Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment, No. 1, To Amend Listing Rules Applicable to Special Purpose Acquisition Companies Whose Business Plan is To Complete One or More Business Combinations, 14508-14511 [2021-05345]

Download as PDF 14508 Federal Register / Vol. 86, No. 49 / Tuesday, March 16, 2021 / Notices impact, or impose any burden, on competition. The Investment Policy applies equally to allowable investments of Clearing Fund and Participants Fund deposits, as applicable, of each member of the Clearing Agencies, and establishes a uniform policy at the Clearing Agencies. The proposed changes to the Investment Policy would not affect any changes on the fundamental purpose or operation of this document and, as such, would also not have any impact, or impose any burden, on competition. (C) Clearing Agency’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Clearing Agencies have not solicited or received any written comments relating to this proposal. The Clearing Agencies will notify the Commission of any written comments received by the Clearing Agencies. III. Date of Effectiveness of the Proposed Rule Change, and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove 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: 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– NSCC–2021–003 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549. All submissions should refer to File Number SR–NSCC–2021–003. This file number should be included on the VerDate Sep<11>2014 16:52 Mar 15, 2021 Jkt 253001 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 NSCC and on DTCC’s website (https://dtcc.com/legal/sec-rulefilings.aspx). 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–NSCC– 2021–003 and should be submitted on or before April 6, 2021. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–05347 Filed 3–15–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–91294; File No. SR– NASDAQ–2020–062] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment, No. 1, To Amend Listing Rules Applicable to Special Purpose Acquisition Companies Whose Business Plan is To Complete One or More Business Combinations March 10, 2021. On September 3, 2020, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or 16 17 PO 00000 CFR 200.30–3(a)(12). Frm 00106 Fmt 4703 Sfmt 4703 ‘‘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 its listing rules to permit companies whose business plan is to complete one or more business combinations (‘‘SPACs’’ or ‘‘Acquisition Companies’’) 15 calendar days following the closing of a business combination to demonstrate that the SPAC has satisfied the applicable round lot shareholder requirement. The proposed rule change was published for comment in the Federal Register on September 22, 2020.3 On November 4, 2020, pursuant to Section 19(b)(2) of the Exchange Act,4 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.5 On December 16, 2020, the Commission instituted proceedings under Section 19(b)(2)(B) of the Act 6 to determine whether to approve or disapprove the proposed rule change.7 On February 25, 2021, the Exchange filed Amendment No. 1 to the proposed rule change, which superseded the proposed rule change as originally filed, and is described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change, as modified by Amendment No. 1, from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend listing rules applicable to companies whose business plan is to complete one or more business combinations (the ‘‘Original Proposal’’). The Exchange is filing this proposal (‘‘Amendment No. 1’’) to amend the Original Proposal. Amendment No. 1 supersedes the 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 89897 (September 16, 2020), 85 FR 59574. Comments received on the proposal are available on the Commission’s website at: https://www.sec.gov/ comments/sr-nasdaq-2020-062/ srnasdaq2020062.htm. 4 15 U.S.C. 78s(b)(2). 5 See Securities Exchange Act Release No. 90340, 85 FR 71704 (November 10, 2020). The Commission designated December 21, 2020, as the date by which it should approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change. 6 15 U.S.C. 78s(b)(2)(B). 7 See Securities Exchange Act Release No. 90682, 85 FR 83113 (December 16, 2020). 2 17 E:\FR\FM\16MRN1.SGM 16MRN1 Federal Register / Vol. 86, No. 49 / Tuesday, March 16, 2021 / Notices Original Proposal in its entirety to add an additional disclosure requirement. 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. jbell on DSKJLSW7X2PROD with NOTICES A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Nasdaq is filing this amendment to SR–NASDAQ–2020–062, which was published for comment by the Commission on September 16, 2020.8 The original proposal would allow certain acquisition companies listed under IM–5101–2 with a 15-day period after closing a business combination to provide evidence that the combined company satisfied the round lot shareholder requirement for initial listing at the time of the business combination. This Amendment No. 1 would require a company relying on this 15-day period to file a Form 8–K, were required by SEC rules, or issue a press release noting that the company is relying upon the additional 15 calendar days available under Nasdaq rules to demonstrate compliance. In 2009, Nasdaq adopted additional listing requirements for a company whose business plan is to complete an initial public offering and engage in a merger or acquisition with one or more unidentified companies within a specific period of time (‘‘Acquisition Companies’’).9 Such a company is required to keep at least 90% of the proceeds from its initial public offering in an escrow account and, until the company has completed one or more business combinations having an aggregate fair market value of at least 80% of the value of the escrow account, must meet the requirements for initial listing following each business 8 Securities Exchange Act Release No. 99897 (September 22, 2020), 85 FR 59574 (September 16, 2020). 9 Securities Exchange Act Release No. 58228 (July 25, 2008), 73 FR 44794 (July 31, 2008) (adopting the predecessor to IM–5101–2). VerDate Sep<11>2014 16:52 Mar 15, 2021 Jkt 253001 combination.10 If a shareholder vote on the business combination is held, public shareholders voting against a business combination must have the right to convert their shares of common stock into a pro rata share of the aggregate amount then in the escrow account (net of taxes payable and amounts distributed to management for working capital purposes) if the business combination is approved and consummated.11 If the combined company does not meet the initial listing requirements following a business combination, Nasdaq Staff will issue a Staff Delisting Determination under Nasdaq Rule 5810. Under the existing rules, ‘‘following each business combination’’ with an Acquisition Company, the resulting company must satisfy all initial listing requirements. The rule does not provide a timetable for the company to demonstrate that it satisfies those requirements, however. Accordingly, Nasdaq proposes to modify the rule to specify if the Acquisition Company demonstrates that it will satisfy all requirements except the applicable round lot shareholder requirement, then the company will receive 15 calendar days following the closing to demonstrate that it satisfied the applicable round lot shareholder requirement immediately following the transaction’s closing. Ordinarily, in determining compliance with the round lot shareholder requirement at the time of a business combination, Nasdaq will review a company’s public disclosures and information provided by the company about the transaction. For example, the merger agreement may result in the Acquisition Company issuing a round lot of shares to more than 300 holders of the target of the business combination at closing. If public information is not available that enables Nasdaq to determine compliance, Nasdaq will typically request that the company provide additional information such as registered shareholder lists from the company’s transfer agent, data from Cede & Co. about shares held in street name, or data from broker-dealers and from third parties that distribute information such as proxy materials for 10 See Nasdaq Rule IM–5101–2(d) and (e). Nasdaq Rule IM–5101–2(d). If a shareholder vote on the business combination is not held, the company must provide all shareholders with the opportunity to redeem their shares for cash equal to their pro rata share of the aggregate amount then in the deposit account (net of taxes payable and amounts distributed to management for working capital purposes). Nasdaq Rule IM–5101– 2(e). 11 See PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 14509 the broker-dealers.12 If the company can provide information demonstrating compliance before the business combination closes, no further information would be required. However, Nasdaq has observed that in some cases it can be difficult for a company to obtain evidence demonstrating the number of shareholders that it has or will have following a business combination. As noted above, shareholders of an Acquisition Company may redeem or tender their shares until just before the time of the business combination, and the company may not know how many shareholders will choose to redeem until very close to the consummation of the business combination. In cases where the number of round lot shareholders is close to the applicable requirement, this could affect the ability for Nasdaq to determine compliance before the business combination closes. Accordingly, for a company that has demonstrated that it will satisfy all initial listing requirements except for the round lot shareholder requirement before consummating the business combination, Nasdaq will allow the company 15 calendar days after the closing of the business combination, if necessary, to demonstrate that it also complied with the round lot requirement at the time of the business combination. To be clear, the company must still demonstrate that it satisfied the round lot shareholder requirement immediately following the business combination; the proposal is merely giving the company 15 calendars days to provide evidence that it did. Providing Acquisition Companies with an additional 15 days to demonstrate compliance with the round lot rule as of the date of the business combination will result in the continuation of the listing of companies that have completed a business combination but not yet demonstrated that they satisfied all initial listing requirements. For this reason, the Exchange proposes that each Acquisition Company that has not demonstrated compliance with the applicable round lot shareholder requirement on the date of the business combination’s closing will be required to issue a press release or file a Form 8– K, if required, prior to closing of the business combination, stating that the company is relying upon the additional 15 calendar days available under Nasdaq rules to demonstrate 12 Companies must seek this information from third parties because many accounts are held in street name and shareholders may object to being identified to the company. E:\FR\FM\16MRN1.SGM 16MRN1 14510 Federal Register / Vol. 86, No. 49 / Tuesday, March 16, 2021 / Notices jbell on DSKJLSW7X2PROD with NOTICES compliance. The company also will be required to note that in the event it is unable to demonstrate compliance, the company will be subject to delisting. In the event the Acquisition Company does not make the required public disclosure prior to the closing of the business combination, Nasdaq will halt trading in the company’s securities until such time as the required announcement is made public. Nasdaq believes that this proposal balances the burden placed on the Acquisition Company to obtain accurate shareholder information for the new entity and the need to ensure that a company that does not satisfy the initial listing requirements following a business combination enters the delisting process promptly. If the company does not evidence compliance within the proposed time period, Nasdaq staff would issue a delisting determination, which the company could appeal to an independent Hearings Panel as described in the 5800 Series of the Nasdaq Rules. Nasdaq also believes that the disclosure requirement will help provide transparency to investors about the status of the company during this time. Finally, Nasdaq proposes a nonsubstantive change to eliminate a duplicate paragraph in paragraphs (d) and (e) of IM–5101–2 and to add a new paragraph designation. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,13 in general, and furthers the objectives of Section 6(b)(5) of the Act,14 in particular, in that it is designed 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, by imposing a specific timeline for Acquisition Companies to demonstrate that they will comply with the initial listing requirements following a business combination and allowing a reasonable period of time for the company to provide evidence that it complied with the round lot shareholder requirement at the time of the business combination. The proposed rule would specify the time when an Acquisition Company must demonstrate compliance with the initial listing standards following the completion of a business combination, thereby enhancing investor protection. Specifically, it would require an 13 15 14 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). VerDate Sep<11>2014 16:52 Mar 15, 2021 Jkt 253001 Acquisition Company to provide evidence before completing the business combination that it will satisfy all requirements for initial listing, except for the round lot shareholder requirement. While the proposed rule would allow Acquisition Companies 15 calendar days, if needed, to provide evidence that they also complied with the round lot shareholder requirement at the time of the business combination, that additional time is a reasonable accommodation given both the difficulty companies face in identifying their shareholders and the ability for the Acquisition Company’s shareholders to redeem their shares when the business combination is consummated. In that regard, Acquisition Companies are unlike other newly listing companies, which do not face redemptions and are not already listed and trading at the time they must demonstrate compliance. Importantly, the company must still demonstrate that it satisfied the round lot shareholder requirement immediately following the business combination. The proposed rule also requires an Acquisition Company utilizing the additional 15 day period after closing of the business combination to file a Form 8–K, were required by SEC rules, or issue a press release, prior to the closing of the business combination, noting that the company is relying upon the additional 15 calendar days available under Nasdaq rules to demonstrate compliance. The company must also note that in the event it is unable to demonstrate compliance, the company will be subject to delisting. In the event the Acquisition Company does not make the required disclosure prior to the listing of the combined company, Nasdaq will halt trading in the company’s securities until such time as the required announcement is made public. The Exchange believes this disclosure requirement will ensure that prospective investors are aware that the company has not yet demonstrated that it meets the shareholder requirement and therefore may be delisted. In light of these requirements, Nasdaq believes that the proposed rule change appropriately balances the protection of prospective investors with the protection of shareholders of the Acquisition Company, the latter of whom would be harmed if Nasdaq issued a delisting determination at a time when the company did, in fact, satisfy all initial listing requirements but could not yet provide proof. The proposed rule change is also consistent with Section 6(b)(7) of the Act in that it provides a fair procedure PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 for the prohibition or limitation by the Exchange of any person with respect to access to services offered. The proposed rule change accounts for the particular difficulties encountered by Acquisition Companies when attempting to determine their total number of shareholders due to the ability of shareholders to redeem their shares. Acquisition Companies will still be required to demonstrate compliance with all initial listing standards immediately following the business combination, which is the initial listing of the combined company. This is no different from the requirements imposed on other newly listing companies. The non-substantive changes to eliminate a duplicate paragraph in paragraphs (d) and (e) of IM–5101–2 and to add a new paragraph designation will improve the rule’s readability and thereby remove an impediment to a free and open market and a national market system and help to better protect investors, which Nasdaq believes is consistent with the requirements of Section 6(b)(5) of the Act.15 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 not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule would clarify that a company listing in connection with a merger with an Acquisition Company must provide evidence before completing the business combination that it will satisfy all requirements for initial listing, although a reasonable accommodation would be made to allow the company to demonstrate compliance with the round lot shareholder requirement before issuing a delisting letter if that is the only requirement that the company cannot demonstrate compliance with before completing the business combination. This change is not expected to have any impact on competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others On December 21, 2020, the Commission issued an Order Instituting Proceedings 16 (‘‘OIP’’) pursuant to Section 19(b)(2)(B) of the Act to determine whether to approve or disapprove the Original Proposal 15 15 U.S.C. 78f(b)(5). Exchange Act Release No. 90682 (December 21, 2021), 85 FR 83113 (December 16, 2020). 16 Securities E:\FR\FM\16MRN1.SGM 16MRN1 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. VerDate Sep<11>2014 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 PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 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. E:\FR\FM\16MRN1.SGM 16MRN1

Agencies

[Federal Register Volume 86, Number 49 (Tuesday, March 16, 2021)]
[Notices]
[Pages 14508-14511]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05345]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91294; File No. SR-NASDAQ-2020-062]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing of Proposed Rule Change, as Modified by Amendment, No. 
1, To Amend Listing Rules Applicable to Special Purpose Acquisition 
Companies Whose Business Plan is To Complete One or More Business 
Combinations

March 10, 2021.
    On September 3, 2020, The Nasdaq Stock Market LLC (``Nasdaq'' 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 its listing rules to permit companies 
whose business plan is to complete one or more business combinations 
(``SPACs'' or ``Acquisition Companies'') 15 calendar days following the 
closing of a business combination to demonstrate that the SPAC has 
satisfied the applicable round lot shareholder requirement. The 
proposed rule change was published for comment in the Federal Register 
on September 22, 2020.\3\ On November 4, 2020, pursuant to Section 
19(b)(2) of the Exchange Act,\4\ the Commission designated a longer 
period within which to approve the proposed rule change, disapprove the 
proposed rule change, or institute proceedings to determine whether to 
disapprove the proposed rule change.\5\ On December 16, 2020, the 
Commission instituted proceedings under Section 19(b)(2)(B) of the Act 
\6\ to determine whether to approve or disapprove the proposed rule 
change.\7\ On February 25, 2021, the Exchange filed Amendment No. 1 to 
the proposed rule change, which superseded the proposed rule change as 
originally filed, and is described in Items I and II below, which Items 
have been prepared by the Exchange. The Commission is publishing this 
notice to solicit comments on the proposed rule change, as modified by 
Amendment No. 1, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 89897 (September 16, 
2020), 85 FR 59574. Comments received on the proposal are available 
on the Commission's website at: https://www.sec.gov/comments/sr-nasdaq-2020-062/srnasdaq2020062.htm.
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 90340, 85 FR 71704 
(November 10, 2020). The Commission designated December 21, 2020, as 
the date by which it should approve, disapprove, or institute 
proceedings to determine whether to disapprove the proposed rule 
change.
    \6\ 15 U.S.C. 78s(b)(2)(B).
    \7\ See Securities Exchange Act Release No. 90682, 85 FR 83113 
(December 16, 2020).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend listing rules applicable to 
companies whose business plan is to complete one or more business 
combinations (the ``Original Proposal''). The Exchange is filing this 
proposal (``Amendment No. 1'') to amend the Original Proposal. 
Amendment No. 1 supersedes the

[[Page 14509]]

Original Proposal in its entirety to add an additional disclosure 
requirement.

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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Nasdaq is filing this amendment to SR-NASDAQ-2020-062, which was 
published for comment by the Commission on September 16, 2020.\8\ The 
original proposal would allow certain acquisition companies listed 
under IM-5101-2 with a 15-day period after closing a business 
combination to provide evidence that the combined company satisfied the 
round lot shareholder requirement for initial listing at the time of 
the business combination. This Amendment No. 1 would require a company 
relying on this 15-day period to file a Form 8-K, were required by SEC 
rules, or issue a press release noting that the company is relying upon 
the additional 15 calendar days available under Nasdaq rules to 
demonstrate compliance.
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    \8\ Securities Exchange Act Release No. 99897 (September 22, 
2020), 85 FR 59574 (September 16, 2020).
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    In 2009, Nasdaq adopted additional listing requirements for a 
company whose business plan is to complete an initial public offering 
and engage in a merger or acquisition with one or more unidentified 
companies within a specific period of time (``Acquisition 
Companies'').\9\ Such a company is required to keep at least 90% of the 
proceeds from its initial public offering in an escrow account and, 
until the company has completed one or more business combinations 
having an aggregate fair market value of at least 80% of the value of 
the escrow account, must meet the requirements for initial listing 
following each business combination.\10\ If a shareholder vote on the 
business combination is held, public shareholders voting against a 
business combination must have the right to convert their shares of 
common stock into a pro rata share of the aggregate amount then in the 
escrow account (net of taxes payable and amounts distributed to 
management for working capital purposes) if the business combination is 
approved and consummated.\11\ If the combined company does not meet the 
initial listing requirements following a business combination, Nasdaq 
Staff will issue a Staff Delisting Determination under Nasdaq Rule 
5810.
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    \9\ Securities Exchange Act Release No. 58228 (July 25, 2008), 
73 FR 44794 (July 31, 2008) (adopting the predecessor to IM-5101-2).
    \10\ See Nasdaq Rule IM-5101-2(d) and (e).
    \11\ See Nasdaq Rule IM-5101-2(d). If a shareholder vote on the 
business combination is not held, the company must provide all 
shareholders with the opportunity to redeem their shares for cash 
equal to their pro rata share of the aggregate amount then in the 
deposit account (net of taxes payable and amounts distributed to 
management for working capital purposes). Nasdaq Rule IM-5101-2(e).
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    Under the existing rules, ``following each business combination'' 
with an Acquisition Company, the resulting company must satisfy all 
initial listing requirements. The rule does not provide a timetable for 
the company to demonstrate that it satisfies those requirements, 
however. Accordingly, Nasdaq proposes to modify the rule to specify if 
the Acquisition Company demonstrates that it will satisfy all 
requirements except the applicable round lot shareholder requirement, 
then the company will receive 15 calendar days following the closing to 
demonstrate that it satisfied the applicable round lot shareholder 
requirement immediately following the transaction's closing.
    Ordinarily, in determining compliance with the round lot 
shareholder requirement at the time of a business combination, Nasdaq 
will review a company's public disclosures and information provided by 
the company about the transaction. For example, the merger agreement 
may result in the Acquisition Company issuing a round lot of shares to 
more than 300 holders of the target of the business combination at 
closing. If public information is not available that enables Nasdaq to 
determine compliance, Nasdaq will typically request that the company 
provide additional information such as registered shareholder lists 
from the company's transfer agent, data from Cede & Co. about shares 
held in street name, or data from broker-dealers and from third parties 
that distribute information such as proxy materials for the broker-
dealers.\12\ If the company can provide information demonstrating 
compliance before the business combination closes, no further 
information would be required.
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    \12\ Companies must seek this information from third parties 
because many accounts are held in street name and shareholders may 
object to being identified to the company.
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    However, Nasdaq has observed that in some cases it can be difficult 
for a company to obtain evidence demonstrating the number of 
shareholders that it has or will have following a business combination. 
As noted above, shareholders of an Acquisition Company may redeem or 
tender their shares until just before the time of the business 
combination, and the company may not know how many shareholders will 
choose to redeem until very close to the consummation of the business 
combination. In cases where the number of round lot shareholders is 
close to the applicable requirement, this could affect the ability for 
Nasdaq to determine compliance before the business combination closes. 
Accordingly, for a company that has demonstrated that it will satisfy 
all initial listing requirements except for the round lot shareholder 
requirement before consummating the business combination, Nasdaq will 
allow the company 15 calendar days after the closing of the business 
combination, if necessary, to demonstrate that it also complied with 
the round lot requirement at the time of the business combination. To 
be clear, the company must still demonstrate that it satisfied the 
round lot shareholder requirement immediately following the business 
combination; the proposal is merely giving the company 15 calendars 
days to provide evidence that it did.
    Providing Acquisition Companies with an additional 15 days to 
demonstrate compliance with the round lot rule as of the date of the 
business combination will result in the continuation of the listing of 
companies that have completed a business combination but not yet 
demonstrated that they satisfied all initial listing requirements. For 
this reason, the Exchange proposes that each Acquisition Company that 
has not demonstrated compliance with the applicable round lot 
shareholder requirement on the date of the business combination's 
closing will be required to issue a press release or file a Form 8-K, 
if required, prior to closing of the business combination, stating that 
the company is relying upon the additional 15 calendar days available 
under Nasdaq rules to demonstrate

[[Page 14510]]

compliance. The company also will be required to note that in the event 
it is unable to demonstrate compliance, the company will be subject to 
delisting. In the event the Acquisition Company does not make the 
required public disclosure prior to the closing of the business 
combination, Nasdaq will halt trading in the company's securities until 
such time as the required announcement is made public.
    Nasdaq believes that this proposal balances the burden placed on 
the Acquisition Company to obtain accurate shareholder information for 
the new entity and the need to ensure that a company that does not 
satisfy the initial listing requirements following a business 
combination enters the delisting process promptly. If the company does 
not evidence compliance within the proposed time period, Nasdaq staff 
would issue a delisting determination, which the company could appeal 
to an independent Hearings Panel as described in the 5800 Series of the 
Nasdaq Rules. Nasdaq also believes that the disclosure requirement will 
help provide transparency to investors about the status of the company 
during this time.
    Finally, Nasdaq proposes a non-substantive change to eliminate a 
duplicate paragraph in paragraphs (d) and (e) of IM-5101-2 and to add a 
new paragraph designation.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\13\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\14\ in particular, in that it is designed 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, by imposing a specific timeline for Acquisition Companies to 
demonstrate that they will comply with the initial listing requirements 
following a business combination and allowing a reasonable period of 
time for the company to provide evidence that it complied with the 
round lot shareholder requirement at the time of the business 
combination.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
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    The proposed rule would specify the time when an Acquisition 
Company must demonstrate compliance with the initial listing standards 
following the completion of a business combination, thereby enhancing 
investor protection. Specifically, it would require an Acquisition 
Company to provide evidence before completing the business combination 
that it will satisfy all requirements for initial listing, except for 
the round lot shareholder requirement. While the proposed rule would 
allow Acquisition Companies 15 calendar days, if needed, to provide 
evidence that they also complied with the round lot shareholder 
requirement at the time of the business combination, that additional 
time is a reasonable accommodation given both the difficulty companies 
face in identifying their shareholders and the ability for the 
Acquisition Company's shareholders to redeem their shares when the 
business combination is consummated. In that regard, Acquisition 
Companies are unlike other newly listing companies, which do not face 
redemptions and are not already listed and trading at the time they 
must demonstrate compliance. Importantly, the company must still 
demonstrate that it satisfied the round lot shareholder requirement 
immediately following the business combination. The proposed rule also 
requires an Acquisition Company utilizing the additional 15 day period 
after closing of the business combination to file a Form 8-K, were 
required by SEC rules, or issue a press release, prior to the closing 
of the business combination, noting that the company is relying upon 
the additional 15 calendar days available under Nasdaq rules to 
demonstrate compliance. The company must also note that in the event it 
is unable to demonstrate compliance, the company will be subject to 
delisting. In the event the Acquisition Company does not make the 
required disclosure prior to the listing of the combined company, 
Nasdaq will halt trading in the company's securities until such time as 
the required announcement is made public. The Exchange believes this 
disclosure requirement will ensure that prospective investors are aware 
that the company has not yet demonstrated that it meets the shareholder 
requirement and therefore may be delisted. In light of these 
requirements, Nasdaq believes that the proposed rule change 
appropriately balances the protection of prospective investors with the 
protection of shareholders of the Acquisition Company, the latter of 
whom would be harmed if Nasdaq issued a delisting determination at a 
time when the company did, in fact, satisfy all initial listing 
requirements but could not yet provide proof.
    The proposed rule change is also consistent with Section 6(b)(7) of 
the Act in that it provides a fair procedure for the prohibition or 
limitation by the Exchange of any person with respect to access to 
services offered. The proposed rule change accounts for the particular 
difficulties encountered by Acquisition Companies when attempting to 
determine their total number of shareholders due to the ability of 
shareholders to redeem their shares. Acquisition Companies will still 
be required to demonstrate compliance with all initial listing 
standards immediately following the business combination, which is the 
initial listing of the combined company. This is no different from the 
requirements imposed on other newly listing companies.
    The non-substantive changes to eliminate a duplicate paragraph in 
paragraphs (d) and (e) of IM-5101-2 and to add a new paragraph 
designation will improve the rule's readability and thereby remove an 
impediment to a free and open market and a national market system and 
help to better protect investors, which Nasdaq believes is consistent 
with the requirements of Section 6(b)(5) of the Act.\15\
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    \15\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule would clarify 
that a company listing in connection with a merger with an Acquisition 
Company must provide evidence before completing the business 
combination that it will satisfy all requirements for initial listing, 
although a reasonable accommodation would be made to allow the company 
to demonstrate compliance with the round lot shareholder requirement 
before issuing a delisting letter if that is the only requirement that 
the company cannot demonstrate compliance with before completing the 
business combination. This change is not expected to have any impact on 
competition.

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

    On December 21, 2020, the Commission issued an Order Instituting 
Proceedings \16\ (``OIP'') pursuant to Section 19(b)(2)(B) of the Act 
to determine whether to approve or disapprove the Original Proposal

[[Page 14511]]

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.
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    \16\ Securities Exchange Act Release No. 90682 (December 21, 
2021), 85 FR 83113 (December 16, 2020).
    \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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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:

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-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\
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    \18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-05345 Filed 3-15-21; 8:45 am]
BILLING CODE 8011-01-P
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