Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing of a Proposed Rule Change With Respect to Amendments to the Seventh Amended and Restated Bylaws (the “CGM Bylaws”) of Its Parent Corporation, Cboe Global Markets, Inc. (“Cboe” or “Corporation”), 86065-86070 [2024-25055]
Download as PDF
<![CDATA[
Federal Register / Vol. 89, No. 209 / Tuesday, October 29, 2024 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
public interest. Particularly, the
Exchange believes that, by permitting
stockholders of Cboe to bring business
or Stockholder Nominees before a
special meeting, the proposed rule
change strengthens the corporate
governance of the Exchange’s ultimate
parent company, which is beneficial to
both investors and the public interest.
Additionally, the procedural
requirements are designed to help
protect investors by stating clearly and
explicitly the procedures stockholders
must follow in order to bring business
or Stockholder Nominees before a
special meeting. The informational
requirements are designed to enhance
investor protection by helping to ensure
among other things, that the Corporation
and its stockholders have full and
accurate information about nominating
stockholders and Stockholder Nominees
and that such stockholders and
nominees comply with applicable laws,
regulations and other requirements.
The changes that the Exchange is
proposing with regard to so-called
‘‘advance notice bylaws’’ in light of the
recent developments in Delaware law
are designed to help provide additional
clarity to stockholders wishing to bring
business before a stockholder meeting or
propose a Stockholder Nominee. The
Exchange believes that this filing
furthers the objectives of Section 6(b)(5)
by simplifying the requirements and
clarifying the information that must be
disclosed by stockholders. This furthers
the interests of investors and the public
by removing potential impediments to
raising business or proposing
Stockholder Nominees that may
otherwise restrict a stockholder’s ability
to participate in the corporate
governance of the Corporation.
Finally, the remaining changes to
existing provisions of the CGM Bylaws
are clarifying in nature, and they
enhance investor protection and the
public interest by preventing confusion
with respect to the operation of the
Bylaw provisions.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Because the proposed rule change
relates to the governance of the
Corporation and not to the operations of
the Exchange, 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 change is not
designed to address any competitive
issue or have any impact on
competition; rather, adoption of a
stockholder special meeting provision,
updating ‘‘advance notice bylaws,’’ and
VerDate Sep<11>2014
17:34 Oct 28, 2024
Jkt 265001
other bylaws updates by the Corporation
are intended to enhance corporate
governance and accountability to
stockholders.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the Exchange consents, the Commission
will:
A. by order approve or disapprove
such proposed rule change, or
B. institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
C2–2024–016 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–C2–2024–016. 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
PO 00000
Frm 00131
Fmt 4703
Sfmt 4703
86065
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–C2–2024–016 and should be
submitted on or before November 19,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–25059 Filed 10–28–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101417; File No. SR–
CboeEDGX–2024–059]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
of a Proposed Rule Change With
Respect to Amendments to the
Seventh Amended and Restated
Bylaws (the ‘‘CGM Bylaws’’) of Its
Parent Corporation, Cboe Global
Markets, Inc. (‘‘Cboe’’ or ‘‘Corporation’’)
October 23, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
11, 2024, Cboe EDGX Exchange, Inc.
(the ‘‘Exchange’’ or ‘‘EDGX’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
7 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\29OCN1.SGM
29OCN1
86066
Federal Register / Vol. 89, No. 209 / Tuesday, October 29, 2024 / Notices
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) is filing with
the Securities and Exchange
Commission (the ‘‘Commission’’) a
proposed rule change with respect to
amendments to the Seventh Amended
and Restated Bylaws (the ‘‘CGM
Bylaws’’) of its parent corporation, Cboe
Global Markets, Inc. (‘‘Cboe’’ or
‘‘Corporation’’). The text of the
proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/edgx/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
khammond on DSKJM1Z7X2PROD with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
At Cboe’s annual meeting held on
May 16, 2024, Cboe’s stockholders
considered two advisory proposals that
would provide Cboe stockholders with
the right to call a special meeting of the
stockholders provided that a certain
threshold percentage of stockholders
propose to call such a meeting. The two
proposals were submitted separately.
One of the proposals was submitted by
an individual stockholder (‘‘Stockholder
Proposal’’). The other proposal was
submitted by Cboe Management
(‘‘Management Proposal’’). The
Stockholder Proposal, which did not
pass but received 45% of the votes cast,
requested that the CGM Board take steps
to enable stockholders having at least
10% of Cboe’s voting power to call a
special meeting of the stockholders. The
Management Proposal, which passed
with 65% of the votes cast, requested
that the CGM Board take steps to enable
VerDate Sep<11>2014
17:34 Oct 28, 2024
Jkt 265001
stockholders having at least 25% of
Cboe’s voting power to call a special
meeting of the stockholders.
The Nominating & Governance
Committee of the CGM Board reviewed
the voting results of the Stockholder
Proposal and the Management Proposal
and discussed the stockholder voting
standards and rights contemplated by
the CGM Bylaws. Following this review,
the Nominating & Governance
Committee recommended to the CGM
Board, and the CGM Board approved,
certain changes to the CGM Bylaws to
implement the Management Proposal.
The CGM Board also approved
amending the CGM Bylaws to improve
the governance processes of Cboe, to
make certain provisions more consistent
with Delaware General Corporation Law
(‘‘DGCL’’), and to make clarifying and
cleanup changes to the CGM Bylaws.
The proposed rule change amends the
CGM Bylaws to implement the changes
approved by the CGM Board.
Proposed Changes to Article 2—
Stockholders
Current Section 2.3 (Special Meeting)
of the CGM Bylaws provides that only
the Chair of the Board, the Chief
Executive Officer or the CGM Board
may call a special meeting of the
stockholders. To respond to feedback
from its stockholders, as discussed
above, Cboe proposes to delete portions
of this provision and add language that
will provide Cboe stockholders with the
right to call special stockholder
meetings (a ‘‘Stockholder Requested
Special Meeting’’) after following
particular procedures.
In defining the procedural
requirements, Cboe’s goals are to ensure
timely notice of a meeting request and
to gather sufficient information about
the proposing stockholder(s) and the
proposed business itself. Among other
things, this information will help ensure
that Cboe is able to comply with its
disclosure and other requirements
under applicable law and that Cboe, the
CGM Board and its stockholders are able
to adequately assess proposed business
submitted by stockholders.
Additionally, Cboe notes that the
proposed terms are common among
public companies that have adopted a
right for stockholders to call special
meetings. The proposed changes to the
CGM Bylaws to effect the stockholder
special meeting right are set forth below.
Revisions to Section 2.3(a)
First, the proposed changes to Section
2.3(a) provide that a Stockholder
Requested Special Meeting may be
called: (i) at any time by the CGM Board
pursuant to a resolution adopted by the
PO 00000
Frm 00132
Fmt 4703
Sfmt 4703
affirmative vote of a majority of the total
number of CGM directors then in office;
or (ii) by Cboe’s Corporate Secretary
following the receipt of a written
request in proper form for a special
meeting (a ‘‘Special Meeting Request’’)
by one or more stockholders. In order to
call a special meeting, the stockholders
must hold, in the aggregate, at least 25%
of Cboe’s outstanding shares of common
stock entitled to vote on matters brought
before the special meeting (the
‘‘Requisite Percentage’’).
The proposed changes to Section
2.3(a) also clarify that the Chair of the
Board, the Chief Executive Officer or the
President of Cboe may not individually
call a special meeting of the
stockholders. This change was made to
vest authority within Cboe to call a
special meeting in the Board. Without
the proposed change, the Chair of the
Board, Chief Executive Officer and the
President could each call a special
meeting of the stockholders without
CGM Board approval. The proposed
change to Section 2.3(a) simplifies this
requirement to confirm that, within
Cboe, only the CGM Board may call for
a special meeting of the stockholders.
Proposed Section 2.3(b) and Section
2.3(c)
Proposed Section 2.3(b) and Section
2.3(c) set forth the procedures a
stockholder must follow in order to
submit a written request in proper form
to call a Stockholder Requested Special
Meeting. Stockholders must first submit
a request to Cboe’s Corporate Secretary
to define a date on which the Requisite
Percentage will be determined (the
‘‘Record Date’’). A stockholder must
sign any request to set a Record Date
and also provide a reasonably brief
description of the purpose or purposes
of the special meeting of the
stockholders. A stockholder is also
required in the request to set a Record
Date to disclose certain information
regarding themselves and any
individuals or entities such stockholder
may be associated with (a ‘‘Stockholder
Associated Person(s)’’), as well as such
information concerning any nominees to
the CGM Board (‘‘Stockholder
Nominee(s)’’) if such stockholder is so
proposing. The information that a
stockholder must disclose regarding
Stockholder Associated Persons and
Stockholder Nominees is contained in
Section 2.11 of the CGM Bylaws and
incorporated by reference in this
Section 2.3(b). The information required
to be provided in the request to set a
Record Date provides Cboe with notice
that a stockholder is seeking to bring
business before the stockholders and
assists with the logistical aspects of
E:\FR\FM\29OCN1.SGM
29OCN1
Federal Register / Vol. 89, No. 209 / Tuesday, October 29, 2024 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
determining which stockholders will be
counted for purposes of determining
whether the Requisite Percentage is met.
Proposed Section 2.3(d) and Section
2.3(e)
Proposed Section 2.3(d) and Section
2.3(e) include detailed information on
the requirements for a Special Meeting
Request to have been properly
delivered, subject to certain carve-outs
for stockholders who submit their
request in response to a solicitation for
public consent by the Corporation made
pursuant to Section 14 of the Exchange
Act. Specifically, a Special Meeting
Request must:
• be delivered within 60 days
following the Record Date;
• be signed by each stockholder
making up the Requisite Percentage;
• contain a reasonably brief
description of the purpose of the special
meeting;
• include details of each stockholder
holding the Requisite Percentage,
including:
Æ The stockholder’s name;
Æ The stockholder’s address;
Æ information concerning the
stockholder submitting the Special
Meeting Request and any Stockholder
Associated Persons;
Æ information concerning any
Stockholder Nominees; and
Æ documentary evidence that the
shares included in the Requisite
Percentage are owned by such
stockholder;
• include an acknowledgment that
any reduction in the number of shares
owned by such stockholders as of the
date of such Special Meeting Request
and through the meeting date will
constitute a revocation of such Special
Meeting Request with respect to such
reduction;
• relate to an item of business that is
a proper subject for stockholder action
under applicable law;
• not include an item of business that
did not appear on the request to set a
Record Date;
• not be delivered during the period
commencing 90 days prior to the oneyear anniversary of the immediately
preceding annual meeting and ending
on the date of the next annual meeting;
and
• otherwise comply with applicable
law.
In defining the requirements for a
Special Meeting Request, Cboe’s goal is
to gather sufficient information about
the stockholder seeking to request a
special meeting and the proposed
business for both itself and its
stockholders and to help ensure the
efficient use of corporate resources by
VerDate Sep<11>2014
17:34 Oct 28, 2024
Jkt 265001
86067
restricting a stockholder from raising
items that could reasonably be
addressed at an annual meeting of the
stockholders, as in the requirement that
a Special Meeting Request not be
delivered in the period commencing 90
days prior to the one-year anniversary of
the immediately preceding annual
meeting. Overall, this information is
designed to help ensure that Cboe is
able to comply with its disclosure and
other requirements under applicable
law and that Cboe, the CGM Board and
its stockholders are able to assess the
proposed business or Stockholder
Nominee adequately.
and (ii) such Special Meeting Requests
have been dated and delivered to the
Corporate Secretary within sixty (60)
days of the delivery to the Corporate
Secretary of the earliest dated Special
Meeting Request relating to such item(s)
of business. This proposed section helps
to ensure the efficient use of corporate
resources by preventing multiple
stockholders from raising items that
should reasonably be consolidated. The
conditions under which the Corporation
may combine multiple Special Meeting
Requests are sufficiently limited to
require that each unique item is
addressed separately.
Proposed Section 2.3(f)
Proposed Section 2.3(f) provides that
the CGM Board may cancel a special
meeting in its discretion if the
percentage of stock held by the
stockholders requesting a special
meeting falls below the Requisite
Percentage at any point after sixty (60)
days from the first date on which a valid
Special Meeting Request is delivered to
Cboe. This provides the CGM Board
with discretion to reevaluate the Special
Meeting Request in the event the
Special Meeting Request is revoked by
stockholders holding a sufficient
percentage of the stock of the
Corporation.
Revisions to Section 2.9
Section 2.9 of the CGM Bylaws
governs proxy representation. It is
proposed that language be added to
clarify that any stockholder directly or
indirectly soliciting proxies from other
stockholders of the Corporation may use
any proxy card color other than white,
which shall be reserved for exclusive
use by the CGM Board.
Proposed Section 2.3(g)
Proposed Section 2.3(g) provides that
within ten (10) days following the date
on which the Secretary has received
valid Special Meeting Requests, the
CGM Board shall fix the record date and
meeting date, time and location for the
Stockholder Requested Special Meeting,
provided that the date of any such
Stockholder Requested Special Meeting
shall not be more than ninety (90) days
after the date on which a valid Special
Meeting Request is received by Cboe.
The CGM Board may submit its own
proposal or proposals for consideration
at any Stockholder Requested Special
Meeting. Ninety (90) days allows the
Corporation reasonable time to assess
the items proposed in the Special
Meeting Request while also not
imposing a potentially burdensome
delay on the stockholders.
Proposed Section 2.3(h)
Proposed Section 2.3(h) provides that
multiple Special Meeting Requests may
be considered together if (i) each Special
Meeting Request identifies the same or
substantially the same purpose or
purposes of the Stockholder Requested
Special Meeting and the same or
substantially the same items of business
proposed to be brought before the
Stockholder Requested Special Meeting,
PO 00000
Frm 00133
Fmt 4703
Sfmt 4703
Revisions to Section 2.11
Section 2.11 of the CGM Bylaws,
which are the ‘‘advance notice
bylaws’’,3 requires stockholders to
notify Cboe, during a specified period in
advance of an annual meeting or special
meeting called by the CGM Board, of
their intention to nominate one or more
persons for election to the CGM Board
or to present a business proposal for
consideration by the stockholders at the
meeting and provide certain information
regarding such request. When designing
the proposed procedural requirements
for stockholders to call a special
meeting, as outlined above, Cboe
evaluated the existing procedural
requirements for stockholders to bring
business before an annual meeting or to
nominate director candidates at an
annual meeting or special meeting. Cboe
has determined that the advance notice
bylaws may be enhanced to help
achieve the core objectives of fulsome
disclosure and accurate explanations
from stockholders bringing business or
potential nominees before a stockholder
meeting. While advance notice bylaws
are beneficial in providing a company
and its stockholders with information
regarding stockholders, and their
Stockholder Associated Persons, seeking
3 ‘‘Advance notice bylaws’’ allow stockholder(s)
to bring business before an annual or special
meeting of stockholders, but set forth procedural
requirements to help ensure that companies and
boards have sufficient information about the
proposal and the proposing stockholder(s), as well
as adequate time to consider the proposal, by
requiring the proposing stockholder(s) to give
advance notice of the intention to bring the
proposal before the annual or special meeting.
E:\FR\FM\29OCN1.SGM
29OCN1
khammond on DSKJM1Z7X2PROD with NOTICES
86068
Federal Register / Vol. 89, No. 209 / Tuesday, October 29, 2024 / Notices
to bring business or potential nominees
before a stockholder meeting, therefore
permitting orderly meetings and
election contests, and assisting the
board’s information gathering and
disclosure functions, the Delaware
Supreme Court in Kellner v. AIM
ImmunoTech Inc.4 has recently
provided some guidance on
circumstances where such requests may
be overbroad or request information not
sufficiently connected to the legitimate
information gathering function these
provisions serve. Therefore, as further
detailed below, Cboe has determined
that it would be beneficial to refine
certain of the provisions in the CGM
Bylaws to increase the clarity of the
requests for information from
stockholders seeking to bring business
before a meeting.
First, Section 2.11(a)(iii)(C) of the
CGM Bylaws currently defines the
information required to be disclosed
regarding a stockholder providing notice
of nominations or other business, any
Stockholder Associated Person(s) and
any Stockholder Nominee(s). Cboe
proposes certain amendments to this
section to (i) clarify the information a
stockholder is required to disclose
relating to arrangements between the
stockholder providing notice or any
Stockholder Associated Person and any
other stockholder with regard to the
stockholder meeting and (ii) eliminate
disclosures on performance related fees
to which such stockholder or
Stockholder Associated Person may be
entitled as a result of any increase or
decrease in the stock of Cboe, and the
prospectus or similar document of the
stockholder providing notice or any
Stockholder Associated Person. Cboe
believes that, while these provisions as
currently written provide valuable
information to the Corporation and its
stockholders in assessing the proposed
business or Stockholder Nominee, these
requirements should be sufficiently
specific so as not to potentially dissuade
stockholders from bringing business
before a stockholder meeting and should
otherwise comply with Delaware law.
The proposed changes narrow the
information required to be disclosed
such that Cboe is able to help ensure the
objectives of the provisions are met
without burdening stockholders with
potentially overbroad requests for
information.
Section 2.11(a)(iii)(D) of the CGM
Bylaws currently sets forth certain
representations that must be made by a
stockholder seeking to bring business or
a Stockholder Nominee before a
4 Kellner v. AIM ImmunoTech Inc., C.A. 2023–
0879–LWW (Del. Ch. Jan. 5, 2024).
VerDate Sep<11>2014
17:34 Oct 28, 2024
Jkt 265001
stockholder meeting regarding whether
such stockholder is part of a group
which intends to deliver or solicit
proxies from stockholders in support of
such proposed business. Cboe proposes
changes to update this section in order
to be more consistent with the universal
proxy rules provided for in Rule 14a–19
of the Exchange Act by explicitly stating
that any stockholder providing notice
that they intend to solicit proxies in
support of a proposed nominee must do
so in accordance with Rule 14a–19 of
the Exchange Act. Cboe also proposes to
clarify that the representation must
confirm whether the stockholder
intends or is part of a group which
intends to engage in a solicitation
(within the meaning of Rule 14a–1(1) of
the Exchange Act) with respect to the
nomination of any proposed nominee or
proposed business to be considered at
the meeting.
Section 2.11(a)(iii)(F) of the CGM
Bylaws currently requires that a
Stockholder Nominee furnish any
information that Cboe may determine is
required for Cboe to determine the
qualifications of such Stockholder
Nominee to serve as a director of the
Corporation. Cboe proposes to add
language clarifying that the information
Cboe may require must be consistent
with the parameters set forth in Cboe’s
Corporate Governance Guidelines or the
CGM Board’s past practice in evaluating
potential director nominees.
Proposed Section 2.11(c)(ii) of the
CGM Bylaws requires the stockholder
providing notice to notify the Secretary
of any inaccuracy or change in any
information submitted pursuant to
Section 2.11 within two (2) business
days of becoming aware of such
inaccuracy or change. Cboe proposes to
modify this requirement by narrowing
the scope of circumstances in which a
stockholder is required to provide
notice of any inaccuracy or change of
information that they have previously
provided to material inaccuracies or
changes.
Proposed Section 2.11(c)(iii) of the
CGM Bylaws provides that any
stockholder or Stockholder Associated
Person providing notice with respect to
any Stockholder Nominee is required to
do so in a manner consistent with the
requirements for universal proxy rules
pursuant to Rule 14a–19 of the
Exchange Act. Namely, the nomination
of a Stockholder Nominee shall be
disregarded if, among other things, there
is no longer an intent to solicit proxies
in support of a Stockholder Nominee or
there is a failure to comply with the
applicable requirements of Rule 14a–19.
Upon request by the Corporation, if any
stockholder providing notice or any
PO 00000
Frm 00134
Fmt 4703
Sfmt 4703
Stockholder Associated Person provides
notice pursuant to Rule 14a–19(b) under
the Exchange Act, such stockholder
providing notice shall deliver to the
Corporate Secretary, no later than five
(5) business days prior to the applicable
meeting date, then reasonable evidence
that the requirements of Rule 14a–
19(a)(3) under the Exchange Act have
been satisfied.
Currently Section 2.11(c)(vi) of the
CGM Bylaws defines ‘‘Stockholder
Associated Person’’ to mean, among
other things, (i) any person who is a
member of a ‘‘group’’ (used in Rule 13d–
5 under the Exchange Act) with, or
otherwise acting in concert with, any
stockholder providing notice, (ii) any
person that is directly or indirectly
controlled by, or under common control
with, such stockholder or such
Stockholder Associated Person, or (iii)
any person directly or indirectly
controlling any such stockholder or any
Stockholder Associated Person. The
proposed rule change reflects recent
developments in Delaware law to add
specificity to the definition and limit
which individuals may be determined
to be a Stockholder Associated Person
and makes other clarifying changes.
Specifically, the proposed rule change
adds the qualifier that a Stockholder
Associated Person must be known by
the stockholder to be acting in concert
with such stockholder, removes from
the definition any person directly or
indirectly controlled by, or under
common control with such stockholder
and replaces it with any affiliate or
associate of such stockholder providing
notice, and deletes the reference in the
definition to any person directly or
indirectly controlling any such
stockholder or Stockholder Associated
Person. The proposed rule change also
adds any Stockholder Nominee to the
definition of Stockholder Associated
Person.
Revisions to Other Sections of the
Bylaws
Cboe also proposes to make changes
to Section 2.11 to reflect recent
developments in Delaware law and to
provide clarifications and prevent
confusion. Cboe proposes to add a note
to Section 2.11(a)(ii) that any proposed
business for a stockholder meeting must
be a proper matter for stockholder
action. Cboe also proposes to amend
Section 2.11(a)(iii)(B) to state that a
Stockholder Nominee’s written consent
must be included in Cboe’s proxy
statement before they may be brought
before a meeting. Previously, Section
2.11(a)(iii)(B) had stated that the
Stockholder Nominee’s written consent
must be included in a proxy statement,
E:\FR\FM\29OCN1.SGM
29OCN1
Federal Register / Vol. 89, No. 209 / Tuesday, October 29, 2024 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
but had not specifically defined it as
Cboe’s proxy statement. Cboe also
proposes to amend the same section to
state that a Stockholder Nominee will
not enter into any commitment to vote
in a certain manner if nominated to the
CGM Board. Previously, this section had
simply stated that a Stockholder
Nominee may not enter into any
commitment to vote in a certain manner
with respect to certain matters at any
company, without defining Cboe
specifically. Cboe also proposes to
amend the same section to require that
a Stockholder Nominee not omit facts
that are necessary to ensure statements
made are not misleading in any material
respect. Previously, the Stockholder
Nominee’s responsibility to not omit
facts that are necessary to ensure
statements are not misleading was not
subject to materiality.
Cboe also proposes to make changes
to Section 3.10 of the CGM Bylaws to
provide that the Lead Director of Cboe
may call a special meeting of the CGM
Board. Section 3.10 currently permits,
among other things, the Chair of the
Board or the Chief Executive Officer to
call a special meeting of the CGM Board.
Revising this section to allow the Lead
Director to call a special meeting of the
CGM Board addresses a potential
scenario in which the Chair of the Board
and the Chief Executive Officer
positions are jointly held by one
individual and a special meeting of the
CGM Board is not able to be called by
individual independent directors.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.5 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 6 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, 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.
In light of an advisory vote by the
stockholders of Cboe, Cboe is proposing
changes to its Bylaws to implement a
5 15
6 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
VerDate Sep<11>2014
17:34 Oct 28, 2024
Jkt 265001
right for stockholders to call a special
meeting of the stockholders at a 25%
threshold. The Exchange believes that
this filing furthers the objectives of
Section 6(b)(5) of the Act because the
proposed rule change would be
consistent with and facilitate a
governance and regulatory structure that
is designed to prevent fraudulent and
manipulative acts and practices, 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. Particularly, the
Exchange believes that, by permitting
stockholders of Cboe to bring business
or Stockholder Nominees before a
special meeting, the proposed rule
change strengthens the corporate
governance of the Exchange’s ultimate
parent company, which is beneficial to
both investors and the public interest.
Additionally, the procedural
requirements are designed to help
protect investors by stating clearly and
explicitly the procedures stockholders
must follow in order to bring business
or Stockholder Nominees before a
special meeting. The informational
requirements are designed to enhance
investor protection by helping to ensure
among other things, that the Corporation
and its stockholders have full and
accurate information about nominating
stockholders and Stockholder Nominees
and that such stockholders and
nominees comply with applicable laws,
regulations and other requirements.
The changes that the Exchange is
proposing with regard to so-called
‘‘advance notice bylaws’’ in light of the
recent developments in Delaware law
are designed to help provide additional
clarity to stockholders wishing to bring
business before a stockholder meeting or
propose a Stockholder Nominee. The
Exchange believes that this filing
furthers the objectives of Section 6(b)(5)
by simplifying the requirements and
clarifying the information that must be
disclosed by stockholders. This furthers
the interests of investors and the public
by removing potential impediments to
raising business or proposing
Stockholder Nominees that may
otherwise restrict a stockholder’s ability
to participate in the corporate
governance of the Corporation.
Finally, the remaining changes to
existing provisions of the CGM Bylaws
are clarifying in nature, and they
enhance investor protection and the
PO 00000
Frm 00135
Fmt 4703
Sfmt 4703
86069
public interest by preventing confusion
with respect to the operation of the
Bylaw provisions.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Because the proposed rule change
relates to the governance of the
Corporation and not to the operations of
the Exchange, 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 change is not
designed to address any competitive
issue or have any impact on
competition; rather, adoption of a
stockholder special meeting provision,
updating ‘‘advance notice bylaws,’’ and
other bylaws updates by the Corporation
are intended to enhance corporate
governance and accountability to
stockholders.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the Exchange consents, the Commission
will:
A. by order approve or disapprove
such proposed rule change, or
B. institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
CboeEDGX–2024–059 on the subject
line.
E:\FR\FM\29OCN1.SGM
29OCN1
86070
Federal Register / Vol. 89, No. 209 / Tuesday, October 29, 2024 / Notices
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–CboeEDGX–2024–059. 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–CboeEDGX–2024–059 and should be
submitted on or before November 19,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–25055 Filed 10–28–24; 8:45 am]
khammond on DSKJM1Z7X2PROD with NOTICES
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101408; File No. SR–NYSE–
2024–65]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Its
Price List
October 23, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
10, 2024, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Price List to modify two adding tiers for
Midpoint Passive Liquidity (‘‘MPL’’)
Orders that add liquidity to the
Exchange. 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.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Price List to modify two adding tiers for
1 15
7 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
17:34 Oct 28, 2024
2 17
Jkt 265001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00136
Fmt 4703
Sfmt 4703
MPL Orders that add liquidity to the
Exchange.
The proposed changes respond to the
current competitive environment where
order flow providers have a choice of
where to direct liquidity-providing
orders by offering further incentives for
member organizations to send
additional displayed liquidity to the
Exchange.
The Exchange proposes to implement
the fee changes effective October 10,
2024.3
Background
Current Market and Competitive
Environment
The Exchange operates in a highly
competitive market. The Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, the
Commission highlighted the importance
of market forces in determining prices
and SRO revenues and, also, recognized
that current regulation of the market
system ‘‘has been remarkably successful
in promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 4
While Regulation NMS has enhanced
competition, it has also fostered a
‘‘fragmented’’ market structure where
trading in a single stock can occur
across multiple trading centers. When
multiple trading centers compete for
order flow in the same stock, the
Commission has recognized that ‘‘such
competition can lead to the
fragmentation of order flow in that
stock.’’ 5 Indeed, cash equity trading is
currently dispersed across 16
exchanges,6 numerous alternative
trading systems,7 and broker-dealer
internalizers and wholesalers, all
competing for order flow. Based on
publicly-available information, no
3 The Exchange originally filed to amend the Fee
Schedule on October 1, 2024 (SR–NYSE–2024–62).
SR–NYSE–2024–62 was subsequently withdrawn
and replaced by this filing.
4 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(File No. S7–10–04) (Final Rule) (‘‘Regulation
NMS’’).
5 See Securities Exchange Act Release No. 61358,
75 FR 3594, 3597 (January 21, 2010) (File No. S7–
02–10) (Concept Release on Equity Market
Structure).
6 See Cboe U.S Equities Market Volume
Summary, available at https://markets.cboe.com/us/
equities/market_share. See generally https://
www.sec.gov/fast-answers/divisionsmarketregmr
exchangesshtml.html.
7 See FINRA ATS Transparency Data, available at
https://otctransparency.finra.org/otctransparency/
AtsIssueData. A list of alternative trading systems
registered with the Commission is available at
https://www.sec.gov/foia/docs/atslist.htm.
E:\FR\FM\29OCN1.SGM
29OCN1
]]>Agencies
[Federal Register Volume 89, Number 209 (Tuesday, October 29, 2024)]
[Notices]
[Pages 86065-86070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-25055]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101417; File No. SR-CboeEDGX-2024-059]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing of a Proposed Rule Change With Respect to Amendments to the
Seventh Amended and Restated Bylaws (the ``CGM Bylaws'') of Its Parent
Corporation, Cboe Global Markets, Inc. (``Cboe'' or ``Corporation'')
October 23, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on October 11, 2024, Cboe EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
[[Page 86066]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') is filing
with the Securities and Exchange Commission (the ``Commission'') a
proposed rule change with respect to amendments to the Seventh Amended
and Restated Bylaws (the ``CGM Bylaws'') of its parent corporation,
Cboe Global Markets, Inc. (``Cboe'' or ``Corporation''). The text of
the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
At Cboe's annual meeting held on May 16, 2024, Cboe's stockholders
considered two advisory proposals that would provide Cboe stockholders
with the right to call a special meeting of the stockholders provided
that a certain threshold percentage of stockholders propose to call
such a meeting. The two proposals were submitted separately. One of the
proposals was submitted by an individual stockholder (``Stockholder
Proposal''). The other proposal was submitted by Cboe Management
(``Management Proposal''). The Stockholder Proposal, which did not pass
but received 45% of the votes cast, requested that the CGM Board take
steps to enable stockholders having at least 10% of Cboe's voting power
to call a special meeting of the stockholders. The Management Proposal,
which passed with 65% of the votes cast, requested that the CGM Board
take steps to enable stockholders having at least 25% of Cboe's voting
power to call a special meeting of the stockholders.
The Nominating & Governance Committee of the CGM Board reviewed the
voting results of the Stockholder Proposal and the Management Proposal
and discussed the stockholder voting standards and rights contemplated
by the CGM Bylaws. Following this review, the Nominating & Governance
Committee recommended to the CGM Board, and the CGM Board approved,
certain changes to the CGM Bylaws to implement the Management Proposal.
The CGM Board also approved amending the CGM Bylaws to improve the
governance processes of Cboe, to make certain provisions more
consistent with Delaware General Corporation Law (``DGCL''), and to
make clarifying and cleanup changes to the CGM Bylaws. The proposed
rule change amends the CGM Bylaws to implement the changes approved by
the CGM Board.
Proposed Changes to Article 2--Stockholders
Current Section 2.3 (Special Meeting) of the CGM Bylaws provides
that only the Chair of the Board, the Chief Executive Officer or the
CGM Board may call a special meeting of the stockholders. To respond to
feedback from its stockholders, as discussed above, Cboe proposes to
delete portions of this provision and add language that will provide
Cboe stockholders with the right to call special stockholder meetings
(a ``Stockholder Requested Special Meeting'') after following
particular procedures.
In defining the procedural requirements, Cboe's goals are to ensure
timely notice of a meeting request and to gather sufficient information
about the proposing stockholder(s) and the proposed business itself.
Among other things, this information will help ensure that Cboe is able
to comply with its disclosure and other requirements under applicable
law and that Cboe, the CGM Board and its stockholders are able to
adequately assess proposed business submitted by stockholders.
Additionally, Cboe notes that the proposed terms are common among
public companies that have adopted a right for stockholders to call
special meetings. The proposed changes to the CGM Bylaws to effect the
stockholder special meeting right are set forth below.
Revisions to Section 2.3(a)
First, the proposed changes to Section 2.3(a) provide that a
Stockholder Requested Special Meeting may be called: (i) at any time by
the CGM Board pursuant to a resolution adopted by the affirmative vote
of a majority of the total number of CGM directors then in office; or
(ii) by Cboe's Corporate Secretary following the receipt of a written
request in proper form for a special meeting (a ``Special Meeting
Request'') by one or more stockholders. In order to call a special
meeting, the stockholders must hold, in the aggregate, at least 25% of
Cboe's outstanding shares of common stock entitled to vote on matters
brought before the special meeting (the ``Requisite Percentage'').
The proposed changes to Section 2.3(a) also clarify that the Chair
of the Board, the Chief Executive Officer or the President of Cboe may
not individually call a special meeting of the stockholders. This
change was made to vest authority within Cboe to call a special meeting
in the Board. Without the proposed change, the Chair of the Board,
Chief Executive Officer and the President could each call a special
meeting of the stockholders without CGM Board approval. The proposed
change to Section 2.3(a) simplifies this requirement to confirm that,
within Cboe, only the CGM Board may call for a special meeting of the
stockholders.
Proposed Section 2.3(b) and Section 2.3(c)
Proposed Section 2.3(b) and Section 2.3(c) set forth the procedures
a stockholder must follow in order to submit a written request in
proper form to call a Stockholder Requested Special Meeting.
Stockholders must first submit a request to Cboe's Corporate Secretary
to define a date on which the Requisite Percentage will be determined
(the ``Record Date''). A stockholder must sign any request to set a
Record Date and also provide a reasonably brief description of the
purpose or purposes of the special meeting of the stockholders. A
stockholder is also required in the request to set a Record Date to
disclose certain information regarding themselves and any individuals
or entities such stockholder may be associated with (a ``Stockholder
Associated Person(s)''), as well as such information concerning any
nominees to the CGM Board (``Stockholder Nominee(s)'') if such
stockholder is so proposing. The information that a stockholder must
disclose regarding Stockholder Associated Persons and Stockholder
Nominees is contained in Section 2.11 of the CGM Bylaws and
incorporated by reference in this Section 2.3(b). The information
required to be provided in the request to set a Record Date provides
Cboe with notice that a stockholder is seeking to bring business before
the stockholders and assists with the logistical aspects of
[[Page 86067]]
determining which stockholders will be counted for purposes of
determining whether the Requisite Percentage is met.
Proposed Section 2.3(d) and Section 2.3(e)
Proposed Section 2.3(d) and Section 2.3(e) include detailed
information on the requirements for a Special Meeting Request to have
been properly delivered, subject to certain carve-outs for stockholders
who submit their request in response to a solicitation for public
consent by the Corporation made pursuant to Section 14 of the Exchange
Act. Specifically, a Special Meeting Request must:
be delivered within 60 days following the Record Date;
be signed by each stockholder making up the Requisite
Percentage;
contain a reasonably brief description of the purpose of
the special meeting;
include details of each stockholder holding the Requisite
Percentage, including:
[cir] The stockholder's name;
[cir] The stockholder's address;
[cir] information concerning the stockholder submitting the Special
Meeting Request and any Stockholder Associated Persons;
[cir] information concerning any Stockholder Nominees; and
[cir] documentary evidence that the shares included in the
Requisite Percentage are owned by such stockholder;
include an acknowledgment that any reduction in the number
of shares owned by such stockholders as of the date of such Special
Meeting Request and through the meeting date will constitute a
revocation of such Special Meeting Request with respect to such
reduction;
relate to an item of business that is a proper subject for
stockholder action under applicable law;
not include an item of business that did not appear on the
request to set a Record Date;
not be delivered during the period commencing 90 days
prior to the one-year anniversary of the immediately preceding annual
meeting and ending on the date of the next annual meeting; and
otherwise comply with applicable law.
In defining the requirements for a Special Meeting Request, Cboe's
goal is to gather sufficient information about the stockholder seeking
to request a special meeting and the proposed business for both itself
and its stockholders and to help ensure the efficient use of corporate
resources by restricting a stockholder from raising items that could
reasonably be addressed at an annual meeting of the stockholders, as in
the requirement that a Special Meeting Request not be delivered in the
period commencing 90 days prior to the one-year anniversary of the
immediately preceding annual meeting. Overall, this information is
designed to help ensure that Cboe is able to comply with its disclosure
and other requirements under applicable law and that Cboe, the CGM
Board and its stockholders are able to assess the proposed business or
Stockholder Nominee adequately.
Proposed Section 2.3(f)
Proposed Section 2.3(f) provides that the CGM Board may cancel a
special meeting in its discretion if the percentage of stock held by
the stockholders requesting a special meeting falls below the Requisite
Percentage at any point after sixty (60) days from the first date on
which a valid Special Meeting Request is delivered to Cboe. This
provides the CGM Board with discretion to reevaluate the Special
Meeting Request in the event the Special Meeting Request is revoked by
stockholders holding a sufficient percentage of the stock of the
Corporation.
Proposed Section 2.3(g)
Proposed Section 2.3(g) provides that within ten (10) days
following the date on which the Secretary has received valid Special
Meeting Requests, the CGM Board shall fix the record date and meeting
date, time and location for the Stockholder Requested Special Meeting,
provided that the date of any such Stockholder Requested Special
Meeting shall not be more than ninety (90) days after the date on which
a valid Special Meeting Request is received by Cboe. The CGM Board may
submit its own proposal or proposals for consideration at any
Stockholder Requested Special Meeting. Ninety (90) days allows the
Corporation reasonable time to assess the items proposed in the Special
Meeting Request while also not imposing a potentially burdensome delay
on the stockholders.
Proposed Section 2.3(h)
Proposed Section 2.3(h) provides that multiple Special Meeting
Requests may be considered together if (i) each Special Meeting Request
identifies the same or substantially the same purpose or purposes of
the Stockholder Requested Special Meeting and the same or substantially
the same items of business proposed to be brought before the
Stockholder Requested Special Meeting, and (ii) such Special Meeting
Requests have been dated and delivered to the Corporate Secretary
within sixty (60) days of the delivery to the Corporate Secretary of
the earliest dated Special Meeting Request relating to such item(s) of
business. This proposed section helps to ensure the efficient use of
corporate resources by preventing multiple stockholders from raising
items that should reasonably be consolidated. The conditions under
which the Corporation may combine multiple Special Meeting Requests are
sufficiently limited to require that each unique item is addressed
separately.
Revisions to Section 2.9
Section 2.9 of the CGM Bylaws governs proxy representation. It is
proposed that language be added to clarify that any stockholder
directly or indirectly soliciting proxies from other stockholders of
the Corporation may use any proxy card color other than white, which
shall be reserved for exclusive use by the CGM Board.
Revisions to Section 2.11
Section 2.11 of the CGM Bylaws, which are the ``advance notice
bylaws'',\3\ requires stockholders to notify Cboe, during a specified
period in advance of an annual meeting or special meeting called by the
CGM Board, of their intention to nominate one or more persons for
election to the CGM Board or to present a business proposal for
consideration by the stockholders at the meeting and provide certain
information regarding such request. When designing the proposed
procedural requirements for stockholders to call a special meeting, as
outlined above, Cboe evaluated the existing procedural requirements for
stockholders to bring business before an annual meeting or to nominate
director candidates at an annual meeting or special meeting. Cboe has
determined that the advance notice bylaws may be enhanced to help
achieve the core objectives of fulsome disclosure and accurate
explanations from stockholders bringing business or potential nominees
before a stockholder meeting. While advance notice bylaws are
beneficial in providing a company and its stockholders with information
regarding stockholders, and their Stockholder Associated Persons,
seeking
[[Page 86068]]
to bring business or potential nominees before a stockholder meeting,
therefore permitting orderly meetings and election contests, and
assisting the board's information gathering and disclosure functions,
the Delaware Supreme Court in Kellner v. AIM ImmunoTech Inc.\4\ has
recently provided some guidance on circumstances where such requests
may be overbroad or request information not sufficiently connected to
the legitimate information gathering function these provisions serve.
Therefore, as further detailed below, Cboe has determined that it would
be beneficial to refine certain of the provisions in the CGM Bylaws to
increase the clarity of the requests for information from stockholders
seeking to bring business before a meeting.
---------------------------------------------------------------------------
\3\ ``Advance notice bylaws'' allow stockholder(s) to bring
business before an annual or special meeting of stockholders, but
set forth procedural requirements to help ensure that companies and
boards have sufficient information about the proposal and the
proposing stockholder(s), as well as adequate time to consider the
proposal, by requiring the proposing stockholder(s) to give advance
notice of the intention to bring the proposal before the annual or
special meeting.
\4\ Kellner v. AIM ImmunoTech Inc., C.A. 2023-0879-LWW (Del. Ch.
Jan. 5, 2024).
---------------------------------------------------------------------------
First, Section 2.11(a)(iii)(C) of the CGM Bylaws currently defines
the information required to be disclosed regarding a stockholder
providing notice of nominations or other business, any Stockholder
Associated Person(s) and any Stockholder Nominee(s). Cboe proposes
certain amendments to this section to (i) clarify the information a
stockholder is required to disclose relating to arrangements between
the stockholder providing notice or any Stockholder Associated Person
and any other stockholder with regard to the stockholder meeting and
(ii) eliminate disclosures on performance related fees to which such
stockholder or Stockholder Associated Person may be entitled as a
result of any increase or decrease in the stock of Cboe, and the
prospectus or similar document of the stockholder providing notice or
any Stockholder Associated Person. Cboe believes that, while these
provisions as currently written provide valuable information to the
Corporation and its stockholders in assessing the proposed business or
Stockholder Nominee, these requirements should be sufficiently specific
so as not to potentially dissuade stockholders from bringing business
before a stockholder meeting and should otherwise comply with Delaware
law. The proposed changes narrow the information required to be
disclosed such that Cboe is able to help ensure the objectives of the
provisions are met without burdening stockholders with potentially
overbroad requests for information.
Section 2.11(a)(iii)(D) of the CGM Bylaws currently sets forth
certain representations that must be made by a stockholder seeking to
bring business or a Stockholder Nominee before a stockholder meeting
regarding whether such stockholder is part of a group which intends to
deliver or solicit proxies from stockholders in support of such
proposed business. Cboe proposes changes to update this section in
order to be more consistent with the universal proxy rules provided for
in Rule 14a-19 of the Exchange Act by explicitly stating that any
stockholder providing notice that they intend to solicit proxies in
support of a proposed nominee must do so in accordance with Rule 14a-19
of the Exchange Act. Cboe also proposes to clarify that the
representation must confirm whether the stockholder intends or is part
of a group which intends to engage in a solicitation (within the
meaning of Rule 14a-1(1) of the Exchange Act) with respect to the
nomination of any proposed nominee or proposed business to be
considered at the meeting.
Section 2.11(a)(iii)(F) of the CGM Bylaws currently requires that a
Stockholder Nominee furnish any information that Cboe may determine is
required for Cboe to determine the qualifications of such Stockholder
Nominee to serve as a director of the Corporation. Cboe proposes to add
language clarifying that the information Cboe may require must be
consistent with the parameters set forth in Cboe's Corporate Governance
Guidelines or the CGM Board's past practice in evaluating potential
director nominees.
Proposed Section 2.11(c)(ii) of the CGM Bylaws requires the
stockholder providing notice to notify the Secretary of any inaccuracy
or change in any information submitted pursuant to Section 2.11 within
two (2) business days of becoming aware of such inaccuracy or change.
Cboe proposes to modify this requirement by narrowing the scope of
circumstances in which a stockholder is required to provide notice of
any inaccuracy or change of information that they have previously
provided to material inaccuracies or changes.
Proposed Section 2.11(c)(iii) of the CGM Bylaws provides that any
stockholder or Stockholder Associated Person providing notice with
respect to any Stockholder Nominee is required to do so in a manner
consistent with the requirements for universal proxy rules pursuant to
Rule 14a-19 of the Exchange Act. Namely, the nomination of a
Stockholder Nominee shall be disregarded if, among other things, there
is no longer an intent to solicit proxies in support of a Stockholder
Nominee or there is a failure to comply with the applicable
requirements of Rule 14a-19. Upon request by the Corporation, if any
stockholder providing notice or any Stockholder Associated Person
provides notice pursuant to Rule 14a-19(b) under the Exchange Act, such
stockholder providing notice shall deliver to the Corporate Secretary,
no later than five (5) business days prior to the applicable meeting
date, then reasonable evidence that the requirements of Rule 14a-
19(a)(3) under the Exchange Act have been satisfied.
Currently Section 2.11(c)(vi) of the CGM Bylaws defines
``Stockholder Associated Person'' to mean, among other things, (i) any
person who is a member of a ``group'' (used in Rule 13d-5 under the
Exchange Act) with, or otherwise acting in concert with, any
stockholder providing notice, (ii) any person that is directly or
indirectly controlled by, or under common control with, such
stockholder or such Stockholder Associated Person, or (iii) any person
directly or indirectly controlling any such stockholder or any
Stockholder Associated Person. The proposed rule change reflects recent
developments in Delaware law to add specificity to the definition and
limit which individuals may be determined to be a Stockholder
Associated Person and makes other clarifying changes. Specifically, the
proposed rule change adds the qualifier that a Stockholder Associated
Person must be known by the stockholder to be acting in concert with
such stockholder, removes from the definition any person directly or
indirectly controlled by, or under common control with such stockholder
and replaces it with any affiliate or associate of such stockholder
providing notice, and deletes the reference in the definition to any
person directly or indirectly controlling any such stockholder or
Stockholder Associated Person. The proposed rule change also adds any
Stockholder Nominee to the definition of Stockholder Associated Person.
Revisions to Other Sections of the Bylaws
Cboe also proposes to make changes to Section 2.11 to reflect
recent developments in Delaware law and to provide clarifications and
prevent confusion. Cboe proposes to add a note to Section 2.11(a)(ii)
that any proposed business for a stockholder meeting must be a proper
matter for stockholder action. Cboe also proposes to amend Section
2.11(a)(iii)(B) to state that a Stockholder Nominee's written consent
must be included in Cboe's proxy statement before they may be brought
before a meeting. Previously, Section 2.11(a)(iii)(B) had stated that
the Stockholder Nominee's written consent must be included in a proxy
statement,
[[Page 86069]]
but had not specifically defined it as Cboe's proxy statement. Cboe
also proposes to amend the same section to state that a Stockholder
Nominee will not enter into any commitment to vote in a certain manner
if nominated to the CGM Board. Previously, this section had simply
stated that a Stockholder Nominee may not enter into any commitment to
vote in a certain manner with respect to certain matters at any
company, without defining Cboe specifically. Cboe also proposes to
amend the same section to require that a Stockholder Nominee not omit
facts that are necessary to ensure statements made are not misleading
in any material respect. Previously, the Stockholder Nominee's
responsibility to not omit facts that are necessary to ensure
statements are not misleading was not subject to materiality.
Cboe also proposes to make changes to Section 3.10 of the CGM
Bylaws to provide that the Lead Director of Cboe may call a special
meeting of the CGM Board. Section 3.10 currently permits, among other
things, the Chair of the Board or the Chief Executive Officer to call a
special meeting of the CGM Board. Revising this section to allow the
Lead Director to call a special meeting of the CGM Board addresses a
potential scenario in which the Chair of the Board and the Chief
Executive Officer positions are jointly held by one individual and a
special meeting of the CGM Board is not able to be called by individual
independent directors.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\5\ Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \6\ requirements that the rules of
an exchange be designed to prevent fraudulent and manipulative acts and
practices, 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.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
In light of an advisory vote by the stockholders of Cboe, Cboe is
proposing changes to its Bylaws to implement a right for stockholders
to call a special meeting of the stockholders at a 25% threshold. The
Exchange believes that this filing furthers the objectives of Section
6(b)(5) of the Act because the proposed rule change would be consistent
with and facilitate a governance and regulatory structure that is
designed to prevent fraudulent and manipulative acts and practices, 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. Particularly,
the Exchange believes that, by permitting stockholders of Cboe to bring
business or Stockholder Nominees before a special meeting, the proposed
rule change strengthens the corporate governance of the Exchange's
ultimate parent company, which is beneficial to both investors and the
public interest.
Additionally, the procedural requirements are designed to help
protect investors by stating clearly and explicitly the procedures
stockholders must follow in order to bring business or Stockholder
Nominees before a special meeting. The informational requirements are
designed to enhance investor protection by helping to ensure among
other things, that the Corporation and its stockholders have full and
accurate information about nominating stockholders and Stockholder
Nominees and that such stockholders and nominees comply with applicable
laws, regulations and other requirements.
The changes that the Exchange is proposing with regard to so-called
``advance notice bylaws'' in light of the recent developments in
Delaware law are designed to help provide additional clarity to
stockholders wishing to bring business before a stockholder meeting or
propose a Stockholder Nominee. The Exchange believes that this filing
furthers the objectives of Section 6(b)(5) by simplifying the
requirements and clarifying the information that must be disclosed by
stockholders. This furthers the interests of investors and the public
by removing potential impediments to raising business or proposing
Stockholder Nominees that may otherwise restrict a stockholder's
ability to participate in the corporate governance of the Corporation.
Finally, the remaining changes to existing provisions of the CGM
Bylaws are clarifying in nature, and they enhance investor protection
and the public interest by preventing confusion with respect to the
operation of the Bylaw provisions.
B. Self-Regulatory Organization's Statement on Burden on Competition
Because the proposed rule change relates to the governance of the
Corporation and not to the operations of the Exchange, 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 change is not designed to
address any competitive issue or have any impact on competition;
rather, adoption of a stockholder special meeting provision, updating
``advance notice bylaws,'' and other bylaws updates by the Corporation
are intended to enhance corporate governance and accountability to
stockholders.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
A. by order approve or disapprove such proposed rule change, or
B. institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-CboeEDGX-2024-059 on the subject line.
[[Page 86070]]
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-CboeEDGX-2024-059. 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-CboeEDGX-2024-059 and should
be submitted on or before November 19, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
---------------------------------------------------------------------------
\7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-25055 Filed 10-28-24; 8:45 am]
BILLING CODE 8011-01-P
