)(2),
‘‘a listed Company that receives a notification of
deficiency from the Exchange is required to make
a public announcement by filing a Form 8–K, where
required by [Commission] rules, or by issuing a
press release disclosing receipt of the notification
and the Rule(s) upon which the deficiency is based,
and describing each specific basis and concern
identified by the Exchange in reaching its
determination that the Company does not meet the
listing standard.’’ For avoidance of doubt, the
Exchange further states that a request for
information by LTSE staff pursuant to LTSE Rule
14.207(a)(1), absent a notification of deficiency, will
not require a public announcement by the subject
Company pursuant to LTSE Rules 14.501(c) or
14.207(b)(2). See id. at 8244 n.9.
25 See id. at 8244.
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Fmt 4703
Sfmt 4703
Reprimand Letter in accordance with
LTSE Rule 14.501(d)(4).26 Under LTSE
Rule 14.500(a), a Public Reprimand
Letter or Staff Delisting Determination,
upon timely request by a Company, is
subject to review by a Listings Review
Committee, which will adjudicate the
request in accordance with the
procedures and timelines set forth in
LTSE Rules 14.502, 14.504, and
14.505.27
The Exchange asserts that providing
an opportunity for remediation to
Companies that face a deficiency with
respect to LTSE Rule 14.425 will allow
Companies to formulate effective
Policies tailored to Company-specific
needs.28 The Exchange argues that the
ability to tailor Policies, if necessary, to
changing circumstances, while
remaining anchored to the Principles, is
essential for ensuring that the Policies
are effective and meaningful tools for
supporting long-term value creation for
Companies and their investors.29 To that
end, the Exchange maintains that, in
case of a deficiency, Companies will be
able to achieve compliance by changing
Policies or practices related to the
deficiency, amending the applicable
Policies, or some combination of both,
provided that the changes are consistent
with the Principles.30
III. Discussion and Commission
Findings
The Commission has carefully
reviewed the proposed rule change and
finds that it is consistent with the
requirements of Section 6 of the Act.31
In particular, the Commission finds that
the proposed rule change is consistent
with Section 6(b)(5) of the Act,32 which
requires, among other things, that rules
of a national securities exchange be
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
that those rules are not designed to
26 See
id.
id.
28 See id. at 8245.
29 See id.
30 See id. For the avoidance of doubt, the
Exchange states that each Company shall be solely
responsible for ensuring any changes in its practices
to conform to its Policies do not violate any legal,
regulatory, contractual, or other requirements
applicable to the Company. See id. at 8245 n.11.
31 15 U.S.C. 78f. In approving this proposed rule
change, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
32 15 U.S.C. 78f(b)(5).
27 See
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Federal Register / Vol. 86, No. 49 / Tuesday, March 16, 2021 / Notices
permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Commission notes that the
proposed rule change will bring the
Exchange’s handling of deficiencies in a
Company’s compliance with LTSE Rule
14.425 into alignment with its handling
of deficiencies in a Company’s
compliance with other LTSE Rules
pertaining to corporate governance,33 as
detailed in the adjudicatory process set
forth in LTSE Rule Series 14.500. The
Commission further notes that any
Company listed on LTSE would already
have had to adopt and publish LongTerm Policies prior to being accepted
for listing. The Commission therefore
believes it is reasonable to afford a
Company the opportunity to submit a
Plan of Compliance should a deficiency
subsequently arise in this area. The
Commission notes in this regard that, in
addition to submitting a Plan of
Compliance, a listed Company that
receives a deficiency notification from
the Exchange is required to make a
public announcement that discloses its
receipt of the notification and the basis
for it, and that such announcement must
be made as promptly as possible but not
more than four business days following
receipt of the notification.34 Based on
the foregoing, the Commission finds that
the proposed rule change is consistent
with the Act.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,35 that the
proposed rule change (SR–LTSE–2021–
01), be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.36
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–05340 Filed 3–15–21; 8:45 am]
BILLING CODE 8011–01–P
OFFICE OF THE UNITED STATES
TRADE REPRESENTATIVE
Notice of Modification of Section 301
Action: Enforcement of U.S. WTO
Rights in the Large Civil Aircraft
Dispute
Office of the United States
Trade Representative (USTR).
ACTION: Notice.
jbell on DSKJLSW7X2PROD with NOTICES
AGENCY:
The U.S. Trade
Representative has determined to
SUMMARY:
33 See
supra note 21 and accompanying text.
LTSE Rule 14.501(c); supra note 24.
35 15 U.S.C. 78s(b)(2).
36 17 CFR 200.30–3(a)(12).
34 See
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16:52 Mar 15, 2021
Jkt 253001
modify the action being taken in the
investigation by suspending the
additional tariffs on goods of the
European Union for a period of four
months. The suspension is in accord
with a joint U.S.-EU statement that
promotes a resolution of the large civil
aircraft dispute.
DATES: As of 12:01 a.m. eastern standard
time on March 11, 2021, the additional
duties on products of the European
Union covered by the action taken in
this investigation are suspended for a
period of four months.
FOR FURTHER INFORMATION CONTACT: For
questions about the investigation or this
notice, contact Associate General
Counsel Megan Grimball, at (202) 395–
5725, or Director for Europe Michael
Rogers, at (202) 395–3320.
SUPPLEMENTARY INFORMATION:
A. Proceedings in the Investigation
For background on the proceedings in
this investigation, please see prior
notices, including: Notice of initiation,
84 FR 15028 (April 12, 2019); notice of
determination and action, 84 FR 54245
(October 9, 2019); and notices
concerning revisions or modifications of
action, 85 FR 10204 (February 21, 2020),
85 FR 50866 (August 18, 2020), 86 FR
674 (January 6, 2021), 86 FR 9420
(February 12, 2021), and FR Doc. 2021–
05035 (March 11, 2021).
B. Modification of Action
Section 307(a) of the Trade Act of
1974, as amended, (Trade Act) provides
that the U.S. Trade Representative may
modify or terminate any action subject
to the specific direction, if any, of the
President with respect to such action,
that is being taken under section 301 if
any of the conditions described in
section 301(a)(2) exist. Section
301(a)(2)(B)(iv) of the Trade Act
provides that the U.S. Trade
Representative is not required to take
action under section 301(a)(1) ‘‘in
extraordinary cases, where the taking of
action . . . would have an adverse
impact on the United States economy
substantially out of proportion to the
benefits of such action, taking into
account the impact of not taking such
action on the credibility of [actions
taken under section 301].’’
On March 5, 2021, the United States
and the European Union issued a Joint
Statement promoting a resolution of the
large civil aircraft dispute:
The European Union and the United States
today agreed on the mutual suspension for
four months of the tariffs related to the World
Trade Organization (WTO) Aircraft disputes.
The suspension will cover all tariffs both on
aircraft as well as on non-aircraft products,
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Fmt 4703
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14513
and will become effective as soon as the
internal procedures on both sides are
completed.
This will allow the EU and the US to ease
the burden on their industries and workers
and focus efforts towards resolving these long
running disputes at the WTO.
The EU and the US are committed to reach
a comprehensive and durable negotiated
solution to the Aircraft disputes. Key
elements of a negotiated solution will
include disciplines on future support in this
sector, outstanding support measures,
monitoring and enforcement, and addressing
the trade distortive practices of and
challenges posed by new entrants to the
sector from non-market economies, such as
China.
These steps signal the determination of
both sides to embark on a fresh start in the
relationship.
Promoting a successful resolution of
the dispute by suspending the
additional duties provides benefits to
the U.S. economy that outweigh any
adverse impacts on the U.S. economy,
and the suspension maintains the
credibility of the section 301 action.
Accordingly, the U.S. Trade
Representative has determined, in
accordance with sections 307(a) and
301(a)(2)(B)(iv) of the Trade Act, to
modify the action by suspending the
additional duties on products of the
European Union for four months. The
decision to modify the action takes into
account the public comments received
in response to prior notices issued in
the investigation as well as the advice
of the interagency Section 301
Committee.
To give effect to the U.S. Trade
Representative’s determination, as
specified in the Annex to this notice,
the additional duties imposed by
subheadings 9903.89.05, 9903.89.07,
9903.89.10, 9903.89.13, 9903.89.16,
9903.89.19, 9903.89.22, 9903.89.25,
9903.89.28, 9903.89.31, 9903.89.34,
9903.89.37, 9903.89.40, 9903.89.43,
9903.89.46, 9903.89.52, 9903.89.55,
9903.89.57, 9903.89.59, 9903.89.61, and
9903.89.63, and as provided by their
associated subchapter notes, will not
apply to products of Austria, Belgium,
Bulgaria, Croatia, Republic of Cyprus,
Czech Republic, Denmark, Estonia,
Finland, France, Germany, Greece,
Hungary, Ireland, Italy, Latvia,
Lithuania, Luxembourg, Malta,
Netherlands, Poland, Portugal, Romania,
Slovakia, Slovenia, Spain, and Sweden,
that are entered for consumption, or
withdrawn from warehouse for
consumption, on or after 12:01 a.m.
eastern standard time on March 11,
2021, and before 12:01 a.m. eastern
daylight time on July 11, 2021.
Any product of Austria, Belgium,
Bulgaria, Croatia, Republic of Cyprus,
E:\FR\FM\16MRN1.SGM
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]]>Agencies
[Federal Register Volume 86, Number 49 (Tuesday, March 16, 2021)]
[Notices]
[Pages 14511-14513]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05340]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91287; File No. SR-LTSE-2021-01]
Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.;
Order Approving Proposed Rule Change To Amend LTSE Rule 14.501 To
Specify the Process for Enforcing Compliance With LTSE Rule 14.425 for
Listed Companies
March 10, 2021.
I. Introduction
On January 19, 2021, Long-Term Stock Exchange, Inc. (``LTSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend Rule 14.501(d)(2)(A)(iii) to specify the
process for enforcing compliance with LTSE Rule 14.425, which requires
each listed company of the Exchange to adopt and publish ``Long-Term
Policies'' as set forth in the rule. The proposed rule change was
published for comment in the Federal Register on February 4, 2021.\3\
No comment letters were received in response to the Notice. This order
approves the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 91019 (January 29,
2021), 86 FR 8243 (February 4, 2021) (``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
The Exchange proposes to amend Rule 14.501(d)(2)(A)(iii) to specify
the process under LTSE Rule Series 14.500 for enforcing compliance with
LTSE Rule 14.425, which requires listed Companies \4\ to adopt and
publish Long-Term Policies consistent with a defined set of principles
(the ``Principles'') articulated in LTSE Rule 14.425(b).\5\ As the
Exchange states, LTSE Rule 14.425(a) requires Companies to adopt and
publish the following policies: A Long-Term Stakeholder Policy; a Long-
Term Strategy Policy; a Long-Term Compensation Policy; a Long-Term
Board Policy; and a Long-Term Investor Policy (collectively, the
``Policies'').\6\ LTSE Rule 14.425(b) establishes that Companies have
flexibility in developing what they believe to be appropriate policies
for their businesses on condition that each of the Policies must be
consistent with the Principles.\7\ Under LTSE Rule 14.425(c), Companies
also are required to review their Policies at least annually, make them
publicly available free of charge on or through their websites, and
provide related disclosures in certain filings with the Commission.\8\
In addition, the Exchange has represented to the Commission that it
will enforce the provisions of LTSE Rule 14.425 by ensuring that each
Company has addressed all of the requirements enumerated for each of
the prescribed Policies, consistent with the Principles, and that each
Company has made the Policies publicly available without cost.\9\
---------------------------------------------------------------------------
\4\ ``Company'' means the issuer of a security listed or
applying to list on the Exchange. For purposes of Chapter 14 of the
LTSE Rules, the term ``Company'' includes an issuer that is not
incorporated, such as, for example, a limited partnership. See LTSE
Rule 14.002(a)(5).
\5\ See Notice, supra note 3, at 8244. LTSE Rule Series 14.500
sets forth the procedures of the Exchange relating to a Company's
failure to meet the listing standards in Chapter 14 of the
Exchange's rules, which comprises the corporate governance standards
set forth in Rule Series 14.400, including Rule 14.425 regarding
Long-Term Policies.
\6\ See id. See also Securities Exchange Act Release No. 86722
(August 21, 2019), 84 FR 44952 (August 27, 2019) (SR-LTSE-2019-01)
(``Long-Term Policies Approval Order'') (Order Approving Proposed
Rule Change To Adopt Rule 14.425, Which Would Require Companies
Listed on the Exchange To Develop and Publish Certain Long-Term
Policies).
\7\ See Notice, supra note 3, at 8244.
\8\ See id.
\9\ See id. See also Long-Term Policies Approval Order, supra
note 6, at 44954.
---------------------------------------------------------------------------
Currently, LTSE states that it enforces the provisions of LTSE Rule
14.425 through a number of rules in the LTSE Rulebook.\10\ The Exchange
notes that, under LTSE Rule 14.101, the Exchange may at all times
exercise its broad discretionary authority to suspend or delist
Companies based on any event, condition, or circumstance that exists or
[[Page 14512]]
occurs that makes initial or continued listing of the securities on the
Exchange inadvisable or unwarranted in the opinion of the Exchange to
protect investors and the public interest, among other objectives.\11\
Under LTSE Rule 14.500(a), LTSE staff is responsible for identifying
deficiencies that may lead to delisting.\12\ Under LTSE Rule 14.410, a
Company is required to provide the Exchange with prompt notification
after an Executive Officer of the Company becomes aware of any
noncompliance by the Company with the LTSE Rule Series 14.400, which
includes Rule 14.425.\13\ Under LTSE Rule 14.207(a)(1), the Exchange
may request any additional information or documentation, public or non-
public, deemed necessary to make a determination regarding a Company's
continued listing, and a Company may be denied continued listing if it
fails to provide such information within a reasonable period of
time.\14\ In addition, the Exchange states that it plans to monitor
Company compliance with Rule 14.425 annually and on an ad hoc
basis.\15\
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\10\ See Notice, supra note 3, at 8244.
\11\ See id. at 8245.
\12\ See id. at 8244.
\13\ See id.
\14\ See id.
\15\ See id. at 8244 n.6.
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Finally, LTSE Rule 14.501 sets forth the provisions regarding the
Exchange's process for notifying Companies regarding different types of
deficiencies and their corresponding consequences.\16\ The Exchange
states that there are four types of Company deficiency notifications
that the Exchange may issue pursuant to LTSE Rule 14.501(a): (i) Staff
Delisting Determinations, which are notifications of deficiencies that,
unless appealed, subject the Company to immediate suspension and
delisting; (ii) notifications of deficiencies for which the Company may
submit a plan of compliance (``Plan of Compliance'') for staff review;
(iii) notifications of deficiencies for which a Company is entitled to
an automatic cure or compliance period; and (iv) Public Reprimand
Letters.\17\ LTSE Rule 14.501(d) identifies the deficiencies that fall
within each of these four categories,\18\ and provides that in the case
of a deficiency not specified in LTSE Rule 14.501(d)(1)-(4), LTSE staff
will issue either a Staff Delisting Determination or a Public Reprimand
Letter.\19\
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\16\ See id. at 8244.
\17\ See id.
\18\ See id.
\19\ See id. at 8244 n.7.
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The Exchange proposes to amend LTSE Rule 14.501(d)(2)(A)(iii) to
specify that deficiencies relating to LTSE Rule 14.425 would be
included among those for which a Company may submit a Plan of
Compliance for staff review.\20\ The Exchange states that this would be
similar to how other corporate governance rules are handled generally
in LTSE Rule 14.501(d)(2)(A)(iii).\21\
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\20\ See id. at 8244. The proposed rule change would also remove
two erroneous ``or''s in LTSE Rule 14.501(d)(2)(A)(iii). See id. at
8244 n.8.
\21\ See id. (citing LTSE Rules 14.408(a) (Meetings of
Shareholders), 14.408(c) (Quorum), 14.411(Review of Related Party
Transactions), 14.412 (Shareholder Approval), 14.406 (Code of
Conduct), 14.407(a)(4)(D) (Partner Meetings of Limited Partners),
14.407(a)(4)(E) (Quorum of Limited Partnerships), 14.407(a)(4)(G)
(Related Party Transactions of Limited Partnerships), 14.413 (Voting
Rights), and 14.414 (Internal Audit Function)).
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Under LTSE Rule 14.501(d)(2)(C), a Company has 45 calendar days to
submit a plan to regain compliance.\22\ According to the Exchange, LTSE
staff may extend this deadline for up to an additional five calendar
days upon good cause shown and may request such additional information
from the Company as is necessary to make a determination regarding
whether to grant such an extension.\23\ The Exchange asserts that this
time period appropriately balances the interests of the Exchange in
ensuring compliance with its listing standards with the application of
principles-based listing standards by the Company.\24\
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\22\ See id. at 8244.
\23\ See id.
\24\ See id. The Exchange also states that, notwithstanding the
mandated period to submit a Plan of Compliance and regain compliance
under LTSE Rule 14.501(d)(2), as set forth in LTSE Rule 14.501(c)
and repeated in LTSE Rule 14.207(b)(2), ``a listed Company that
receives a notification of deficiency from the Exchange is required
to make a public announcement by filing a Form 8-K, where required
by [Commission] rules, or by issuing a press release disclosing
receipt of the notification and the Rule(s) upon which the
deficiency is based, and describing each specific basis and concern
identified by the Exchange in reaching its determination that the
Company does not meet the listing standard.'' For avoidance of
doubt, the Exchange further states that a request for information by
LTSE staff pursuant to LTSE Rule 14.207(a)(1), absent a notification
of deficiency, will not require a public announcement by the subject
Company pursuant to LTSE Rules 14.501(c) or 14.207(b)(2). See id. at
8244 n.9.
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According to the Exchange, the process for reviewing such a Plan of
Compliance is set forth in LTSE Rule 14.501(d)(2)(B) and would be
unchanged by this proposal.\25\ Under that provision, the Exchange may
provide the Company with up to 180 days to regain compliance (with
certain exceptions), issue a Staff Delisting Determination letter, or
issue a Public Reprimand Letter in accordance with LTSE Rule
14.501(d)(4).\26\ Under LTSE Rule 14.500(a), a Public Reprimand Letter
or Staff Delisting Determination, upon timely request by a Company, is
subject to review by a Listings Review Committee, which will adjudicate
the request in accordance with the procedures and timelines set forth
in LTSE Rules 14.502, 14.504, and 14.505.\27\
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\25\ See id. at 8244.
\26\ See id.
\27\ See id.
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The Exchange asserts that providing an opportunity for remediation
to Companies that face a deficiency with respect to LTSE Rule 14.425
will allow Companies to formulate effective Policies tailored to
Company-specific needs.\28\ The Exchange argues that the ability to
tailor Policies, if necessary, to changing circumstances, while
remaining anchored to the Principles, is essential for ensuring that
the Policies are effective and meaningful tools for supporting long-
term value creation for Companies and their investors.\29\ To that end,
the Exchange maintains that, in case of a deficiency, Companies will be
able to achieve compliance by changing Policies or practices related to
the deficiency, amending the applicable Policies, or some combination
of both, provided that the changes are consistent with the
Principles.\30\
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\28\ See id. at 8245.
\29\ See id.
\30\ See id. For the avoidance of doubt, the Exchange states
that each Company shall be solely responsible for ensuring any
changes in its practices to conform to its Policies do not violate
any legal, regulatory, contractual, or other requirements applicable
to the Company. See id. at 8245 n.11.
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III. Discussion and Commission Findings
The Commission has carefully reviewed the proposed rule change and
finds that it is consistent with the requirements of Section 6 of the
Act.\31\ In particular, the Commission finds that the proposed rule
change is consistent with Section 6(b)(5) of the Act,\32\ which
requires, among other things, that rules of a national securities
exchange be 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 that those rules are not designed to
[[Page 14513]]
permit unfair discrimination between customers, issuers, brokers, or
dealers.
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\31\ 15 U.S.C. 78f. In approving this proposed rule change, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
\32\ 15 U.S.C. 78f(b)(5).
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The Commission notes that the proposed rule change will bring the
Exchange's handling of deficiencies in a Company's compliance with LTSE
Rule 14.425 into alignment with its handling of deficiencies in a
Company's compliance with other LTSE Rules pertaining to corporate
governance,\33\ as detailed in the adjudicatory process set forth in
LTSE Rule Series 14.500. The Commission further notes that any Company
listed on LTSE would already have had to adopt and publish Long-Term
Policies prior to being accepted for listing. The Commission therefore
believes it is reasonable to afford a Company the opportunity to submit
a Plan of Compliance should a deficiency subsequently arise in this
area. The Commission notes in this regard that, in addition to
submitting a Plan of Compliance, a listed Company that receives a
deficiency notification from the Exchange is required to make a public
announcement that discloses its receipt of the notification and the
basis for it, and that such announcement must be made as promptly as
possible but not more than four business days following receipt of the
notification.\34\ Based on the foregoing, the Commission finds that the
proposed rule change is consistent with the Act.
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\33\ See supra note 21 and accompanying text.
\34\ See LTSE Rule 14.501(c); supra note 24.
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\35\ that the proposed rule change (SR-LTSE-2021-01), be, and
hereby is, approved.
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\35\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
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\36\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-05340 Filed 3-15-21; 8:45 am]
BILLING CODE 8011-01-P
