Notice2021-19509
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Proposing To Adopt Listing Standards for Subscription Warrants Issued by a Company Organized Solely for the Purpose of Identifying an Acquisition Target
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 10, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 173 (Friday, September 10, 2021)</title>
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[Federal Register Volume 86, Number 173 (Friday, September 10, 2021)]
[Notices]
[Pages 50748-50750]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-19509]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92876; File No. SR-NYSE-2021-45]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change Proposing To Adopt Listing
Standards for Subscription Warrants Issued by a Company Organized
Solely for the Purpose of Identifying an Acquisition Target
September 3, 2021.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on August 24, 2021, New York Stock Exchange LLC (``NYSE'' or
``Exchange'') 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 self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the NYSE Listed Company Manual
(``Manual'') to adopt a new listing standard for the listing of
Subscription Warrants. The proposed rule change is available on the
Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a>, 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 adopt a new subsection of Section 102 of
the Manual (to be designated Section 102.09) to permit the listing of
Subscription Warrants. For purposes of proposed Section 102.09 a
Subscription Warrant is a warrant issued by a company organized solely
for the purpose of identifying an acquisition target and exercisable
into the common stock of such company upon entry into a binding
agreement with respect to such acquisition.
Initial Listing Standards for Subscription Warrants
The Exchange will list Subscription Warrants subject to the
following requirements:
(i) The issuer of the Subscription Warrants must be a company
formed solely for the purpose of issuing the Subscription Warrants and
consummating the acquisition of one or more operating businesses or
assets with a value (calculated at the time of entry into the
acquisition agreement) equal to at least 80% of the aggregate exercise
price of the Subscription Warrants (an ``Acquisition'').
(ii) For a transaction to qualify as an Acquisition, the resultant
entity must qualify for initial listing on the Exchange and the
acquisition agreement must provide that the transaction will be
consummated only if the resultant entity will be listed on the Exchange
or another national securities exchange.
(iii) At the time of initial listing, the Subscription Warrants
must: (A) Have an aggregate exercise price of at least $250 million;
(B) have at least 1,100,000 publicly held Subscription Warrants
outstanding, with an aggregate exercise price of at least $200 million;
(C) have at least 400 holders of round lots; (D)
[[Page 50749]]
have an exercise price per share of common stock of at least $10.00;
and (D) expire in no more than 10 years. For purposes of proposed
Section 102.09, public holders of Subscription Warrants do not include
those held by directors, officers, or their immediate families and
other concentrated holdings of 10 percent.
(iv) The Subscription Warrants may not be fully exercisable for
common stock of a company until after such company enters into a
binding agreement with respect to the Acquisition and may not limit the
ability of holders to exercise such warrants in full prior to the
closing of such Acquisition.
(v) The proceeds of the exercise of the Subscription Warrants will
be held in an interest-bearing custody account controlled by an
independent custodian, pending the closing of such Acquisition.
(vi) The shares of common stock issued upon exercise of the
Subscription Warrants will promptly be redeemed by the issuer of such
Subscription Warrants for cash (A) upon termination of the acquisition
agreement; or (B) if the Acquisition does not close within twelve
months from the date of exercise of the Subscription Warrants, or such
earlier time as is specified in the operative agreements. If the shares
issuable upon exercise of the Subscription Warrants are redeemed, the
holders will receive cash payments equal to their proportional share of
the funds in the custody account, including any interest earned on
those funds.
(vii) The sale of the Subscription Warrants and the issuance of the
common stock of the issuer in exchange for the Subscription Warrants
must both be registered under the Securities Act.
(viii) The issuer of the Subscription Warrants will be subject to
the same corporate governance requirements under Section 303A hereof as
an issuer of listed common stock.
(ix) the Acquisition must be approved by a majority of the
independent directors of the issuer of the Subscription Warrants.
Continued Listing Standards for Subscription Warrants
The Exchange will immediately initiate suspension and delisting
procedures of an issuer's Subscription Warrants if:
<bullet> The number of publicly-held Subscription Warrants is fewer
than 100,000;
<bullet> the number of public holders of such Subscription Warrants
is fewer than 100; or
<bullet> the total market capitalization of such Subscription
Warrants is below $15 million over 30 consecutive trading days.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b)(5) of the Act,\4\ in that it is designed to promote
just and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest, and is not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers.
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\4\ 15 U.S.C. 78f(b)(5).
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Furthermore, the Exchange believes that the proposed listing
standard is consistent with Section 6(b)(5) of the Act in that it
contains requirements in relation to the listing of Subscription
Warrants that provide adequate protections for investors and the public
interest. In particular:
<bullet> The Subscription Warrants may not be fully exercisable for
common stock of a company until after such company enters into a
binding agreement with respect to the Acquisition and may not limit the
ability of holders to exercise such warrants in full prior to the
closing of such Acquisition.
<bullet> The proceeds of the exercise of the Subscription Warrants
will be held in an interest-bearing custody account controlled by an
independent custodian, pending the closing of such Acquisition.
<bullet> The shares of common stock issued upon exercise of the
Subscription Warrants will promptly be redeemed by the issuer of such
Subscription Warrants for cash (A) upon termination of the acquisition
agreement; or (B) if the Acquisition does not close within twelve
months from the date of exercise of the Subscription Warrants, or such
earlier time as is specified in the operative agreements. If the shares
issuable upon exercise of the Subscription Warrants are redeemed, the
holders will receive cash payments equal to their proportional share of
the funds in the custody account, including any interest earned on
those funds.
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
an additional type of security and that will enhance competition among
market participants, to the benefit of investors and the marketplace.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule would be
available in a non-discriminatory way to any company satisfying its
requirements, as well as all other applicable NYSE listing
requirements. In addition, the Exchange faces competition for listings
but the proposed rule change does not impose any burden on the
competition with other exchanges; any competing exchange could
similarly adopt rules to allow the listing of Subscription Warrants.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or up to 90 days (i) as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding or (ii) as to which the self-regulatory
organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#6012150c054d030f0d0d050e1413201305034e070f16"><span class="__cf_email__" data-cfemail="8bf9fee7eea6e8e4e6e6eee5fff8cbf8eee8a5ece4fd">[email protected]</span></a>. Please include
File Number SR-NYSE-2021-45 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange
[[Page 50750]]
Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2021-45. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSE-2021-45, and should be submitted on
or before October 1, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-19509 Filed 9-9-21; 8:45 am]
BILLING CODE 8011-01-P
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