Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change To Amend Section 703.12(II) of the NYSE Listed Company Manual To Expand the Circumstances Under Which Rights May Be Listed on the NYSE, 42543-42546 [2024-10640]
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Federal Register / Vol. 89, No. 95 / Wednesday, May 15, 2024 / Notices
burden on such Members relative to
their levels of business activity.
The proposed fees do not favor certain
categories of Connectivity Subscribers
in a manner that would impose an
undue burden on competition. The
Exchange does not believe that the
proposed rule change would place
certain Connectivity Subscribers at the
Exchange at a relative advantage or
disadvantage compared to other
Connectivity Subscribers or affect the
ability of such firms to compete.
Finally, as described in the Purpose
section, the proposed fee change is
designed to assist the Exchange in
complying with its Regulation SCI
compliance obligations to have levels of
capacity adequate to maintain IEX’s
operational capability and promote the
maintenance of fair and orderly markets,
thereby promoting both intermarket and
intramarket competition by enabling
IEX to support a robust trading
environment for its Members and
compete with other equities venues.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) 76 of the Act.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 77 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
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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 rule-comments@
sec.gov. Please include file number SR–
IEX–2024–08 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–IEX–2024–08. 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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–IEX–2024–08 and should be
submitted on or before June 5, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.78
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–10588 Filed 5–14–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100102; File No. SR–NYSE–
2024–23]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing of Proposed Rule Change To
Amend Section 703.12(II) of the NYSE
Listed Company Manual To Expand the
Circumstances Under Which Rights
May Be Listed on the NYSE
May 10, 2024.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on April 29,
2024, New York Stock Exchange LLC
(‘‘NYSE’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Section 703.12(II) of the NYSE Listed
Company Manual (‘‘Manual’’) to expand
the circumstances under which rights
may be listed on the NYSE. The text of
the proposed rule change is set forth in
Exhibit 5. The proposed rule change is
available on the Exchange’s website at
www.nyse.com, at the principal office of
the Exchange, 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
self-regulatory organization 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 those 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 parts of such
statements.
1 15
76 15
U.S.C. 78s(b)(3)(A)(ii).
77 15 U.S.C. 78s(b)(2)(B).
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U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
78 17
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Federal Register / Vol. 89, No. 95 / Wednesday, May 15, 2024 / Notices
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Section 703.12(II) of the Manual
provides for the listing of rights on the
NYSE. For purposes of Section
703.12(II), the term ‘‘rights’’ refers to the
privilege offered to holders of record of
issued equity securities to subscribe for
additional securities of the same class.
Consistent with this definition, rights
that have traded on the Exchange
historically have involved a distribution
of rights to the holders of a class of
equity securities that is already listed on
the Exchange, and such rights have
typically been limited to granting the
recipients the right to subscribe for
additional shares of the listed class of
equity securities they already hold.
While it has historically been the case
that rights traded on the Exchange have
been granted only to existing
shareholders of the issuer, the Exchange
does not believe that there is an investor
protection concern that justifies that
limitation. Consequently, the Exchange
proposes to amend Section 703.12(II) to
provide that the term ‘‘rights’’ will also
refer to the privilege offered recipients
of such rights to subscribe for shares of
a class of securities of such issuer that
is listed or to be listed on the Exchange,
regardless of whether the recipients of
the rights are existing shareholders of
record of such issuer.
Section 703.12(II) currently provides
that, in order to be listed on the
Exchange, rights must be issued to
purchase or receive a security that is
already listed on the Exchange or that
will be listed on the Exchange
concurrent with the rights. The
Exchange proposes to expand the
circumstances in which a right may be
listed to permit the listing of a right
where the security into which such right
is exercisable will be listed on the
Exchange upon exercise of the rights
and such exercise is pursuant to a
registration statement filed under the
Securities Act of 1933 (a ‘‘Securities Act
Registration Statement’’) that has been
declared effective by the SEC prior to or
simultaneous with the listing of such
rights (such rights will be defined in the
proposed amended rule as ‘‘Prospective
Listing Rights’’). The proposed
provisions relating to Prospective
Listing Rights mean that some listed
rights may list and trade on the
Exchange prior to the listing and trading
of the securities for which such rights
are exercisable. The Exchange believes
that this amendment will give issuers
greater flexibility in structuring a rights
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19:12 May 14, 2024
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offering as a capital raising tool.
Specifically, the Exchange believes that
the requirement that there be an
effective Securities Act Registration
Statement in relation to the exercise of
the Prospective Listing Rights prior to or
simultaneous to the listing of the
Prospective Listing Rights would
provide a significant investor protection
as it would ensure that investors trading
or exercising the Prospective Listing
Rights would have access to the
appropriate level of disclosure to enable
them to make informed investment
decisions. The Exchange notes that the
issuer of the Prospective Listing rights
will be required by law to update this
Securities Act Registration Statement to
reflect any material changes in the
information required to be included
therein that arise between the time of
effectiveness of the Securities Act
Registration Statement and the exercise
of the Prospective Listing Rights,
thereby ensuring that investors trading
the Prospective Listing Rights on the
Exchange will have access to current
information about the issuer on a
continuous basis.
Any security underlying a Prospective
Listing Right will be required to meet
applicable initial listing standards set
forth in Section 102.00 or Section
103.00. Prospective Listing Rights
would only be eligible for initial listing
if, at the time of initial listing, there
were (i) at least 1,000,000 rights issued
and (ii) at least 400 public holders of
round lots.4 The Exchange notes that
these distribution requirements are
identical to those required for securities
to be listed under the ‘‘equity’’
standards (i.e., for trading on the NYSE’s
trading floor) under Section 703.19
(‘‘Other Securities’’) of the Manual.
If it is determined that the security for
which the Prospective Listing Rights are
exercisable will not be listed on the
Exchange (which may occur for a
variety of reasons, including because the
Exchange determines that the
underlying securities are no longer
eligible for listing or the issuer chooses
to terminate the Prospective Listing
Rights because the transaction that they
were intended to fund has been
terminated), the Exchange will promptly
initiate suspension and delisting
procedures with respect to such
Prospective Listing Rights.
In addition, if the market value of
publicly-held shares of a series of
Prospective Listing Rights at any time is
less than $4,000,000, the Exchange will
4 For purposes of Section 703.12(II), ‘‘Public
holders’’ excludes holders that are directors,
officers, or their immediate families and holders of
other concentrated holdings of 10 percent or more
of the total outstanding shares.
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promptly initiate suspension and
delisting procedures with respect to
such Prospective Listing Rights. The
Exchange notes that this $4,000,000
continued listing requirement is
comparable to the $4,000,000 initial
market value requirement for securities
to be listed under the ‘‘equity’’
standards under Section 703.19 (‘‘Other
Securities’’) of the Manual. If
Prospective Listing Rights remain
outstanding at the time of the initial
listing on the Exchange of the securities
into which such Prospective Listing
Rights are exercisable, the Prospective
Listing Rights must at such time meet
all of the initial listing requirements
applicable to the listing of rights other
than Prospective Listing Rights. Any
Prospective Listing Rights that do not
meet such requirements will be subject
to immediate suspension and delisting
procedures. If the Exchange commences
delisting procedures in either of the
circumstances with respect to
Prospective Listing Rights set forth in
this paragraph, the issuer of the
Prospective Listing Rights will not be
eligible to avail itself of the provisions
of Sections 802.02 and 802.03 and any
such Prospective Listing Rights will be
subject to delisting procedures as set
forth in Section 804.00.
Finally, as the definition of ‘‘public
holders’’ will now also be used in the
proposed listing requirements for
Prospective Listing Rights, the Exchange
proposes to move that definition to the
end of Section 703.12(II) without
changing the wording of the definition
in any way.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,5 in general, and
furthers the objectives of Section 6(b)(5)
of the Act 6 in particular, in that it is
designed to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest and is
not designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Exchange notes the existence of
a significant protection of the interests
of existing shareholders of listed
common stock where the listed issuer
5 15
6 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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grants rights to recipients other than the
existing shareholders of that listed class.
Section 312.03(c) of the Manual requires
(subject, generally, to exceptions for
cash sales at the Minimum Price 7 and
public offerings) that a listed issuer
must obtain shareholder approval prior
to the issuance of common stock, or of
securities convertible into or exercisable
for common stock, in any transaction or
series of related transactions if: (1) the
common stock has, or will have upon
issuance, voting power equal to or in
excess of 20% of the voting power
outstanding before the issuance of such
stock or of securities convertible into or
exercisable for common stock; or (2) the
number of shares of common stock to be
issued is, or will be upon issuance,
equal to or in excess of 20% of the
number of shares of common stock
outstanding before the issuance of the
common stock or of securities
convertible into or exercisable for
common stock. Nasdaq Rule 5635 and
NYSE American Company Guide
Section 713 include comparable
requirements. Consequently, generally,
rights offerings by listed issuers of
common stock or of securities that are
convertible into or exercisable for
common stock would be subject to
shareholder approval if the rights were
being issued to recipients other than the
holders of the listed common stock and
(1) the shares of common stock
underlying the rights have, or will have
upon issuance, voting power equal to or
in excess of 20% of the voting power
outstanding before the issuance of such
stock or of securities convertible into or
exercisable for common stock; or (2) the
number of shares of common stock to be
issued is, or will be upon issuance,
equal to or in excess of 20% of the
number of shares of common stock
outstanding before the issuance of the
common stock or of securities
convertible into or exercisable for
common stock. As such, the holders of
the listed common stock would have the
ability to block any rights offering that
7 Section 312.04(h) defines ‘‘Minimum Price’’ as
a price that is the lower of: (i) the Official Closing
Price immediately preceding the signing of the
binding agreement; or (ii) the average Official
Closing Price for the five trading days immediately
preceding the signing of the binding agreement.
Section 312.04(i) defines the ‘‘Official Closing
Price’’ of the issuer’s common stock as the official
closing price on the Exchange as reported to the
Consolidated Tape immediately preceding the
signing of a binding agreement to issue the
securities. For example, if the transaction is signed
after the close of the regular session at 4:00 p.m.
Eastern Standard Time on a Tuesday, then
Tuesday’s official closing price is used. If the
transaction is signed at any time between the close
of the regular session on Monday and the close of
the regular session on Tuesday, then Monday’s
official closing price is used.
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19:12 May 14, 2024
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was materially dilutive of their
economic or voting interests.
The Exchange believes it is consistent
with the protection of investors to
expand the circumstances in which a
right may be listed to permit the listing
of a right where the security into which
such right is exercisable will be listed
upon exercise of the rights and such
exercise is pursuant to a Securities Act
Registration Statement that has been
declared effective by the SEC prior to or
simultaneous with the listing of such
rights (i.e., Prospective Listing Rights).
The requirement that there be an
effective Securities Act Registration
Statement in relation to the exercise of
the rights prior to or simultaneous with
the listing of the Prospective Listing
Rights would, in the Exchange’s view,
provide a significant investor protection
as it would ensure that investors trading
or exercising the Prospective Listing
Rights would have access to the
appropriate level of disclosure to enable
them to make informed investment
decisions. In particular, the Exchange
believes that the availability of an
effective Securities Act Registration
Statement at the time of initial listing of
the Prospective Listing Rights including
disclosure about the anticipated
business and financial position of the
issuer as it will exist upon exercise of
the Prospective Listing Rights (and the
listing of the underlying securities on
the Exchange) will provide investors in
the Prospective Listing Rights with the
ability to make judgments about the
anticipated value of the underlying
securities by making comparisons to the
market values of comparable listed
companies. The Exchange also believes
that the obligation of the issuer of
Prospective Listing Rights under the
Securities Act and the rules thereunder
to amend the Securities Act Registration
Statement up to the time of exercise of
the Prospective Listing Rights to reflect
any material changes in the issuer’s
business or financial condition will
ensure that investors will have access to
adequate disclosure to enable them to
value the securities throughout the life
of the Prospective Listing Rights.
Furthermore, the issuer of Prospective
Listing Rights would be subject to the
requirements of Sections 202.05 and
202.06 of the Manual, which require
immediate disclosure of all material
news. The Exchange believes that these
requirements under the securities laws
and Exchange rules will provide
investors in Prospective Listing Rights
with an appropriate level of access to
information to make investment
decisions and that this robust level of
disclosure will also act as a significant
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42545
safeguard against illegal manipulation of
the securities.
The Exchange notes that the proposal
does not include any limitations on how
long Prospective Listing Rights may
remain outstanding prior to their
exercise and the listing of the
underlying securities. The Exchange
believes that there are practical
commercial reasons why such a
requirement is unnecessary. Investors
are unlikely to find it attractive to
commit their capital to the exercise of
rights if the exercise period is extended
for more than a limited period. If the
exercise period is excessive,
rightholders are likely to withdraw from
the offer, making the success of a long
offering period unlikely.
As proposed, Prospective Listing
Rights must meet initial listing
requirements of at least (i) 1,000,000
rights issued and (ii) 400 public holders
of round lots. In addition, listed
Prospective Listing Rights would be
subject to the prompt commencement of
suspension and delisting procedures if
(i) it is determined that the security for
which the Prospective Listing Rights are
exercisable will not be listed on the
Exchange or (ii) the market value of
publicly-held shares of a series of
Prospective Listing Rights falls below
$4,000,000. If the Exchange commences
delisting procedures in the
circumstances with respect to
Prospective Listing Rights set forth in
this paragraph, the issuer of the
Prospective Listing Rights will not be
eligible to avail itself of the provisions
of Sections 802.02 and 802.03 and any
such listed rights will be subject to
delisting procedures as set forth in
Section 804.00. The Exchange believes
that these initial and continued listing
requirements will protect investors by
helping to ensure trading liquidity in
the Prospective Listing Rights and also
ensuring that such rights will not be
traded unless the underlying security is
expected to list on the Exchange. The
Exchange notes that the proposed initial
and continued quantitative listing
standards for Prospective Listing Rights
are identical to (or, in the case of the
market-value of publicly-held shares
requirement more rigorous than) those
required for securities to be listed under
the ‘‘equity’’ standards (i.e., for trading
on the NYSE’s trading floor) under
Section 703.19 (‘‘Other Securities’’) of
the Manual. As the Exchange has
extensive experience with the
application of those standards under
Section 703.19 and believes that they
have provided adequate investor
protection when used in that context,
the Exchange believes that these
standards will also provide adequate
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Federal Register / Vol. 89, No. 95 / Wednesday, May 15, 2024 / Notices
protection to investors in Prospective
Listing Rights.
The Exchange is not proposing to
adopt any initial market value or
security price requirements for
Prospective Listing Rights. However, the
Exchange notes that proposed
$4,000,000 market value of publiclyheld shares requirement would be
applied immediately and therefore
imposes a minimum trading value for
Prospective Listing Rights at the time of
initial listing. The Exchange believes
that this requirement ensures that
Prospective Listing Rights will not
commence trading on the Exchange
unless the market believes that they
have a more than nominal trading value.
The Exchange believes that its
existing surveillance procedures are
adequate to enable it to detect
manipulative trading practices with
respect to Prospective Listing Rights.
The Exchange notes that the NYSE and
other self-regulatory organizations have
extensive experience in conducting
surveillance of the trading in securities
whose value, like that of Prospective
Listing Rights, is substantially
dependent on the issuer’s future
acquisition of an identified operating
asset, including for example, listed
SPACs that are trading on the Exchange
after entering into a definitive
agreement with respect to a business
combination. The Exchange also
believes that market participants are
able to arrive at market prices for such
securities without excessive volatility
and that this experience provides a
reasonable basis for understanding how
Prospective Listing Rights are likely to
trade.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
lotter on DSK11XQN23PROD with NOTICES1
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
Exchange believes that the proposed
rule change will increase competition
by giving issuers enhanced
opportunities to raise capital by giving
them greater flexibility in structuring
rights offering as a capital raising tool.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) by order approve or disapprove
the proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–NYSE–2024–23 and should be
submitted on or before June 5, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–10640 Filed 5–14–24; 8:45 am]
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:
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
35191; File No. 812–15450]
Electronic Comments
Goldman Sachs BDC, Inc., et al.
• 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–
NYSE–2024–23 on the subject line.
May 9, 2024.
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–NYSE–2024–23. 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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
PO 00000
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Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’).
ACTION: Notice.
AGENCY:
Notice of application for an order
under sections 17(d) and 57(i) of the
Investment Company Act of 1940 (the
‘‘Act’’) and rule 17d–1 under the Act to
permit certain joint transactions
otherwise prohibited by sections 17(d)
and 57(a)(4) of the Act and rule 17d–1
under the Act.
SUMMARY OF APPLICATION: Applicants
request an order to amend a previous
order granted by the Commission that
permits certain business development
companies and closed-end management
investment companies to co-invest in
portfolio companies with each other and
with certain affiliated investment
entities.
APPLICANTS: Goldman Sachs BDC, Inc.,
Goldman Sachs Private Middle Market
Credit LLC, Goldman Sachs Private
Middle Market Credit II LLC, Goldman
Sachs Middle Market Lending Corp. II,
Phillip Street Middle Market Lending
Fund LLC, Goldman Sachs Private
Credit Corp., BDC Blocker I, LLC, GSBD
Blocker II, LLC, GSBD Blocker III LLC,
GSBD Blocker IV LLC, GSBD Wine I,
LLC, GSBD Blocker V, LLC, GSBD
Blocker VI LLC, MMLC Blocker I, LLC,
MMLC Blocker II, LLC, MMLC Blocker
III, LLC, MMLC Wine I, LLC, Goldman
Sachs Private Middle Market Credit SPV
LLC, PMMC Blocker I, LLC, PMMC
8 17
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 89, Number 95 (Wednesday, May 15, 2024)]
[Notices]
[Pages 42543-42546]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-10640]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100102; File No. SR-NYSE-2024-23]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change To Amend Section 703.12(II) of
the NYSE Listed Company Manual To Expand the Circumstances Under Which
Rights May Be Listed on the NYSE
May 10, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on April 29, 2024, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. 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\ 15 U.S.C. 78a.
\3\ 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
The Exchange proposes to amend Section 703.12(II) of the NYSE
Listed Company Manual (``Manual'') to expand the circumstances under
which rights may be listed on the NYSE. The text of the proposed rule
change is set forth in Exhibit 5. The proposed rule change is available
on the Exchange's website at www.nyse.com, at the principal office of
the Exchange, 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 self-regulatory organization
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 those 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 parts of such statements.
[[Page 42544]]
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
Section 703.12(II) of the Manual provides for the listing of rights
on the NYSE. For purposes of Section 703.12(II), the term ``rights''
refers to the privilege offered to holders of record of issued equity
securities to subscribe for additional securities of the same class.
Consistent with this definition, rights that have traded on the
Exchange historically have involved a distribution of rights to the
holders of a class of equity securities that is already listed on the
Exchange, and such rights have typically been limited to granting the
recipients the right to subscribe for additional shares of the listed
class of equity securities they already hold.
While it has historically been the case that rights traded on the
Exchange have been granted only to existing shareholders of the issuer,
the Exchange does not believe that there is an investor protection
concern that justifies that limitation. Consequently, the Exchange
proposes to amend Section 703.12(II) to provide that the term
``rights'' will also refer to the privilege offered recipients of such
rights to subscribe for shares of a class of securities of such issuer
that is listed or to be listed on the Exchange, regardless of whether
the recipients of the rights are existing shareholders of record of
such issuer.
Section 703.12(II) currently provides that, in order to be listed
on the Exchange, rights must be issued to purchase or receive a
security that is already listed on the Exchange or that will be listed
on the Exchange concurrent with the rights. The Exchange proposes to
expand the circumstances in which a right may be listed to permit the
listing of a right where the security into which such right is
exercisable will be listed on the Exchange upon exercise of the rights
and such exercise is pursuant to a registration statement filed under
the Securities Act of 1933 (a ``Securities Act Registration
Statement'') that has been declared effective by the SEC prior to or
simultaneous with the listing of such rights (such rights will be
defined in the proposed amended rule as ``Prospective Listing
Rights''). The proposed provisions relating to Prospective Listing
Rights mean that some listed rights may list and trade on the Exchange
prior to the listing and trading of the securities for which such
rights are exercisable. The Exchange believes that this amendment will
give issuers greater flexibility in structuring a rights offering as a
capital raising tool. Specifically, the Exchange believes that the
requirement that there be an effective Securities Act Registration
Statement in relation to the exercise of the Prospective Listing Rights
prior to or simultaneous to the listing of the Prospective Listing
Rights would provide a significant investor protection as it would
ensure that investors trading or exercising the Prospective Listing
Rights would have access to the appropriate level of disclosure to
enable them to make informed investment decisions. The Exchange notes
that the issuer of the Prospective Listing rights will be required by
law to update this Securities Act Registration Statement to reflect any
material changes in the information required to be included therein
that arise between the time of effectiveness of the Securities Act
Registration Statement and the exercise of the Prospective Listing
Rights, thereby ensuring that investors trading the Prospective Listing
Rights on the Exchange will have access to current information about
the issuer on a continuous basis.
Any security underlying a Prospective Listing Right will be
required to meet applicable initial listing standards set forth in
Section 102.00 or Section 103.00. Prospective Listing Rights would only
be eligible for initial listing if, at the time of initial listing,
there were (i) at least 1,000,000 rights issued and (ii) at least 400
public holders of round lots.\4\ The Exchange notes that these
distribution requirements are identical to those required for
securities to be listed under the ``equity'' standards (i.e., for
trading on the NYSE's trading floor) under Section 703.19 (``Other
Securities'') of the Manual.
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\4\ For purposes of Section 703.12(II), ``Public holders''
excludes holders that are directors, officers, or their immediate
families and holders of other concentrated holdings of 10 percent or
more of the total outstanding shares.
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If it is determined that the security for which the Prospective
Listing Rights are exercisable will not be listed on the Exchange
(which may occur for a variety of reasons, including because the
Exchange determines that the underlying securities are no longer
eligible for listing or the issuer chooses to terminate the Prospective
Listing Rights because the transaction that they were intended to fund
has been terminated), the Exchange will promptly initiate suspension
and delisting procedures with respect to such Prospective Listing
Rights.
In addition, if the market value of publicly-held shares of a
series of Prospective Listing Rights at any time is less than
$4,000,000, the Exchange will promptly initiate suspension and
delisting procedures with respect to such Prospective Listing Rights.
The Exchange notes that this $4,000,000 continued listing requirement
is comparable to the $4,000,000 initial market value requirement for
securities to be listed under the ``equity'' standards under Section
703.19 (``Other Securities'') of the Manual. If Prospective Listing
Rights remain outstanding at the time of the initial listing on the
Exchange of the securities into which such Prospective Listing Rights
are exercisable, the Prospective Listing Rights must at such time meet
all of the initial listing requirements applicable to the listing of
rights other than Prospective Listing Rights. Any Prospective Listing
Rights that do not meet such requirements will be subject to immediate
suspension and delisting procedures. If the Exchange commences
delisting procedures in either of the circumstances with respect to
Prospective Listing Rights set forth in this paragraph, the issuer of
the Prospective Listing Rights will not be eligible to avail itself of
the provisions of Sections 802.02 and 802.03 and any such Prospective
Listing Rights will be subject to delisting procedures as set forth in
Section 804.00.
Finally, as the definition of ``public holders'' will now also be
used in the proposed listing requirements for Prospective Listing
Rights, the Exchange proposes to move that definition to the end of
Section 703.12(II) without changing the wording of the definition in
any way.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\5\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \6\ in particular, in that it
is designed to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest
and is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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The Exchange notes the existence of a significant protection of the
interests of existing shareholders of listed common stock where the
listed issuer
[[Page 42545]]
grants rights to recipients other than the existing shareholders of
that listed class. Section 312.03(c) of the Manual requires (subject,
generally, to exceptions for cash sales at the Minimum Price \7\ and
public offerings) that a listed issuer must obtain shareholder approval
prior to the issuance of common stock, or of securities convertible
into or exercisable for common stock, in any transaction or series of
related transactions if: (1) the common stock has, or will have upon
issuance, voting power equal to or in excess of 20% of the voting power
outstanding before the issuance of such stock or of securities
convertible into or exercisable for common stock; or (2) the number of
shares of common stock to be issued is, or will be upon issuance, equal
to or in excess of 20% of the number of shares of common stock
outstanding before the issuance of the common stock or of securities
convertible into or exercisable for common stock. Nasdaq Rule 5635 and
NYSE American Company Guide Section 713 include comparable
requirements. Consequently, generally, rights offerings by listed
issuers of common stock or of securities that are convertible into or
exercisable for common stock would be subject to shareholder approval
if the rights were being issued to recipients other than the holders of
the listed common stock and (1) the shares of common stock underlying
the rights have, or will have upon issuance, voting power equal to or
in excess of 20% of the voting power outstanding before the issuance of
such stock or of securities convertible into or exercisable for common
stock; or (2) the number of shares of common stock to be issued is, or
will be upon issuance, equal to or in excess of 20% of the number of
shares of common stock outstanding before the issuance of the common
stock or of securities convertible into or exercisable for common
stock. As such, the holders of the listed common stock would have the
ability to block any rights offering that was materially dilutive of
their economic or voting interests.
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\7\ Section 312.04(h) defines ``Minimum Price'' as a price that
is the lower of: (i) the Official Closing Price immediately
preceding the signing of the binding agreement; or (ii) the average
Official Closing Price for the five trading days immediately
preceding the signing of the binding agreement. Section 312.04(i)
defines the ``Official Closing Price'' of the issuer's common stock
as the official closing price on the Exchange as reported to the
Consolidated Tape immediately preceding the signing of a binding
agreement to issue the securities. For example, if the transaction
is signed after the close of the regular session at 4:00 p.m.
Eastern Standard Time on a Tuesday, then Tuesday's official closing
price is used. If the transaction is signed at any time between the
close of the regular session on Monday and the close of the regular
session on Tuesday, then Monday's official closing price is used.
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The Exchange believes it is consistent with the protection of
investors to expand the circumstances in which a right may be listed to
permit the listing of a right where the security into which such right
is exercisable will be listed upon exercise of the rights and such
exercise is pursuant to a Securities Act Registration Statement that
has been declared effective by the SEC prior to or simultaneous with
the listing of such rights (i.e., Prospective Listing Rights). The
requirement that there be an effective Securities Act Registration
Statement in relation to the exercise of the rights prior to or
simultaneous with the listing of the Prospective Listing Rights would,
in the Exchange's view, provide a significant investor protection as it
would ensure that investors trading or exercising the Prospective
Listing Rights would have access to the appropriate level of disclosure
to enable them to make informed investment decisions. In particular,
the Exchange believes that the availability of an effective Securities
Act Registration Statement at the time of initial listing of the
Prospective Listing Rights including disclosure about the anticipated
business and financial position of the issuer as it will exist upon
exercise of the Prospective Listing Rights (and the listing of the
underlying securities on the Exchange) will provide investors in the
Prospective Listing Rights with the ability to make judgments about the
anticipated value of the underlying securities by making comparisons to
the market values of comparable listed companies. The Exchange also
believes that the obligation of the issuer of Prospective Listing
Rights under the Securities Act and the rules thereunder to amend the
Securities Act Registration Statement up to the time of exercise of the
Prospective Listing Rights to reflect any material changes in the
issuer's business or financial condition will ensure that investors
will have access to adequate disclosure to enable them to value the
securities throughout the life of the Prospective Listing Rights.
Furthermore, the issuer of Prospective Listing Rights would be subject
to the requirements of Sections 202.05 and 202.06 of the Manual, which
require immediate disclosure of all material news. The Exchange
believes that these requirements under the securities laws and Exchange
rules will provide investors in Prospective Listing Rights with an
appropriate level of access to information to make investment decisions
and that this robust level of disclosure will also act as a significant
safeguard against illegal manipulation of the securities.
The Exchange notes that the proposal does not include any
limitations on how long Prospective Listing Rights may remain
outstanding prior to their exercise and the listing of the underlying
securities. The Exchange believes that there are practical commercial
reasons why such a requirement is unnecessary. Investors are unlikely
to find it attractive to commit their capital to the exercise of rights
if the exercise period is extended for more than a limited period. If
the exercise period is excessive, rightholders are likely to withdraw
from the offer, making the success of a long offering period unlikely.
As proposed, Prospective Listing Rights must meet initial listing
requirements of at least (i) 1,000,000 rights issued and (ii) 400
public holders of round lots. In addition, listed Prospective Listing
Rights would be subject to the prompt commencement of suspension and
delisting procedures if (i) it is determined that the security for
which the Prospective Listing Rights are exercisable will not be listed
on the Exchange or (ii) the market value of publicly-held shares of a
series of Prospective Listing Rights falls below $4,000,000. If the
Exchange commences delisting procedures in the circumstances with
respect to Prospective Listing Rights set forth in this paragraph, the
issuer of the Prospective Listing Rights will not be eligible to avail
itself of the provisions of Sections 802.02 and 802.03 and any such
listed rights will be subject to delisting procedures as set forth in
Section 804.00. The Exchange believes that these initial and continued
listing requirements will protect investors by helping to ensure
trading liquidity in the Prospective Listing Rights and also ensuring
that such rights will not be traded unless the underlying security is
expected to list on the Exchange. The Exchange notes that the proposed
initial and continued quantitative listing standards for Prospective
Listing Rights are identical to (or, in the case of the market-value of
publicly-held shares requirement more rigorous than) those required for
securities to be listed under the ``equity'' standards (i.e., for
trading on the NYSE's trading floor) under Section 703.19 (``Other
Securities'') of the Manual. As the Exchange has extensive experience
with the application of those standards under Section 703.19 and
believes that they have provided adequate investor protection when used
in that context, the Exchange believes that these standards will also
provide adequate
[[Page 42546]]
protection to investors in Prospective Listing Rights.
The Exchange is not proposing to adopt any initial market value or
security price requirements for Prospective Listing Rights. However,
the Exchange notes that proposed $4,000,000 market value of publicly-
held shares requirement would be applied immediately and therefore
imposes a minimum trading value for Prospective Listing Rights at the
time of initial listing. The Exchange believes that this requirement
ensures that Prospective Listing Rights will not commence trading on
the Exchange unless the market believes that they have a more than
nominal trading value.
The Exchange believes that its existing surveillance procedures are
adequate to enable it to detect manipulative trading practices with
respect to Prospective Listing Rights. The Exchange notes that the NYSE
and other self-regulatory organizations have extensive experience in
conducting surveillance of the trading in securities whose value, like
that of Prospective Listing Rights, is substantially dependent on the
issuer's future acquisition of an identified operating asset, including
for example, listed SPACs that are trading on the Exchange after
entering into a definitive agreement with respect to a business
combination. The Exchange also believes that market participants are
able to arrive at market prices for such securities without excessive
volatility and that this experience provides a reasonable basis for
understanding how Prospective Listing Rights are likely to trade.
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 Exchange believes that
the proposed rule change will increase competition by giving issuers
enhanced opportunities to raise capital by giving them greater
flexibility in structuring rights offering as a capital raising tool.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to 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 self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-NYSE-2024-23 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-NYSE-2024-23. 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NYSE-2024-23 and should be
submitted on or before June 5, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-10640 Filed 5-14-24; 8:45 am]
BILLING CODE 8011-01-P
