[Federal Register Volume 85, Number 179 (Tuesday, September 15, 2020)]
[Notices]
[Pages 57282-57286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-20259]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89799; File No. SR-NASDAQ-2020-027]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change To Apply Additional Initial Listing Criteria for
Companies Primarily Operating in Restrictive Markets
September 9, 2020.
I. Introduction
On May 29, 2020, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to apply additional listing criteria to companies
primarily operating in a jurisdiction that has secrecy laws, blocking
statutes, national security laws or other laws or regulations
restricting access to information by regulators of U.S.-listed
companies. The proposed rule change was published for comment in the
Federal Register on June 12, 2020.\3\ On July 21, 2020, pursuant to
Section 19(b)(2) of the Act,\4\ the Commission designated a longer
period within which to approve the proposed rule change, disapprove the
proposed rule change, or institute proceedings to determine whether to
disapprove the proposed rule change.\5\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 89027 (June 8,
2020), 85 FR 35962 (``Notice''). Comments on the proposed rule
change can be found at: https://www.sec.gov/comments/sr-nasdaq-2020-027/srnasdaq2020027.htm.
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 89358 (July 21,
2020), 85 FR 45275 (July 27, 2020). The Commission designated
September 10, 2020 as the date by which the Commission shall approve
or disapprove, or institute proceedings to determine whether to
approve or disapprove, the proposed rule change.
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The Commission is publishing this order to solicit comments on the
proposed rule change from interested persons and to institute
proceedings pursuant to Section 19(b)(2)(B) of the Act \6\ to determine
whether to approve or disapprove the proposed rule change.
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\6\ 15 U.S.C. 78s(b)(2)(B).
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II. Exchange's Description of the Proposed Rule Change
The Exchange states that in recent years the lack of transparency
from certain emerging markets has raised concerns with respect to
listed emerging market companies regarding the accuracy of disclosures,
accountability, and access to information, particularly when the
companies are based in a jurisdiction that has secrecy laws, blocking
statutes, national security laws or other laws or regulations
restricting access to information by regulators of U.S.-listed
companies (``Restrictive Market'').\7\ The Exchange further states that
such concerns can be compounded when a company lists on the Exchange
through an initial public offering (``IPO'') or a business combination
with a small offering size or a low public float percentage, as the
company may not develop sufficient public float, investor base, and
trading interest to provide the depth and liquidity necessary to
promote fair and orderly trading, which may result in a security that
is illiquid.\8\ The Exchange states that such securities may trade
infrequently, in a more volatile manner, and with a wider bid-ask
spread, all of which may lead to trading at a price that may not
reflect true market value.\9\ In addition, the Exchange states that
less liquid securities may be more susceptible to price manipulation
and that, in particular, the risk of price manipulation due to insider
trading is more acute with respect to a company that principally
administers its business in a Restrictive Market (``Restrictive Market
Company'') because regulatory investigations into price manipulation,
insider trading, and compliance concerns may be impeded, and,
therefore, investor protections and remedies may be limited.\10\ As a
result, the Exchange states that it believes that Restrictive Market
Companies present unique potential risks to U.S. investors.\11\
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\7\ See Notice, supra note 3, at 35962.
\8\ See id. at 35962 and 35965.
\9\ See id. at 35962 and 35965-66.
\10\ See id. at 35962 and 35966.
\11\ See id. at 35965.
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The Exchange states that it is now proposing rule changes that it
believes will help to ensure that Restrictive Market Companies have
sufficient investor base and public float to support fair and orderly
trading on the Exchange.\12\ Specifically, the Exchange proposes to
adopt a definition of ``Restrictive Market'' \13\ and to apply
additional initial listing requirements to a Restrictive Market Company
listing on the Exchange in connection with an IPO or a business
combination.\14\ The Exchange also proposes to prohibit a Restrictive
Market Company from listing on the Nasdaq Capital Market in connection
with a Direct Listing,\15\ but to allow a Restrictive Market Company to
list on the Nasdaq Global Select Market or Nasdaq Global Market in
connection with a Direct Listing, provided that such company meets all
applicable initial listing requirements for such market.
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\12\ See id.
\13\ See infra note 17 and accompanying text.
\14\ The Exchange states that, currently, it may rely upon its
discretionary authority under Nasdaq Listing Rule 5101 to deny
initial listing or apply additional or more stringent criteria when
it is concerned that a small offering size for an IPO may not
reflect the company's initial valuation or may not ensure sufficient
liquidity to support trading in the secondary market. Pursuant to
Rule 5101, Nasdaq has broad discretionary authority over the initial
and continued listing of securities in Nasdaq in order to maintain
the quality of and public confidence in its market, to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, and to protect investors and the
public interest. Nasdaq may use such discretion to deny initial
listing, apply additional or more stringent criteria for the initial
or continued listing of particular securities, or suspend or delist
particular securities based on any event, condition, or circumstance
that exists or occurs that makes initial or continued listing of the
securities on Nasdaq inadvisable or unwarranted in the opinion of
Nasdaq, even though the securities meet all enumerated criteria for
initial or continued listing on Nasdaq. See Nasdaq Listing Rule
5101.
\15\ Nasdaq defines ``Direct Listing'' as the listing of
``companies that have sold common equity securities in private
placements, which have not been listed on a national securities
exchange or traded in the over-the-counter market pursuant to FINRA
Form 211 immediately prior to the initial pricing.'' See Nasdaq
Listing Rule IM-5315-1.
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A. Definition of Restrictive Market
The Exchange proposes to adopt a new definition of Restrictive
Market in Listing Rule 5005(a)(37).\16\ As proposed, a Restrictive
Market would mean a jurisdiction that Nasdaq determines to have secrecy
laws, blocking statutes, national security laws or other laws or
regulations restricting access to information by regulators of U.S.-
listed companies in such jurisdiction.\17\ In
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determining whether a Company's business is principally administered in
a Restrictive Market, Nasdaq may consider the geographic locations of
the Company's: (i) Principal business segments, operations or assets;
(ii) board and shareholders' meetings; (iii) headquarters or principal
executive offices; (iv) senior management and employees; and (v) books
are records.\18\ The Exchange states that it would consider these
factors holistically, recognizing that a company's headquarters may not
be the office from which it conducts its principal business
activities.\19\ The Exchange also states that the proposed definition
would capture both foreign private issuers based in Restrictive Markets
and companies based in the U.S. or another jurisdiction that
principally administer their businesses in Restrictive Markets.\20\
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\16\ The Exchange proposes to renumber current paragraphs
(a)(37) through (a)(46) of Listing Rule 5005 in connection with the
addition of the definition of Restrictive Market. See Notice, supra
note 3, at 35963.
\17\ See id. at 35962-63; proposed Listing Rule 5005(a)(37).
\18\ See id. Nasdaq Listing Rule 5005(a)(6) defines ``Company''
as the issuer of a security listed or applying to list on Nasdaq.
\19\ See Notice, supra note 3, at 35963. The Exchange provides
the following example. Company X's headquarters are located in
Country Y, while the majority of its senior management, employees,
assets, operations and books and records are located in Country Z,
which is a Restrictive Market. Nasdaq would consider Company X's
business to be principally administered in Country Z. See id.
\20\ See id. at 35963, n.5.
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B. Minimum Offering Size or Public Float Percentage Requirement for an
IPO
The Exchange proposes to adopt new Rule 5210(l)(i) to require a
Restrictive Market Company listing its Primary Equity Security \21\ on
Nasdaq in connection with its IPO to offer a minimum amount of
securities in a Firm Commitment Offering \22\ in the U.S. to Public
Holders \23\ that (i) will result in gross proceeds to the Company of
at least $25 million or (ii) will represent at least 25% of the
Company's post-offering Market Value of Listed Securities,\24\
whichever is lower. A Restrictive Market Company listing on the
Exchange in connection with an IPO that is subject to the proposed rule
would also need comply with all other applicable listing
requirements.\25\
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\21\ Nasdaq Listing Rule 5005(a)(33) defines ``Primary Equity
Security'' as ``a Company's first class of Common Stock, Ordinary
Shares, Shares or Certificates of Beneficial Interest of Trust,
Limited Partnership Interests or American Depositary Receipts (ADR)
or Shares (ADS).''
\22\ Nasdaq Listing Rule 5005(a)(17) defines ``Firm Commitment
Offering'' as ``an offering of securities by participants in a
selling syndicate under an agreement that imposes a financial
commitment on participants in such syndicate to purchase such
securities.''
\23\ Nasdaq Listing Rule 5005(a)(36) defines ``Public Holders''
as ``holders of a security that includes both beneficial holders and
holders of record, but does not include any holder who is, either
directly or indirectly, an Executive Officer, director, or the
beneficial holder of more than 10% of the total shares
outstanding.''
\24\ ``Market Value'' means the consolidated closing bid price
multiplied by the measure to be valued. See Nasdaq Listing Rule
5000(a)(23). ``Listed Securities'' means securities listed on Nasdaq
or another national securities exchange. See Nasdaq Listing Rule
5000(a)(22).
\25\ The Exchange provides the following examples to illustrate
the proposed rule. First, Company X, which principally administers
its business in a Restrictive Market, is applying to list on Nasdaq
Global Market and has an expected post-offering Market Value of
Listed Securities of $75,000,000. Since 25% of $75,000,000 is
$18,750,000, which is lower than $25,000,000, pursuant to the
requirements of the proposed rule, Company X would be eligible to
list based on a Firm Commitment Offering in the U.S. to Public
Holders of at least $18,750,000. Company X would also need to comply
with the other applicable listing requirements of the Nasdaq Global
Market, including a Market Value of Unrestricted Publicly Held
Shares of at least $8 million. See Nasdaq Listing Rule
5405(b)(1)(C). See also Rule 5005(a)(45) (definition of
``Unrestricted Publicly Held Shares''), Rule 5005(a)(46) (definition
of ``Unrestricted Securities''), and Rule 5005(a)(37) (definition of
``Restricted Securities''). As another example, Company Y, which
also principally administers its business in a Restrictive Market,
is applying to list on the Nasdaq Global Select Market and its post-
offering Market Value of Listed Securities is expected to be
$200,000,000. Since 25% of $200,000,000 is $50,000,000, which is
higher than $25,000,000, pursuant to the requirements of the
proposed rule, Company Y would be eligible to list based on a Firm
Commitment Offering in the U.S. to Public Holders that will result
in gross proceeds of at least $25,000,000. Company Y would also need
to comply with the other applicable listing requirements of the
Nasdaq Global Select Market, including a Market Value of
Unrestricted Publicly Held Shares of at least $45 million. See
Nasdaq Listing Rule 5315(f)(2)(C).
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The Exchange states that it has observed that Restrictive Market
Companies listing on Nasdaq in connection with an IPO with an offering
size below $25 million or public float ratio below 25% have a high rate
of compliance concerns.\26\ The Exchange further states that it
believes the proposed listing requirement would help ensure that
Restrictive Market Companies seeking to list on the Exchange have
sufficient investor base and public float to support fair and orderly
trading on the Exchange.\27\
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\26\ See Notice, supra note 3, at 35963.
\27\ See id. at 35963-64.
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C. Minimum Market Value of Unrestricted Publicly Held Shares
Requirement for a Business Combination
The Exchange proposes to adopt new Rule 5210(l)(ii) to require a
Company that is conducting a business combination, as described in
Nasdaq Listing Rule 5110(a) \28\ or IM-5101-2,\29\ with a Restrictive
Market Company to have a minimum Market Value of Unrestricted Publicly
Held Shares \30\ following the business combination equal to the lesser
of (i) $25 million or (ii) 25% of post-business combination entity's
Market Value of Listed Securities. A Company subject to the proposed
rule would also need comply with all other applicable listing
requirements.\31\
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\28\ Nasdaq Listing Rule 5110(a) (Business Combinations with
non-Nasdaq Entities Resulting in a Change of Control) sets forth
requirements applicable to a Company that engages in a business
combination with a non-Nasdaq entity, resulting in a change of
control of the Company and potentially allowing the non-Nasdaq
entity to obtain a Nasdaq Listing.
\29\ Nasdaq Listing Rule IM-5101-2 (Listing of Companies Whose
Business Plan is to Complete One or More Acquisitions) sets forth
requirements applicable to a Company whose business plan is to
complete an IPO and engage in a merger or acquisition with one or
more unidentified companies within a specific period of time.
\30\ Nasdaq Listing Rule 5005(a)(45) defines ``Unrestricted
Publicly Held Shares'' as Publicly Held Shares that are Unrestricted
Securities. ``Publicly Held Shares'' means shares not held directly
or indirectly by an officer, director or any person who is the
beneficial owner of more than 10 percent of the total shares
outstanding. See Nasdaq Listing Rule 5005(a)(35). ``Unrestricted
Securities'' means securities that are not subject to resale
restrictions for any reason, including, but not limited to,
securities: (i) Acquired directly or indirectly from the issuer or
an affiliate of the issuer in unregistered offerings such as private
placements or Regulation D offerings; (ii) acquired through an
employee stock benefit plan or as compensation for professional
services; (iii) acquired in reliance on Regulation S, which cannot
be resold within the United States; (iv) subject to a lockup
agreement or a similar contractual restriction; or (v) considered
``restricted securities'' under Rule 144. See Nasdaq Listing Rules
5005(a)(46) and (37).
\31\ The Exchange provides the following examples to illustrate
the proposed rule. First, Company A is currently listed on the
Nasdaq Capital Market and plans to acquire a company that
principally administers its business in a Restrictive Market, in
accordance with IM-5101-2. Following the business combination,
Company A intends to transfer to the Nasdaq Global Select Market.
Company A expects the post-business combination entity to have a
Market Value of Listed Securities of $250,000,000. Since 25% of
$250,000,000 is $62,500,000, which is higher than $25,000,000,
pursuant to the requirements of the proposed rule, to qualify for
listing the post-business combination entity must have a minimum
Market Value of Unrestricted Publicly Held Shares of at least
$25,000,000. The company would also need to comply with the other
applicable listing requirements of the Nasdaq Global Select Market,
including a Market Value of Unrestricted Publicly Held Shares of at
least $45,000,000. See Nasdaq Listing Rule 5315(f)(2)(C). As another
example, Company B is currently listed on Nasdaq Capital Market and
plans to combine with a non-Nasdaq entity that principally
administers its business in a Restrictive Market, resulting in a
change of control as defined in Rule 5110(a), whereby the non-Nasdaq
entity will become the Nasdaq-listed company. Following the change
of control, Company B expects the listed company to have a Market
Value of Listed Securities of $50,000,000. Since 25% of $50,000,000
is $12,500,000, which is lower than $25,000,000, pursuant to the
requirements of the proposed rule, the listed company must have a
minimum Market Value of Unrestricted Publicly Held Shares following
the change of control of at least $12,500,000. The post-business
combination company would also need to comply with all other
applicable listing requirements of the Nasdaq Capital Market,
including a Market Value of Unrestricted Publicly Held Shares of at
least $5 million. See Nasdaq Listing Rule 5505(b)(3)(C).
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The Exchange states that it believes that a business combination,
as described in Nasdaq Rule 5110(a) or IM-5101-2, involving a
Restrictive Market Company presents similar risks to U.S. investors as
an IPO of a Restrictive Market Company and that the proposed listing
requirement will help to provide an additional assurance that there are
sufficient freely tradable shares and investor interest to support fair
and orderly trading on the Exchange when the target company is a
Restrictive Market Company.\32\
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\32\ See Notice, supra note 3, at 35964.
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D. Direct Listings of Restrictive Market Companies
The Exchange proposes to adopt new Rule 5210(l)(iii) to provide
that a Restrictive Market Company that is listing its Primary Equity
Security on Nasdaq in connection with a Direct Listing, as defined in
Listing Rule IM-5315-1,\33\ would be permitted to list on: (i) The
Nasdaq Global Select Market, provided that the Company meets all
applicable listing requirements for the Nasdaq Global Select Market and
the additional requirements of Listing Rule IM-5315-1, or (ii) the
Nasdaq Global Market, provided that the Company meets all applicable
listing requirements for the Nasdaq Global Market and the additional
requirements of Listing Rule IM-5405-1. On the other hand, proposed
Rule 5210(l)(iii) would provide that a Restrictive Market Company would
not be permitted to list on the Nasdaq Capital Market in connection
with a Direct Listing, notwithstanding the fact that the Company may
meet the applicable initial listing requirements for the Nasdaq Capital
Market and the additional requirements in Listing Rule IM-5505-1.
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\33\ See supra note 15.
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The Exchange's rules currently set forth initial listing
requirements for companies listing on the Nasdaq Global Select Market,
Nasdaq Global Market, and Nasdaq Capital Market,\34\ and additional
listing requirements for Companies conducting a Direct Listing on such
markets.\35\ The Exchange states that it believes it is appropriate to
permit Restrictive Market Companies to list through a Direct Listing on
the Nasdaq Global Select Market or Nasdaq Global Market because such
companies would be subject to the additional listing requirements set
forth in IM-5315-1 or IM-5405-1, respectively.\36\ On the other hand,
the Exchange states that it does not believe that the additional
requirements for Direct Listing on the Nasdaq Capital Market, set forth
in IM-5501-1, are sufficient to overcome concerns regarding sufficient
liquidity and investor interest to support fair and orderly trading on
the Exchange with respect to Restrictive Market Companies.\37\
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\34\ See Nasdaq Listing Rules 5315, 5405, and 5505.
\35\ See Nasdaq Listing Rules IM-5315-1, IM-5405-1, and IM-5501-
1.
\36\ See Notice, supra note 3, at 35965.
\37\ See id. As an example, the Exchange states that the Nasdaq
Global Select Market and Nasdaq Global Market require a company to
have at least 1,250,000 and 1.1 million Unrestricted Publicly Held
Shares, respectively, and a Market Value of Unrestricted Publicly
Held Shares of at least $45 million and $8 million, respectively.
See Nasdaq Listing Rules 5315(e)(2), 5315(f)(2)(c), 5405(a)(2), and
5405(b)(1)(c). In contrast, the Nasdaq Capital Market requires a
company to have at least 1 million Unrestricted Publicly Held Shares
and a Market Value of Unrestricted Publicly Held Shares of at least
$5 million. See Nasdaq Listing Rules 5505(a)(2) and 5505(b)(3)(C).
See also Notice, supra note 3, at 35965, n.22.
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III. Summary of the Comment Letters Received
One commenter stated that it fully supports the proposed rule
change inasmuch as it seems reasonably tailored to help ensure full,
complete, and transparent financial and other disclosure from
Restrictive Market Companies.\38\ Another commenter expressed its
support for the proposed rule changes to require Restrictive Market
Companies to have a minimum offering size or public float percentage
for an IPO and minimum market value of publicly held shares for a
business combination and agreed that these requirements should help
mitigate the risks that Restrictive Market Companies present to U.S.
investors.\39\ However, this commenter did not support the proposal to
allow Restrictive Market Companies to list on Nasdaq Global Select
Market or Nasdaq Global Market in connection with a Direct Listing and
stated its general opposition to any proposal that would expand the use
of direct listings.\40\ On the other hand, this commenter agreed with
the Exchange that precluding Restrictive Market Companies from listing
through a Direct Listing on the Nasdaq Capital Market will help to
promote fair and orderly trading on the secondary market.\41\
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\38\ See Letter from Annemarie Tierney, Founder and Principal,
Liquid Advisors, Inc. (July 2, 2020), at 5.
\39\ See Letter from Jeffrey P. Mahoney, General Counsel,
Council of Institutional Investors (June 25, 2020) (``CII Letter''),
at 4-5.
\40\ See id. at 5-6. This commenter cited its letter to the
Commission submitted in connection with File Number SR-NYSE-2019-67,
which stated that ``the SEC should take real and substantial steps,
on an urgent basis, to explore establishing a system of traceable
shares before approving a direct listing regime.'' See Letter from
Jeffrey P. Mahoney, General Counsel, Council of Institutional
Investors (January 16, 2020), at 2-3, available at https://www.sec.gov/comments/sr-nyse-2019-67/srnyse201967-6660338-203855.pdf.
\41\ See CII Letter, supra note 39, at 6.
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IV. Proceedings To Determine Whether To Approve or Disapprove SR-
NASDAQ-2020-027 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \42\ to determine whether the proposed rule
change should be approved or disapproved. Institution of such
proceedings is appropriate at this time in view of the legal and policy
issues raised by the proposed rule change. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to any of the issues involved. Rather, as described below, the
Commission seeks and encourages interested persons to provide
additional comment on the proposed rule change to inform the
Commission's analysis of whether to approve or disapprove the proposed
rule change.
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\42\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\43\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of the proposed rule change's consistency with Section 6(b)(5)
of the Act, which requires, among other things, that the rules of a
national securities exchange be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to 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 to protect
investors and the public interest, and not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.\44\
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\43\ Id.
\44\ 15 U.S.C. 78f(b)(5).
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As discussed above, the Exchange proposes to apply new initial
listing requirements to Restrictive Market Companies in connection with
an IPO to
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require such companies to offer a minimum amount of securities in a
Firm Commitment Offering in the U.S. to Public Holders that (i) will
result in gross proceeds to the company of at least $25 million or (ii)
will represent at least 25% of the company's post-offering Market Value
of Listed Securities, whichever is lower.\45\ In addition, the Exchange
proposes to apply new listing requirements to companies conducting a
business combination with a Restrictive Market Company to require such
companies to have a minimum Market Value of Unrestricted Publicly Held
Shares following the business combination equal to the lesser of (i)
$25 million or (ii) 25% of post-business combination entity's Market
Value of Listed Securities.\46\ In support of the proposed
requirements, the Exchange states that it has observed that Restrictive
Market Companies listing on Nasdaq in connection with an IPO with an
offering size below $25 million or public float ratio below 25% have a
high rate of compliance concerns and that business combinations
involving Restrictive Market Companies present similar risks to U.S.
investors.\47\ However, the Exchange does not provide any other data or
analysis to support the level at which the proposed thresholds are set.
The Commission believes there are questions as to whether the proposed
thresholds are set at levels which are not designed to permit unfair
discrimination amongst Restrictive Market Company issuers.
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\45\ See supra Section II.B.
\46\ See supra Section II.C.
\47\ See supra notes 26 and 32 and accompanying text.
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In addition, the Exchange's proposal sets forth five factors that
the Exchange ``may'' consider when determining whether a Company's
business is principally administered in a Restrictive Market and the
Exchange states that it will consider these factors ``holistically.''
\48\ The proposal does not provide how, or if, the Exchange would apply
these five factors when making a determination of whether a Company's
business is principally administered in a Restrictive Market but,
instead, provides the Exchange with broad discretion in determining so.
The Commission believes there are questions as to whether such broad
discretion when making a determination of whether a Company's business
is principally administered in a Restrictive Market is not designed to
permit unfair discrimination. Accordingly, the Commission believes
there are questions as to whether the proposal is consistent with
Section 6(b)(5) of the Act and its requirement, among other things,
that the rules of a national securities exchange not be designed to
permit unfair discrimination.
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\48\ See supra notes 18-19 and accompanying text.
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Under the Commission's Rules of Practice, the ``burden to
demonstrate that a proposed rule change is consistent with the Exchange
Act and the rules and regulations issued thereunder . . . is on the
[SRO] that proposed the rule change.'' \49\ The description of a
proposed rule change, its purpose and operation, its effect, and a
legal analysis of its consistency with applicable requirements must all
be sufficiently detailed and specific to support an affirmative
Commission finding,\50\ and any failure of an SRO to provide this
information may result in the Commission not having a sufficient basis
to make an affirmative finding that a proposed rule change is
consistent with the Act and the applicable rules and regulations.\51\
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\49\ 17 CFR 201.700(b)(3).
\50\ See id.
\51\ See id.
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The Commission is instituting proceedings to allow for additional
consideration and comment on the issues raised herein, including as to
whether the proposal is consistent with the Act.
V. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) \52\ of the Act or any other provision
of the Act, or the rules and regulations thereunder. Although there do
not appear to be any issues relevant to approval or disapproval that
would be facilitated by an oral presentation of views, data, and
arguments, the Commission will consider, pursuant to Rule 19b-4 under
the Act,\53\ any request for an opportunity to make an oral
presentation.\54\
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\52\ 15 U.S.C. 78f(b)(5).
\53\ 17 CFR 240.19b-4.
\54\ Section 19(b)(2) of the Act, as amended by the Securities
Act Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Act Amendments of 1975, Senate Comm. on
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal should be approved or
disapproved by October 6, 2020. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
October 20, 2020. The Commission asks that commenters address the
sufficiency of the Exchange's statements in support of the proposal,
which are set forth in the Notice,\55\ in addition to any other
comments they may wish to submit about the proposed rule change.
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\55\ See Notice, supra note 3.
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Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NASDAQ-2020-027 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2020-027. 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 (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from
[[Page 57286]]
comment submissions. You should submit only information that you wish
to make available publicly. All submissions should refer to File Number
SR-NASDAQ-2020-027 and should be submitted by October 6, 2020. Rebuttal
comments should be submitted by October 20, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\56\
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\56\ 17 CFR 200.30-3(a)(57).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-20259 Filed 9-14-20; 8:45 am]
BILLING CODE 8011-01-P