[Federal Register Volume 62, Number 214 (Wednesday, November 5, 1997)]
[Notices]
[Pages 59928-59932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29197]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39284; File No. SR-NASD-97-38]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Order Granting Approval to Proposed Rule Change, and
Amendment No. 1 thereto, Relating to the Application of the NASD
Corporate Financing Requirements To Exchange Offers, Mergers and
Acquisitions, and Other Similar Transactions
October 29, 1997.
On May 23, 1997, the National Association of Securities Dealers,
Inc. (``NASD'' or ``Association'') submitted to the Securities and
Exchange Commission (``SEC'' or ``Commission''), pursuant to Section
19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule
19b-4 thereunder,\2\ a proposed rule change to clarify the application
of Rules 2710 and 2720 to exchange offers, merger and acquisition
transactions, and other similar corporate reorganizations. On June 19,
1997, the NASD submitted Amendment No. 1 to the proposed rule
change.\3\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the NASD amended Rule 2710(b)(7)(F)(i)
to replace the phrase ``listed on the Nasdaq National Market, the
New York Stock Exchange, or American Stock Exchange'' with
``designated as a Nasdaq National Market security or listed on the
New York Stock Exchange or American Stock Exchange.'' Letter from
Suzanne E. Rothwell, Chief Counsel, Corporate Financing, NASD
Regulation, to Kathy England, Assistant Director, Division of Market
Regulation, SEC (June 18, 1997).
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The proposed rule change and Amendment No. 1 were published for
comment in Securities Exchange Act Release No. 38822 (July 8, 1997), 62
FR 38150 (July 16, 1997). No comments were received on the proposal.
This order approves the proposed rule change as amended.
I. Introduction
Rule 2710 of the Conduct Rules of the NASD (``Corporate Financing
Rule'') requires that members file with the Corporate Financing
Department of the NASD public offerings of securities for review of the
proposed underwriting terms and arrangements, which terms and
arrangements must comply with that rule. Rule 2720 of the Conduct Rules
(``Conflicts Rule'') establishes standards in addition to those in Rule
2710 to address the conflicts-of-interest that occur in connection with
a public offering of the securities of a member, the parent of a
member, an affiliate of a member, or other issuer with whom the member
has a conflict-of-interest. For an offering to be subject to filing
under the Corporate Financing and Conflicts Rules, a member must be
considered to be ``participating'' in the offering and the offering
must be one that is subject to the filing requirements. Paragraph
(a)(5) of Rule 2710 defines ``participation or participating in a
public offering'' to include participation in the preparation of the
offering or other documents, participation in the distribution of the
offering on an underwritten, non-underwritten, or any other basis,
furnishing of customer and/or broker lists for solicitation, or
participation in any advisory or consulting capacity to the issuer
related to the offering, but not the preparation of an appraisal in a
savings and loan conversion or a bank offering or the preparation of a
fairness opinion pursuant to Rule 13e-3 under the Act.\4\
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\4\ 17 CFR 240.13e-3.
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With respect to offerings subject to compliance with the Rules, the
Corporate Financing and Conflict Rules apply to most ``public
offerings'' of securities, which is defined in Rule 2720(b)(14) to
include, among other things, ``offerings made pursuant to a merger or
acquisition.'' Neither the Corporate Financing Rule nor the Conflicts
Rule currently identifies the types of mergers and acquisitions subject
to filing and compliance with those rules. The NASD has, therefore,
determined to amend Rules 2710 and 2720 to clarify the application of
the requirements of the Corporate Financing and Conflicts Rules to
exchange offers, mergers and acquisitions, and similar corporate
reorganizations and make other related amendments. In view of the
increasing amount of merger and acquisition activity, the NASD believes
that the proposed amendments to Rule 2710 and 2720 will provide
certainty and eliminate confusion regarding their application to such
transactions.
With respect to the time-sensitive nature of many mergers and
acquisitions, exchange offers, and similar corporate reorganizations
that would become subject to filing as a result of approval of the
proposed rule change, the NASD previously announced a policy to
expedite the review of such offerings by the Corporate Financing
Department.\5\ In general, it is anticipated that a comment letter will
be issued by the Corporate Financing Department of the NASD within 48
hours of receipt of the filing
[[Page 59929]]
of the documents related to such a transaction, so long as the
documentation and related information submitted meet the requirements
set forth in subparagraphs (b) (5) and (6) of Rule 2710 and the
appropriate filing fee is included.
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\5\ See Notice to Members 95-73 (September 1995) (``NTM 95-
73''). A copy of NTM 95-73 was submitted as Exhibit 2 to the NASD's
proposal and is available for inspection and copying in the
Commission's Public Reference Room.
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II. Description of the Proposal
The NASD is proposing to amend the Corporate Financing and
Conflicts Rules to clarify their application to exchange offers, merger
and acquisition transactions, and other similar corporate
reorganizations and make other related changes. The amendments limit
the application of the rules to narrow situations where pre-offering
review under the Corporate Financing Rule or the application of the
Conflicts Rule is believed necessary to protect investors. Thus, in
general, an exchange offer will be subject to the Conflicts Rule and
required to be filed with the Corporate Financing Department for review
when a member is participating in solicitation activities related to an
offer involving securities that are exempt from SEC registration. In
addition, exchange offers, merger and acquisition transactions, and
other similar corporate reorganizations will be subject to the
Conflicts Rule, and required to be filed for review, if there is an
issuance of securities that results in the direct or indirect public
ownership of a member.
Description of Proposed Rule Change to Rule 2710
The filing requirements of the Corporate Financing Rule subject an
offering to compliance with that rule and, if the offering consists of
securities issued by a member, the parent of a member, an affiliate of
a member, or an issuer with which the member has a conflict-of-interest
(as that latter term is defined in Rule 2720), to compliance with the
Conflicts rule. Paragraph (b)(9) of Rule 2710 is intended to provide
clarification of certain types of public offerings required to be filed
with the Corporate Financing Department of the NASD for review.
Paragraph (b)(9) is proposed to be amended to add new subparagraph (H)
that would require the filing of exchange offers exempt from
registration under Sections 3(a)(4), 3(a)(9), and 3(a)(11) of the
Securities Act of 1933 (``Securities Act''),\6\ where the member
engages in active solicitation, and exchange offers registered with the
Commission if a member acts as a dealer manager.\7\ Active solicitation
occurs when a member directly solicits or contacts securityholders,
acts as a dealer manager, performs tasks that are performed by investor
relations firms (i.e., contacts securityholders to determine the action
they intend to take), contacts securityholders to determine whether
they have received the offering materials, answers unsolicited
contacts, and participates in meetings with securityholders or their
advisors before or after an exchange offer begins.\8\ In contrast,
active solicitation does not encompass the delivery of a ``fairness
opinion,'' advice as to the structure and terms of the exchange offer,
assistance in the preparation of the offering documents to be sent to
securityholders, nor any other functions that do not involve direct
solicitation or direct contact with securityholders.
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\6\ 15 U.S.C. 77c(a)(4), 77c(a)(9), and 77c(a)(11).
\7\ In this context, the term ``exchange offer'' is intended to
refer to transactions where one security is issued in exchange for
another security of the issuer or another entity, and is
distinguished from mergers, acquisitions and other corporate
reorganizations (except if accomplished through an exchange offer)
registered on a Form S-4 or F-4.
\8\ The concept of ``solicitation'' in rules 2710 and 2720 is
different than in Section 3(a)(9) of the Securities Act. For
example, activities by a broker/dealer that would not be
``soliciting'' for purposes of Section 3(a)(9) may nonetheless come
within the concept of ``solicitation'' for purposes of the
requirement to file an offering with NASD Regulation for review
under Rules 2710 and 2720. See applicable SEC no-action letters on
Section 3(a)(9). Further, the application of the filing requirements
of Rule 2710 does not depend upon whether remuneration is paid to
the member. Thus, regardless of whether a member is paid for
soliciting the exchange, an exchange offer would be subject to
filing if the member engages in solicitation activities as described
in this rule filing.
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The NASD is not extending the filing requirement to other public
exchange offers exempt from registration because such offerings are
either subject to the oversight of a court or of another review
authority, such as the Comptroller of the Currency or the Federal
Deposit Insurance Corporation.\9\
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\9\ See 15 U.S.C. 3(a)(5), 3(a)(6), 3(a)(10), and 3(a)(12).
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With respect to exchange offers registered on Forms S-4 or F-4,
filing is expressly limited to those distributions where the member is
engaged by the company to act as dealer manager and solicits consents
on behalf of the company to the proposed reorganization and to
otherwise facilitate the exchange of securities. In such exchange
offers, the member generally acts as a financial advisor to help
structure the transaction and will receive a fee, as well as
distribution-related compensation for services rendered.
To the extent an exchange offer exempt under Sections 3(a) (4),
(9), and (11) of the Securities Act or registered with the SEC does not
fall within the filing requirement in new subparagraph (b)(9)(H) to
Rule 2710 because the member is not engaging in solicitation activities
or is not acting as dealer manager, respectively, the exchange offer is
considered exempt from compliance with the Corporate Financing and
Conflicts Rules because the member is not considered to be
``participating in the offering.''
The NASD, however, is also proposing to add subparagraph (b)(7)(F)
to Rule 2710 to exempt from filing exchange offers where the securities
to be issued or the securities of the company to be acquired are
designated as a Nasdaq National Market security or listed on the New
York Stock Exchange (``NYSE'') or American Stock Exchange (``Amex'') or
where the company issuing securities qualifies to register securities
on SEC Registration Form S-3, F-3 or F-10.
The exemption for companies qualified to register securities on SEC
Registration Form S-3, F-3, or F-10 applies to those companies that
meet the standards for the Forms in subparagraphs (C) (i) and (ii) of
paragraph (b)(7) of Rule 2710 in order to restrict the exemption to
domestic companies that meet the standards for Forms S-3 and F-3 prior
to October 21, 1992 and to Canadian-incorporated foreign private
issuers that meet the standards for Form F-10 approved in Release No.
34-29354.\10\ This provision would require, in general, that a domestic
company have a three-year history as a public reporting company, and be
in compliance with the current year's periodic reporting requirements
of the Act (with respect to the timely filing of Forms 10-Qs and 10-
Ks). In addition, the minimum required market value of a company's
common stock must be as follows: Form S-3, $150 million (or $100
million market value of voting stock and three million shares annual
trading volume); and Form F-3, $300 million held world-wide. For Form
F-10, Canadian private issuers must have (CN) $360 aggregate value of
voting stock and a public float of (CN) $754 million.
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\10\ See Securities Exchange Act Rel. No. 29354 (June 21, 1991),
56 FR 30036 (July 1, 1991); and Notice to Members 93-88 (December
1993), which includes a copy of Forms S-3 and F-3 as those Forms
existed prior to October 21, 1992 and Form F-10 as approved by the
SEC on June 21, 1991.
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Paragraph (b)(7) of the Corporate Financing Rule, which includes
the two filing exemptions for exchange offers discussed above, lists
those public offerings not required to be filed for review with the
Corporate Financing Department. However, the underwriting terms and
arrangements of such exempt offerings must be in compliance with the
requirements of Rule 2710 or 2810,
[[Page 59930]]
as applicable. Moreover, any offering exempt from filing under
paragraph (b)(7) must nonetheless be filed if the offering is subject
to Rule 2720, the Conflicts Rule, and is subject to review by the
Corporate Financing Department for compliance with Rules 2710 and
2720.\11\
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\11\ See infra note 14.
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Paragraph (b)(9) of the Corporate Financing Rule is also proposed
to be amended to add subparagraph (I) to require the filing of any
exchange offer, merger or acquisition transaction, and similar
corporate reorganization that involves an issuance of securities that
results in the direct or indirect public ownership of a member.\12\
Such offerings would be subject to compliance with Rule 2710 and Rule
2720.\13\ The NASD has long held the view that pre-offering review is
vital to protect investors when the member and the issuer are in a
control relationship that is addressed through the application of Rule
2720. The NASD has previously clarified that mergers or acquisitions
involving an issuer and a member or its parent that result in the
direct or indirect public ownership of a member are subject to
compliance with Rule 2720, regardless of whether the merger or
acquisition occurs subsequent to the issuer's initial public
offering.\14\
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\12\ This latter filing requirement does not, it is important to
note, require the filing of exchange offers, mergers, acquisitions,
and corporate reorganizations involving an offering of securities of
an affiliate of a member other than a parent or of an issuer that
otherwise has a conflict-of-interest with a member.
\13\ Paragraph (n) of Rule 2720 provides that all offerings of
securities included within the scope of that Rule are also subject
to the provisions of Rule 2710, even though an exemption from filing
may be available under Rule 2720.
\14\ See Notice to Members 88-100 (December 1988). In that
notice, the Association expressed its special concerns regarding the
merger of blank check companies in the penny stock market with
privately held holding companies of members, indirectly creating a
publicly-held NASD member without having to comply with Rule 2720.
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Paragraph (b)(8) of Rule 2710 lists those offerings that, although
within the definition of ``public offering,'' are exempted from
compliance with Rule 2710 and 2720. The NASD is proposing to add
subparagraphs (I) and (J) to paragraph (b)(8) to provide an exemption
from filing and compliance with Rules 2710 and 2720 for:
1. Spin-off and reverse spin-off transactions involving a
subsidiary or affiliate of the issuer, where the securities are issued
as a dividend or distribution to current shareholders; and
2. Securities registered with the SEC in connection with a merger,
acquisition, or other similar business combination, except if the
offering would be filed under subparagraph (b)(9)(I), described above,
because it involves a transaction that results in the direct or
indirect public ownership of a member.
In addition, the NASD is proposing to add subparagraph (c)(6)(B)(v)
to Rule 2710 to provide that it is an unreasonable term and arrangement
for a member to receive a right to receive a ``tail fee' arrangement
that has a duration of more than two years from the date the member's
services are terminated, in the event an offering is not completed and
the issuer subsequently consummates a similar transaction. Such
arrangements are currently only provided in connection with exchange
offers. It is believed that the real benefit derived by a company that
grants a ``tail fee' arrangement is the creativity of the strategic
advice given by the member for the particular transaction that may
include, among other things, assisting the company in defining
objectives, performing valuation analyses, formulating restructuring
alternatives, and structuring the offering. In particular, in the case
of an exchange offer, a member providing financial advance will
generally have provided considerable ongoing financial advisory
services to the company.
The proposed ``tail fee'' prohibition also, however, would permit a
member to demonstrate on the basis of information satisfactory to the
NASD that an arrangement of more than two years is not unfair or
unreasonable under the circumstances. The ability of the staff of the
Corporate Financing Department to grant exceptions upon request is
intended to be used where the member can demonstrate that the
creativity of the strategic advice provided by the member has a
potential benefit to the company for more than two years. In the case
of exchange offers exempt from filing but subject to compliance with
the Rule under subparagraph (b)(7)(F), where the ``tail fee''
arrangement is proposed to have a duration of longer than two years, a
member would be required to request an opinion of the staff as to
whether the arrangement is permissible under the Rule. In the case of
any other offering exempt from filing under subparagraph (b)(7), a
member is required to request an opinion of the staff as to whether it
has ``no objections'' as to any proposed ``tail fee'' arrangement.
As set forth above, although ``tail fee'' arrangements are
currently granted only in connection with exchange offers, the
provision is written to regulate such an arrangement in connection with
any type of public offering subject to compliance with the Corporate
Financing Rule. Where a ``tail fee'' arrangement is proposed in
connection with public offerings that are not exchange offers, the NASD
staff will consider whether the arrangement is justified by the
services provided by the member to the issuer. Where the member does
not appear to have provided the type of substantial structuring and/or
advisory services to the issuer similar to those that are described
above, other than those services traditionally provided in connection
with a distribution of a public offering, a proposed ``tail fee''
arrangement will be considered to be unfair and unreasonable on the
basis that the arrangement would violate Rule 2110 (the Association's
basic ethical rule) and Rule 2430 since the member is proposing to be
paid for services that the member has not provided to the issuer. This
position is consistent with subparagraph (c)(6)(B)(iv) of Rule 2710,
which prohibits a member from receiving compensation in connection with
an offering of securities that is not completed, except for
compensation received in connection with a transaction (i.e., a merger
transaction) that occurs in lieu of the proposed offering as a result
of the member's efforts and the reimbursement of the member's
reasonable out-of-pocket accountable expenses.
Description of Proposed Rule Change to Rule 2720
The NASD is proposing to amend the Conflicts Rule to conform the
scope section of the Rule to the amendments to the filing requirements
of Rule 2710 and to clarify the responsibilities of a qualified
independent underwriter in an exchange offer subject to compliance with
rule 2720. Paragraph (a) of Rule 2720 is proposed to be amended to add
subparagraph (3) to provide that in the case of an exchange offer,
merger and acquisition transaction, or similar corporate
reorganization, compliance with Rule 2720 is required only if the
offering comes within subparagraph (b)(9)(h) of Rule 2710, where the
issuance of securities is by a member or the parent of a member or if
the offering comes within subparagraph (b)(9)(I). As set forth above,
proposed subparagraph (b)(9)(H) would require the filing of exchange
offers exempt under Section 3(a)(4), 3(a)(9), and 3(a)(11) of the
Securities Act, if the member's participation involves active
solicitation activities, and of exchange offers registered with the
SEC, if the member is acting as dealer manager. Thus, the exemption
from filing for such exchange offers provided by proposed
[[Page 59931]]
subparagraph (b)(7)(F), where the securities are designated as a Nasdaq
National Market security or listed on the NYSE or Amex or the issuer
qualifies to register the securities on Form S-3, F-3, or F-10, is not
available if the exchange offer is by a member or parent of a
member.\15\ As further set forth above, proposed subparagraph(b)(9)(I)
would require the filing of any exchange offer, merger and acquisition
transaction, or similar corporate reorganization involving an issuance
of securities that results in the direct or indirect public ownership
of a member.\16\
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\15\ See supra note 13.
\16\ This filing requirement is consistent with the position
announced in Notice to Members 88-100 (December 1988) and paragraph
(i) of Rule 2720 which states: ``* * * if an issuer proposes to
engage in any offering which results in the public ownership of a
member * * * the offering shall be subject to the provisions of this
Rule to the same extent as if the transaction had occurred prior to
the filing of the offering.''
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The NASD is also proposing to amend Rule 2720 to clarify the
obligations of a qualified independent underwriter \17\ that would be
required by subparagraph (c)(3) of Rule 2720 to perform due diligence
with respect to the offering document and provide a recommendation with
respect to the exchange value of an exchange offer, merger and
acquisition transaction, or similar corporate reorganization.
Currently, the Conflicts Rule requires that the price at which an
equity issue or the yield at which a debt issue is to be distributed to
the public be established at a price no higher or yield no lower than
that recommended by a qualified independent underwriter (who shall also
participate in the preparation of the registration statement and shall
exercise the usual standards of ``due diligence'' in respect thereto).
The NASD is proposing to amend subparagraph (c)(3)(A) of Rule 2720 by
adding a new exception to state that in any exchange offer, merger and
acquisition transaction or corporate reorganization subject to Rule
2720, the provision which requires that the price or yield of the
securities be established based on the recommendation of a qualified
independent underwriter shall not apply and instead, the exchange value
of the securities being offered in the transaction shall not be less
than that recommended by a qualified independent underwriter.
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\17\ A member must meet a number of requirements in order to be
qualified independent underwriter under subparagraph (b)(15) of Rule
2720, including the requirement that the member ``has agreed in
acting as a qualified independent underwriter to undertake the legal
responsibilities and liabilities of an underwriter under the
Securities Act of 1933, specifically including those inherent in
Section 11 thereof.'' Participation of a qualified independent
underwriter is not required by Rule 2720 if the offering is of
equity securities that meet the test of having a ``bona fide
independent market'' or is of debt that is rated investment grade.
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Finally, in order to make clear that the offerings that are exempt
under subparagraph (b)(8) of Rule 2710 (that include exemptions for
offerings of securities issued in a spin-off or in a merger registered
with the SEC on Form S-4 or F-4) are also exempt from Rule 2720,
paragraph (o) of Rule 2720 is being amended to reference the exemptions
from Rule 2720 that are provided in subparagraph (b)(8) of Rule 2710.
III. Discussion
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to the Association, and, in particular, with the
requirements of Section 15A(b) of the Act.\18\ Among other things,
Section 15A(b)(6) of the Act requires that the rules of a national
securities association be designed to foster cooperation and
coordination with persons engaged in regulation, 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.\19\
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\18\ 15 U.S.C. 78f(b).
\19\ In approving this rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
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Specifically, the Commission believes that the proposed amendments
to Rules 2710 and 2720 should reduce confusion regarding the
application of the NASD's Corporate Financing and Conflicts Rules to
exchange offers, mergers and acquisitions, and other similar corporate
reorganizations. The Commission supports efforts by the NASD to
streamline the process for participation by members in public offerings
by clarifying when pre-offering review is necessary and in the public
interest.
A. Amendment to Rule 2710
The Commission believes that it is appropriate to amend Rule 2710
to require filing of exchange offers exempt from registration under
Sections 3(a)(4), 3(a)(9), and 3(a)(11) of the Securities Act,\20\
where the member engages in active solicitation, and exchange offers
registered with the Commission if a member acts as a dealer manager.
When a member actively solicits securityholders with respect to
exempted exchange offers, or acts as a dealer manager with respect to
exchange offers registered on Form S-4 or F-4, pre-offering review is
necessary to prevent fraudulent and manipulative acts and practices,
and protect investors.
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\20\ 15 U.S.C. 77c(a)(4), 77c(a)(9), and 77c(a)(11).
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The Commission believes that it is appropriate to amend Rule 2710
to exempt from filing exchange offers where securities to be issued or
the securities of the company to be acquired are designated as a Nasdaq
National Market security or listed on the NYSE or Amex or where the
company issuing securities qualifies to register securities on SEC
registration Form S-3, F-3 or F-10. The Commission notes that the
listing standards of the three markets require a minimum number of
independent directors on the Board of Directors. This requirement
should ensure that the independent directors of the acquiror or target
will evaluate the offer and that sufficient information will be
distributed to shareholders and markets, so that investors can make an
informed decision regarding whether to sell or hold securities.
The Commission also believes that it is appropriate to amend Rule
2710 to exempt from filing spin-off and reverse spin-off transactions
involving a subsidiary of affiliate of the issuer, where the securities
are issued as a dividend or distribution to current shareholders, and
securities registered with the SEC in connection with a merger,
acquisition, or other similar business combination. The Commission
agrees that spin-off transactions to existing securityholders as a
dividend or other distribution may not involve an investment decision
by shareholders and, consequently, any member acting as a financial
advisor to the parent company is not generally involved in any public
solicitation in connection with the transaction.\21\ Further, merger
transactions and similar business combinations registered with the SEC
generally only involve a member in providing financial advice to the
Board of Directors of the acquiror or target, that may include an
obligation that the
[[Page 59932]]
member issue a fairness opinion regarding the acquisition price.
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\21\ It should be noted, however, that where a spin-off is
followed by a traditional public offering by the spun-off company to
raise capital, the company's initial public offering would be
subject to the Corporate Financing Rule's filing requirements and to
compliance with Rule 2720. This analysis would require the filing of
any public offering to raise capital that follows a merger,
acquisition, exchange offer or other corporate reorganization that
would be exempt from filing under Rule 2710 or exempt from
compliance with Rules 2710 and 2720. In the latter case, the
offering may fall within another exemption from filing, such as the
filing exemptions provided by subparagraphs (b)(7) (A), (C) or (D)
of Rule 2710.
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B. Amendment to Rule 2720
The Commission believes that it is appropriate to amend Rule 2720
to state that in any exchange offer, merger and acquisition transaction
or corporate reorganization subject to Rule 2720, the provision which
requires that the price or yield of the securities be established based
on the recommendation of a qualified independent underwriter shall not
apply and, instead, the exchange values of the securities being offered
in the transaction shall not be less than that recommended by a
qualified independent underwriter. The Commission believes that the
proposed new provision would clarify that the obligation of the
qualified independent underwriter is to ensure that the recipient of
the exchange offer, which is the party intended to be protected by the
participation of a qualified independent underwriter, shall not receive
fewer of the securities being issued in exchange for each security held
by the recipient than is recommended by the qualified independent
underwriter.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\22\ that the proposed rule change (SR-NASD-97-38) is approved.
\22\ 15 U.S.C. 78s(b)(2).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-29197 Filed 11-4-97; 8:45 am]
BILLING CODE 8010-01-M