Notice2024-07538
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change To Amend Section 102.06 of the NYSE Listed Company Manual To Provide That a Special Purpose Acquisition Company Can Remain Listed Until Forty-Two Months From Its Original Listing Date if It Has Entered Into a Definitive Agreement With Respect to a Business Combination Within Three Years of Listing
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
April 10, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 70 (Wednesday, April 10, 2024)</title>
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[Federal Register Volume 89, Number 70 (Wednesday, April 10, 2024)]
[Notices]
[Pages 25291-25293]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-07538]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99906; File No. SR-NYSE-2024-18]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change To Amend Section 102.06 of the
NYSE Listed Company Manual To Provide That a Special Purpose
Acquisition Company Can Remain Listed Until Forty-Two Months From Its
Original Listing Date if It Has Entered Into a Definitive Agreement
With Respect to a Business Combination Within Three Years of Listing
April 4, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on March 27, 2024, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Section 102.06 of the NYSE Listed
Company Manual (``Manual'') to provide that a special purpose
acquisition company (``SPAC'') can remain listed until forty-two months
from its original listing date if it has entered into a definitive
agreement with respect to a business combination within three years of
listing. The text of the proposed rule change is set forth in Exhibit
5. The proposed rule change is available on the Exchange's website at
<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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
Section 102.06e of the Manual provides that the Exchange will
promptly commence delisting procedures with respect to any listed SPAC
that fails to consummate its Business Combination within (i) the time
period specified by its constitutive documents or by contract or (ii)
three years, whichever is shorter. For purposes of Section 102.06, a
Business Combination is defined as a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization, or similar business
combination with one or more operating businesses or assets with a fair
market value equal to at least 80% of the net assets held in trust by
the SPAC (net of amounts disbursed to management for working capital
purposes and excluding the amount of any deferred underwriting discount
held in trust).
Section 102.06e requires the Exchange to promptly commence
delisting procedures even for listed SPACs that have entered into a
definitive agreement with respect to a Business Combination within
three years of their listing date, but that are unable to complete the
transaction before the three-year deadline established by 102.06e. As a
practical matter, any such NYSE-listed SPAC would need to liquidate,
transfer to a market that provides a longer period of time to complete
the Business Combination, or face delisting.\4\
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\4\ The Exchange notes that the three-year limitation for a SPAC
is established solely by Exchange rule, and that many SPACs have
been able to extend their lives beyond three years either by
shareholder approval or other mechanisms provided under their
organizing documents. Even if approved by shareholders, any
extension beyond three years does not circumvent Exchange rules
which mandate delisting if a SPAC has not consummated a Business
Combination within three years.
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The Exchange notes that Nasdaq's SPAC listing requirements include
a three-year limitation that is substantially similar to that included
in the Exchange's SPAC listing standard.\5\ However, Nasdaq appeal
panels have granted additional time to SPACs that appeal their
delisting for failure to consummate a Business Combination
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within three years in circumstances where the SPAC has a definitive
agreement and requests additional time beyond the three years provided
by the applicable rule to enable it to consummate its merger.\6\
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\5\ See Nasdaq IM 5101-2.
\6\ See, e.g., Current Report on Form 8-K furnished to the SEC
by Brilliant Acquisition Corporation on September 19, 2023: ``[T]he
Company received a notice from the staff of the Listing
Qualifications Department of Nasdaq indicating that, unless the
Company timely requested a hearing before the Panel, the Company's
securities (units, ordinary shares, warrants, and rights) would be
subject to suspension and delisting from The Nasdaq Capital Market
at the opening of business on July 7, 2023 due to the Company's non-
compliance with Nasdaq IM 5101-2, which requires that a special
purpose acquisition company complete one or more business
combinations within 36 months of the effectiveness of its initial
public offering registration statement. . . . The Panel granted the
Company's request for continued listing on Nasdaq, subject to the
following: (i) on or before November 27, 2023, the Company must
advise the Panel on the status of the vote by shareholders of both
the Company and Nukkleus, Inc. (``Nukkleus'') regarding their
planned business combination; and (ii) the Company's completion of
the business combination transaction on or before December 23,
2023''.
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The Exchange proposes to amend Section 102.06e to extend the period
for which a SPAC can remain listed if it has signed a definitive
agreement with respect to a Business Combination. As amended, Section
102.06e will provide that the SPAC will be liquidated if it has not (i)
entered into a definitive agreement with respect to its Business
Combination within (A) the time period specified by its constitutive
documents \7\ or by contract or (B) three years, whichever is shorter
or (ii) consummated its Business Combination within the time period
specified by its constitutive documents or by contract or forty-two
months, whichever is shorter. The Exchange will promptly commence
delisting procedures with respect to any SPAC that fails to (i) enter
into a definitive agreement with respect to its Business Combination
within (A) the time period specified by its constitutive documents or
by contract or (B) three years, whichever is shorter or (ii) consummate
its Business Combination within the time period specified by its
constitutive documents or by contract or forty-two months, whichever is
shorter.
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\7\ The Exchange notes that, on occasion, a SPAC will amend its
constitutive documents to extend the time period in which it has to
consummate a Business Combination. For example, a SPAC's
constitutive documents may initially specify that it has 24 months
to consummate a Business Combination, but such SPAC may subsequently
seek shareholder approval to amend its constitutive documents to
extend that period to 36 months. In applying the proposed rule, the
Exchange will consider the ``time period specified in its
constitutive documents'' to be the time period so specified, as
emended by any shareholder vote.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\8\ in general, and furthers the
objectives of Section 6(b)(5) of the Act \9\ in particular, in that it
is designed to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest
and is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed amendment is consistent
with the protection of investors. The Exchange further believes that a
SPAC represents a significantly different investment after it enters
into a definitive agreement for a Business Combination, as investors
who continue to hold the SPAC's securities or acquire them after that
agreement is executed have knowledge about the operating asset the SPAC
intends to own and can be assumed to own the securities because they
want to have an ownership interest in the post-Business Combination
entity. As such, the Exchange believes that a SPAC that has signed a
definitive merger agreement to acquire an identified business does not
present the same investor protection concerns as a SPAC before signing
such an agreement, which is more purely a blind pool investment.
Furthermore, delisting a SPAC that has signed a definitive merger
agreement when it reaches the three-year deadline may be contrary to
the interests of the SPAC's public shareholders at that time.
For the foregoing reasons, the Exchange believes that it is
consistent with the protection of investors to provide a SPAC that has
signed a Business Combination agreement within three years a maximum
period of forty-two months from the time of listing to consummate a
Business Combination.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes the proposed rule change will not impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange further believes
that the proposed rule change will increase competition by increasing
the possibility that listed SPACs will be able to complete their
Business Combinations before the prospect of delisting. The Exchange
also believes that the proposed amendment will increase competition for
the listing of SPACs and Business Combinations by enabling SPACs listed
on the NYSE additional flexibility in the timing of their Business
Combinations that is similar to the timing Nasdaq currently provides to
SPACs through discretionary grants of additional time by hearing panels
in their delisting process.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#d7a5a2bbb2fab4b8babab2b9a3a497a4b2b4f9b0b8a1"><span class="__cf_email__" data-cfemail="84f6f1e8e1a9e7ebe9e9e1eaf0f7c4f7e1e7aae3ebf2">[email protected]</span></a>. Please include
file number SR-NYSE-2024-18 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSE-2024-18. This file
number should be included on the subject line if email is used. To help
the Commission process and review your
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comments more efficiently, please use only one method. The Commission
will post all comments on the Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://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 a.m. and 3 p.m. Copies of the
filing also will be available for inspection and copying at the
principal office of the Exchange. Do not include personal identifiable
information in submissions; you should submit only information that you
wish to make available publicly. We may redact in part or withhold
entirely from publication submitted material that is obscene or subject
to copyright protection. All submissions should refer to file number
SR-NYSE-2024-18 and should be submitted on or before May 1, 2024.
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\10\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-07538 Filed 4-9-24; 8:45 am]
BILLING CODE 8011-01-P
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