Notice2025-19178
Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing of a Proposed Rule Change To Amend the Amended and Restated Certificate of Incorporation and By-Laws of Its Parent Corporation, Nasdaq, Inc.
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
October 1, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 90 Issue 188 (Wednesday, October 1, 2025)</title>
</head>
<body><pre>
[Federal Register Volume 90, Number 188 (Wednesday, October 1, 2025)]
[Notices]
[Pages 47373-47383]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-19178]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104120; File No. SR-MRX-2025-23]
Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing
of a Proposed Rule Change To Amend the Amended and Restated Certificate
of Incorporation and By-Laws of Its Parent Corporation, Nasdaq, Inc.
September 29, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 26, 2025, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed
with the
[[Page 47374]]
Securities and Exchange Commission (``Commission'') a proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by the Exchange. The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Amended and Restated Certificate
of Incorporation (``Certificate'') and By-Laws (``By-Laws'') of its
parent corporation, Nasdaq, Inc. (``NASDAQ'' or ``Corporation''). The
proposed changes would align the Certificate with certain amendments to
the Delaware General Corporation Law as well as update the By-Laws to
reflect recent changes in law and best practices, as discussed below.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/mrx/rulefilings">https://listingcenter.nasdaq.com/rulebook/mrx/rulefilings</a>
and at the principal office of the Exchange.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to update the Certificate to reflect
certain amendments to the Delaware General Corporation Law. The
Exchange is also proposing to update the By-Laws to reflect recent
changes in law and best practices as discussed below.
(a) Proposed Amendments to the Certificate
(1) Background
On April 23, 2025, NASDAQ's Board of Directors approved proposed
amendments to the Certificate to provide for limited officer
exculpation. On June 11, 2025, NASDAQ held its Annual Meeting of
Stockholders, during which its stockholders considered and approved the
Certificate amendments. In 2022, Delaware amended the Delaware General
Corporation Law to enable companies incorporated in Delaware, such as
NASDAQ, to limit the liability of certain of their officers in narrow
circumstances. This change was made to address situations where
directors would be dismissed from litigation, but the officers, who
were not exculpated, had to continue in the litigation to show their
actions were not grossly negligent. Generally, this issue arises in the
mergers and acquisitions context and often relates to claims that a
particular disclosure document was deficient.
The Certificate amendment would exculpate covered officers from
monetary liability for breach of the duty of care in a manner similar
to that already permitted for directors. However, it would not
exculpate such officers in connection with derivative actions. Failing
to adopt the Certificate amendment could potentially expose the Company
to higher litigation expenses associated with lawsuits, regardless of
merit, and/or impact the Company's recruitment and retention of
exceptional officer candidates who conclude that the potential exposure
to liabilities, costs of defense, and other risks of proceedings exceed
the benefits of serving as one of the Company's officers. The Exchange
notes that amendments providing for officer exculpation are
increasingly common for public companies, and that the number of
shareholder proposals calling for such amendments--the majority of
which have been approved by wide margins--have continued to increase
since 2022 when the Delaware law was passed.\3\
---------------------------------------------------------------------------
\3\ See, e.g., Andrew J. Noreuil and Andrew J. Stanger,
Developments and Trends in Delaware Officer Exculpation Charter
Amendments, Harv. L. Sch. F. On Corp. Governance (June 14, 2024),
<a href="https://corpgov.law.harvard.edu/2024/06/14/developments-and-trends-in-delaware-officer-exculpation-charter-amendments/">https://corpgov.law.harvard.edu/2024/06/14/developments-and-trends-in-delaware-officer-exculpation-charter-amendments/</a>; Megan W.
Shaner, Understanding Officer Exculpation Under the MBCA Amendments,
Bus. L. Today (Nov. 19, 2024) <a href="https://businesslawtoday.org/2024/11/understanding-officer-exculpation-mbca-amendments/">https://businesslawtoday.org/2024/11/understanding-officer-exculpation-mbca-amendments/</a>.
---------------------------------------------------------------------------
Under NASDAQ's Certificate and By-Laws, the Exchange must determine
whether proposed amendments to the Certificate must be filed with the
Commission prior to taking effect. On April 30, 2025, the Board of the
Exchange determined that the proposed amendments to the Certificate
must be filed with the Commission.
(2) Proposed Amendments
To effect the changes discussed above, the Exchange proposes to
amend Article Sixth of NASDAQ's Amended and Restated Certificate of
Incorporation as follows. Paragraph A of Article Sixth of the
Certificate provides that ``[a] director of Nasdaq shall not be liable
to Nasdaq or its stockholders for monetary damages for breach of
fiduciary duty as a director, except to the extent that such exemption
from liability or limitation thereof is not permitted under the General
Corporation Law of the State of Delaware as the same exists or may
hereafter be amended.'' Paragraph B of Article Sixth provides that
``[a]ny repeal or modification of paragraph A shall not adversely
affect any right or protection of a director of Nasdaq existing
hereunder with respect to any act or omission occurring prior to such
repeal or modification.'' In each of these provisions, the Exchange
proposes to add, after each instance of the word ``director,'' the
words ``or officer.'' \4\
---------------------------------------------------------------------------
\4\ See proposed Article Sixth of the Certificate.
---------------------------------------------------------------------------
The Exchange believes the proposed changes to paragraphs A and B of
Article Sixth of the Certificate would update the Certificate to
reflect amendments to the Delaware General Corporation Law \5\ that
enable companies incorporated in Delaware, such as NASDAQ, to limit the
liability of certain of their officers in narrow circumstances, as
discussed above.
---------------------------------------------------------------------------
\5\ See 8 Del. C. Section 102(b)(7).
---------------------------------------------------------------------------
(b) Proposed Amendments to the By-Laws
(1) Background
On April 23, 2025, NASDAQ's Board of Directors approved proposed
amendments to the By-Laws to reflect changes in law and best practices
that have occurred since the most recent amendments to the By-Laws in
2016. As discussed above, under NASDAQ's Certificate and By-Laws, the
Exchange must determine whether proposed amendments to the By-Laws must
be filed with the Commission prior to taking effect. On April 30, 2025,
the Exchange determined that the proposed amendments to the By-Laws
must be filed with the Commission.
(2) Proposed Amendments
To effect the changes discussed above, the Exchange proposes to
amend the By-Laws as follows.
(i) Article III Meetings of Stockholders
Section 3.1(b) of Article III of the By-Laws sets forth the
requirements for a stockholder's notice to NASDAQ of
[[Page 47375]]
nominations or other business to be considered at an annual meeting.
Section 3.1(b)(i) of the By-Laws currently sets forth the information
that a stockholder must provide to NASDAQ about each person whom the
stockholder proposes to nominate for election as a director. Section
3.1(b)(i) of the By-Laws provides in part that the Corporation may
require any proposed nominee to furnish such other information it may
reasonably require to determine the eligibility of such proposed
nominee to serve as director of the Corporation or that could be
material to a reasonable stockholder's understanding of the
independence, or lack of independence, of such proposed nominee.\6\ The
Exchange proposes to amend Section 3.1(b)(i) to narrow the scope of
information that may be requested under this provision. Specifically,
the Exchange proposes to provide that the Corporation may require any
proposed nominee to furnish such other information as it may reasonably
require to determine whether the-proposed nominee is qualified under
the Restated Certificate of Incorporation, the By-Laws, the rules and
regulations of any stock exchange applicable to the Corporation, or any
law or regulation applicable to the Corporation to serve as a director
and/or independent director of the Corporation.\7\ The Exchange
believes that the proposed changes address concerns that the current
provision is unnecessarily open-ended by limiting the information that
may be requested to information on the nominee's qualifications to
serve as director and/or independent director of the Corporation. The
Exchange also proposes certain clarifying changes to Section 3.1(b)(i)
of the By-Laws. Specifically, the Exchange proposes to insert, in its
first full sentence, the word ``Corporation's'' and the words ``of such
Proposing Person and in the accompanying proxy card.'' \8\ The Exchange
believes these proposed non-substantive changes would facilitate the
application of this provision by rendering it more specific and clearer
to understand.
---------------------------------------------------------------------------
\6\ See Section 3.1(b)(1) of the By-Laws. As discussed below,
the Exchange is also proposing a non-substantive change to Section
3.1(a) of the By-Laws to delete the term ``shareholder'' and
substitute therefor the word ``stockholder'' to more closely track
established terminology of the By-Laws and thus make them clearer
and easier to understand. See proposed Section 3.1(a) of the By-
Laws.
\7\ To effect these changes, the Exchange proposes to delete,
from the final sentence of Section 3.1(b)(i) the following: (1) the
romanette (i); (2) the words ``eligibility of such''; and (3) the
phrase ``or (ii) that could be material to a reasonable
stockholder's understanding of the independence, or lack of
independence, of such proposed nominee.'' Further, the Exchange
proposes to amend the final sentence of Section 3.1(b)(i) of the By-
Laws as follows: (1) insert, immediately after the words ``to
determine'' the word ``whether''; (2) insert, immediately after
``proposed nominee, the words ``is qualified under the Restated
Certificate of Incorporation, these By-Laws, the rules and
regulations of any stock exchange applicable to the Corporation, or
any law or regulation applicable to the Corporation''; and (3)
insert, immediately after the words ``to serve as a director'' the
phrase ``and/or independent director.'' See proposed Section
3.1(b)(i) of the By-Laws. As discussed below, the Exchange is also
proposing a non-substantive change to Section 3.1(a) of the By-Laws
to delete therefrom the word ``shareholder'' and substitute therefor
the word ``stockholder.'' See proposed Section 3.1(a) of the By-
Laws.
\8\ See proposed Section 3.1(b)(i) of the By-Laws. The Exchange
also proposes a non-substantive change to Section 3.1(b)(i) to
replace the term ``Requesting Person'' with ``Proposing Person'' as
that term and not ``Requesting Person,'' is defined in the Section
3.1(c) of the By-Laws.
---------------------------------------------------------------------------
Section 3.1(b) of the By-Laws sets forth requirements for notices
from a Proposing Person \9\ to NASDAQ regarding nominations or other
business to be considered at an annual meeting. Section 3.1(b)(iii) of
the By-Laws sets out the information required to be provided with
respect to each Proposing Person. Information required to be provided
under current Section 3.1(b)(iii)(C) includes ``a description of any
agreement, arrangement or understanding with respect to the nomination
or proposal between or among such stockholder and/or such beneficial
owner, any of their respective affiliates or associates, and any others
acting in concert with any of the foregoing.'' \10\ The Exchange
proposes to amend Section 3.1(b)(iii)(C) to delete the reference to
others ``acting in concert with any of the foregoing.'' \11\ The
Exchange believes this proposed change is appropriate to conform the
By-Laws to current practices because the ``acting in concert'' language
has been challenged by plaintiffs or otherwise used in search of
potential litigation targets. The Exchange thus believes it is
appropriate to delete such language from the advance notice
requirements under this section of the By-Laws.\12\
---------------------------------------------------------------------------
\9\ The term '' Proposing Person'' means ``(i) the stockholder
providing the notice of business or the notice of the nomination, as
applicable, proposed to be brought before an annual meeting, (ii)
any beneficial owner or beneficial owners, if different, on whose
behalf such business is proposed to be brought before the meeting or
the notice of the nomination proposed to be made at the meeting is
made, as applicable, and (iii) any affiliate or associate (each
within the meaning of Rule 12b-2 under the Act for purposes of these
By-Laws) of such stockholder or beneficial owner.'' See Section
3.1(c) of the By-Laws.
\10\ See Section 3.1(b)(iii)(C) of the By-Laws.
\11\ See proposed Section 3.1(b)(iii)(C) of the By-Laws. The
Exchange is also proposing conforming changes to express ``others''
in the singular ``other'' and to add, immediately thereafter, the
word ``person.''
\12\ As proposed, Section 3.1(b)(iii)(C) would require the
Proposing Person to describe ``any agreement, arrangement or
understanding with respect to the nomination or proposal between or
among such stockholder and/or such beneficial owner, any of their
respective affiliates or associates, and any other person.'' See
proposed Section 3.1(b)(iii)(C) of the By-Laws.
---------------------------------------------------------------------------
Section 3.1(b)(iii)(I) requires that a Proposing Person describe
any significant equity interest or any Synthetic Equity Interest or
Short Interest in any principal competitor of the Corporation held by
such Proposing Person. The Exchange proposes to add a parenthetical
stating the term ``principal competitor'' as used in this subsection
shall be ``as defined for purposes of Section 8 of the Clayton
Antitrust Act of 1914.'' \13\ The Exchange believes that the proposed
change would address a textual ambiguity in this subsection by
providing greater clarity with respect to the scope of the term
``principal competitor,'' which the current subsection does not define.
---------------------------------------------------------------------------
\13\ See proposed Section 3.1(b)(iii)(I) of the By-Laws.
---------------------------------------------------------------------------
Section 3.1(b)(iii)(J) further requires a Proposing Person to
describe any direct or indirect interest of such Proposing Person in
any contract with the Corporation, any affiliate of the Corporation, or
any principal competitor of the Corporation (including, in any such
case, any employment agreement, collective bargaining agreement or
consulting agreement.\14\ The Exchange proposes adding two
parentheticals to this subsection. The first parenthetical would state
that an ``affiliate,'' as that term is used in this subsection, would
be ``as reflected on the most recent Form 10-K of the Corporation.''
\15\ The second parenthetical would clarify that ``principal
competitor,'' as provided in this subsection, would be ``as defined for
purposes of Section 8 of the Clayton Antitrust Act of 1914.'' \16\ The
Exchange believes that the proposed changes would address textual
ambiguities in this subsection by providing greater clarity with
respect to the scope of the terms ``affiliate'' and ``principal
competitor,'' which terms the current subsection does not define.
---------------------------------------------------------------------------
\14\ See Section 3.1(b)(iii)(J) of the By-Laws.
\15\ See proposed Section 3.1(b)(iii)(J) of the By-Laws.
\16\ See id.
---------------------------------------------------------------------------
Section 3.1(b)(iii)(K) further requires Proposing Persons to
describe any pending or threatened litigation in which such Proposing
Person is a party or material participant involving the Corporation or
any of its officers or Directors, or any affiliate of the
[[Page 47376]]
Corporation.\17\ The Exchange proposes to add a parenthetical to
clarify, consistent with proposed changes to Section 3.1(b)(iii)(J),
that an ``affiliate,'' as used in this subsection, shall be ``as
reflected on the most recent Form 10-K of the Corporation.'' \18\
---------------------------------------------------------------------------
\17\ See Section 3.1(b)(iii)(K) of the By-Laws.
\18\ See proposed Section 3.1(b)(iii)(K) of the By-Laws.
---------------------------------------------------------------------------
Section 3.1(b)(iii)(L) of the By-Laws requires Proposing Persons to
describe any material transaction occurring, in whole or in part,
during the then immediately preceding 12-month period between such
Proposing Person, on the one hand, and the Corporation, any affiliate
of the Corporation or any principal competitor of the Corporation.
Consistent with proposed changes to Section 3.1(iii)(b)(I)-(K), the
Exchange proposes adding two parentheticals: the first stating that an
``affiliate,'' as that term is used in this subsection, would be ``as
reflected on the most recent Form 10-K of the Corporation;'' \19\ the
second would clarify that ``principal competitor,'' as provided in this
subsection, would be ``as defined for purposes of Section 8 of the
Clayton Antitrust Act of 1914.'' \20\ The Exchange believes that these
proposed changes to Section 3.1(b)(iii)(L) would--consistent with
similarly proposed changes to Section 3.1(b)(iii)(I)-(K)--provide
greater clarity with respect to the meaning of the terms ``affiliate''
and ``principal competitor,'' which terms the current Section
3.1(b)(iii)(L) does not define.
---------------------------------------------------------------------------
\19\ See proposed Section 3.1(b)(iii)(I)-(K) of the By-Laws.
\20\ See id.
---------------------------------------------------------------------------
Section 3.1(b)(iii)(O) requires notice to the Corporation if a
Proposing Person intends to act as part of a group to solicit or
deliver proxies in support of a proposal or the election of a nominee
under specified circumstances. Specifically, Section 3.1(b)(iii)(O) of
the By-Laws requires a representation as to whether the Proposing
Person intends or is part of a group which intends (1) to deliver a
proxy statement and/or form of proxy to holders of at least the
percentage of the Corporation's outstanding capital stock required to
approve or adopt the proposal or elect the nominee and/or (2) otherwise
to solicit proxies from stockholders in support of such proposal or
nomination.\21\ The Exchange proposes to amend to Section
3.1(b)(iii)(O) to clarify, in Section 3.1(b)(iii)(O)(2), that the
representation required to be provided under that subsection would
extend to the solicitation of proxies or votes from stockholders in
support of any proposal or proposed nominee.\22\ As further proposed,
new Section 3.1(b)(iii)(O)(3) would specify that the representation
required under Section 3.1(b)(iii) extends to whether the Proposing
Person intends or is part of a group which intends ``to solicit proxies
or votes in support of any proposed nominee in accordance with Rule
14a-19 promulgated under the Act.'' \23\ The Exchange believes that the
proposed changes to Section 3.1(iii)(O) enhance the transparency of
this provision by providing greater specificity with respect to the
content of representations required to be provided under this
subsection. Similarly, proposed Section 3.1(iii)(O)(3) would enhance
the clarity of this provision by specifying that the representation
required under this section extends to whether the stockholder intends
to act as part of a group to solicit proxies under the SEC's universal
proxy rule.
---------------------------------------------------------------------------
\21\ See Section 3.1(b)(iii)(O) of the By-Laws.
\22\ To effect this change, the Exchange proposes to insert,
immediately after ``otherwise to solicit proxies'' in Section
3.1(b)(iii)(O)(2), the words ``or votes.'' See proposed Section
3.1(b)(iii)(O)(2).
\23\ See proposed Section 3.1(b)(iii)(O)(3) of the By-Laws. The
Exchange proposes a conforming change to insert, at the conclusion
of Section 3.1(b)(iii)(O)(2) the following: ``and/or.'' See proposed
Section 3.1(b)(iii)(O)(2) of the By-Laws.
---------------------------------------------------------------------------
Section 3.1(d) of the By-Laws addresses stockholder notice
requirements with respect to nominees for additional directorships if
the number of directors to be elected to the Board at an annual meeting
is increased effective at the annual meeting.\24\ Section 3.1(d)
provides no limitations on the number of nominees that may be nominated
under such circumstances.\25\ The Exchange proposes to amend Section
3.1(d) to set limits on the number of nominees that may be nominated in
such cases to not exceed the number of directors to be elected at the
subject annual meeting. Specifically, the Exchange proposes to provide,
in a new final sentence to Section 3.1(d) of the By-Laws, that the
number of nominees a Proposing Person may nominate for election at the
annual meeting on its own behalf (or in the case of a Proposing Person
giving the notice on behalf of a beneficial owner, the number of
nominees a Proposing Person may nominate for election at the annual
meeting on behalf of such beneficial owner) shall not exceed the number
of directors to be elected at such annual meeting.\26\
---------------------------------------------------------------------------
\24\ See Section 3.1(d) of the By-Laws.
\25\ See id.
\26\ See proposed Section 3.1(d) of the By-Laws.
---------------------------------------------------------------------------
The Exchange believes that the proposed changes to Section 3.1(d)
of the By-Laws would align the By-Laws with current practices by
safeguarding against the practice of proposing multiple nominees and
then deciding--at the last minute--which nominees will actually stand
for election. This in turn would spare the Corporation and its
stockholders from needless expenditure of time and resources to vet the
surplus nominees.
Section 3.2(a) of the By-Laws addresses requirements for requesting
a special meeting of the stockholders, including procedures for
determining the requisite percentage of stockholders necessary to
support a special meeting request. The Exchange proposes to amend
Section 3.2(a) of the By-Laws to remove the phrase ``acting in
concert'' and substitute therefor the words ``knowingly coordinating.''
\27\ The Exchange believes this proposed change would mitigate against
the potential for plaintiff's firms to leverage the ``acting in
concert'' requirement to find targets for potential litigation.
---------------------------------------------------------------------------
\27\ See proposed Section 3.2 of the By-Laws.
---------------------------------------------------------------------------
The Exchange further proposes to amend Section 3.2(a) to remove a
reference to the binding nature of the Board's determination with
respect to whether the special meeting request is in proper form.\28\
Specifically, the Exchange proposes to delete from the final sentence
in Section 3.2(a) the words ``and such determination shall be binding
on the Corporation and the stockholders.'' \29\ The Exchange believes
that the proposed changes would align the By-Laws with current
practices because it would remove all references to the binding or
final nature of Board actions, which language has been the challenged
on the basis that it purports to limit or foreclose judicial review by
Delaware courts.
---------------------------------------------------------------------------
\28\ See Section 3.2(a) of the By-Laws.
\29\ See proposed Section 3.2(a) of the By-Laws. The Exchange
further proposes to make a non-substantive change to Section 3.2(a)
of the By-Laws to capitalize the word ``secretary'' to conform to
other usages of such word in the By-Laws. The Exchange also proposes
to correct a typographical error in Section 3.2(c) of the By-Laws to
express the word ``Business'' therein in the singular as
``business'' is not a defined term. See proposed Section 3.2(c) of
the By-Laws.
---------------------------------------------------------------------------
Section 3.3 of the By-Laws governs determinations regarding
nominations or business eligible to be considered at annual or special
meetings. Section 3.3(a) provides, in part, that the chairman of the
meeting has the power and duty to determine whether a nomination or
business proposed to be brought before the meeting was made or proposed
in accordance with the By-Laws and, if not so made or proposed, to
declare that such nomination or business shall be disregarded.\30\ The
Exchange proposes to amend that
[[Page 47377]]
provision of Section 3.3(a) to add a parenthetical stating that, in
advance of any meeting of stockholders, the Board of Directors or an
authorized committee thereof shall have the same powers and duties,
including the power to declare that a particular nomination or business
shall be disregarded.\31\ The Exchange believes the proposed changes
align the By-Laws with current practices because plaintiffs have argued
that a determination to disregard a matter from consideration at a
meeting should be subject to fiduciary duties. The proposed changes
clarify that the chair of a meeting must be a director or officer whose
decisions, in turn, are subject to fiduciary duties.
---------------------------------------------------------------------------
\30\ See Section 3.3(a) of the By-Laws.
\31\ See proposed Section 3.3 of the By-Laws. To effect this
change, the Exchange proposes to insert, immediately after the words
``Except as otherwise provided by law, the chairman of the meeting''
a parenthetical to read as follows: ``(or, in advance of any meeting
of stockholders, the Board of Directors or an authorized committee
thereof).'' The Exchange also proposes to make a non-substantive
conforming change to Section 3.3(a) to insert, immediately after the
word ``proxies'' in the second full sentence of Section 3.3(a) the
words ``or votes,'' consistent with changes proposed for Section
3.1(b)(iii)(O) of the By-Laws.
---------------------------------------------------------------------------
The Exchange further proposes to amend Section 3.3(a) to clarify
that the Corporation may disregard nominees proposed by a stockholder
under the Commission's universal proxy rule if the shareholder has
failed to comply with that rule. To effect that change, the Exchange
proposes to insert, at the conclusion of current Section 3.3(a), new
text providing as follows:
Notwithstanding anything to the contrary in these By-Laws,
unless otherwise required by law, if any Proposing Person (i)
provides notice pursuant to Rule 14a-19(b) promulgated under the Act
with respect to any proposed nominee and (ii) subsequently fails to
comply with the requirements of Rule 14a-19(a)(2) or Rule 14a-
19(a)(3) promulgated under the Act (or fails to timely provide
reasonable evidence sufficient to satisfy the Corporation that such
Proposing Person has met the requirements of Rule 14a-19(a)(3)
promulgated under the Act in accordance with the following
sentence), then the nomination of each such proposed nominee shall
be disregarded, notwithstanding that proxies or votes in respect of
the election of such proposed nominees may have been received by the
Corporation (which proxies and votes shall be disregarded). Upon
request by the Corporation, if any Proposing Person provides notice
pursuant to Rule 14a-19(b) promulgated under the Act, such Proposing
Person shall deliver to the Corporation, no later than five (5)
business days prior to the applicable meeting, reasonable evidence
that it has met the requirements of Rule 14a-19(a)(3) promulgated
under the Act.
This proposed change to Section 3.3(a) would align the By-Laws with
current practices by specifying that failure to comply with
requirements of the Commission's universal proxy rule would constitute
grounds for the Corporation to disregard a stockholder's proposed
nomination, as well as setting out redress procedures for stockholders
seeking to demonstrate that such requirements have been met.
Section 3.4 of the By-Laws governs the conduct of meetings. Section
3.4 provides in part that the date and time of the opening and closing
of the polls for each matter to be voted upon at a meeting must be
announced at the meeting by the person presiding over the meeting. The
Exchange proposes to amend Section 3.4 to clarify, consistent with the
advance notice provisions in Section 3.1 of the By-Laws, that the
person presiding over a meeting must be a chairman of the meeting who
shall be an officer or director of the Corporation.\32\ The Exchange
believes this proposed change enhances the clarity of Section 3.4 by
specifying, consistent with the advance notice provisions under Section
3.1 of the By-Laws, that the chairman and presiding person of the
meeting must be an officer or director of the Corporation. Section 3.4
also provides in part that the person presiding over a meeting shall
have the right to, among other things, convene and adjourn the
meeting.\33\ The Exchange proposes to clarify that the presiding person
also shall have the right to recess the meeting for any or no
reason.\34\ The Exchange believes this proposed change will make
explicit that the presiding person's rights with respect to the conduct
of the meeting includes the right to recess the meeting for any or no
reason, thereby enhancing the clarity and transparency of this rule.
---------------------------------------------------------------------------
\32\ See proposed Section 3.4 of the By-Laws. To effect this
change, the Exchange proposes to insert, in the first full sentence
of Section 3.4 and immediately after ``shall be announced at the
meeting by the'' the words ``chairman of the meeting who shall be an
officer or director of the Corporation and who shall be the.'' See
id.
\33\ See Section 3.4 of the By-Laws.
\34\ See proposed Section 3.4 of the By-Laws.
---------------------------------------------------------------------------
Section 3.6(d) of the By-Laws governs the amount of shares that a
stockholder must own to invoke proxy access. Section 3.6(d) provides in
part that ``[w]hether outstanding shares of the common stock of the
Corporation are `owned' for these purposes shall be determined by the
Board or any committee thereof, in each case, in its sole discretion.''
\35\ The Exchange proposes to amend Section 3.6(d) to delete therefrom
the words ``in each case, in its sole discretion.'' \36\ The Exchange
further proposes to remove from Section 3.6(h)(ii), Section
3.6(h)(viii), Section 3.6(i)(i), and Section 3.6(k) of the By-Laws
similar references to the finality or ``binding'' nature of decisions
by the Board (or persons authorized by the Board), any committee
thereof, or the chairman of a meeting of stockholders.\37\ These
proposed changes align the By-Laws with current practice because
provisions that purport to assign a binding effect to or otherwise
finality to the decisions of the Board--such as those proposed to be
deleted--are likely targets by litigants who argue that such provisions
unlawfully purport to foreclose judicial review.
---------------------------------------------------------------------------
\35\ See Section 3.6(d) of the By-Laws.
\36\ See proposed Section 3.6(d) of the By-Laws.
\37\ See proposed Section 3.6(h)(ii), Section 3.6(h)(viii),
Section 3.6(i)(i), and Section 3.6(k) of the By-Laws.
---------------------------------------------------------------------------
Finally, Section 3.6(m) provides that Section 3.6 shall be the
exclusive method for stockholders to include nominees for director in
the Corporation's proxy materials. The Exchange proposes to amend
Section 3.6(m) to provide an exception for nominees for director in the
Corporation's proxy materials submitted pursuant to, and in compliance
with, the Commission's universal proxy rule.\38\ The proposed changes
to Section 3.6(m) align the By-Laws with current practice by providing
that, in addition to the exclusive method set out in Section 3.6 of the
By-Laws, stockholders may also include nominees for such purposes
pursuant to and consistent with requirements under the SEC's universal
proxy rule.\39\
---------------------------------------------------------------------------
\38\ To effect this proposed change, the Exchange proposes to
add immediately after the conclusion of current Section 3.6(m) the
words ``other than nominees included pursuant to, and in compliance
with, Section 14a-19 of the Act.'' See proposed Section 3.6(m) of
the By-Laws.
\39\ See proposed Section 3.6(m) of the By-Laws.
---------------------------------------------------------------------------
(ii) Article IV Board of Directors
Section 4.3 of Article IV of the By-Laws governs qualifications for
Directors of the Corporation. This section currently provides in part
the Board may include at least one, but not more than two, Issuer
Directors. The Exchange proposes to amend Section 4.3 to remove
limitations on the number Issuers Directors on the Board.\40\ The
proposed change would provide the Corporation with greater flexibility
with respect to the number of Issuer Directors that may be members of
the Board, as NASDAQ is frequently in search of
[[Page 47378]]
officers of NASDAQ-listed companies to join the Board.
---------------------------------------------------------------------------
\40\ To effect this change, the Exchange proposes to delete from
Section 4.3 of the By-Laws the words ``at least one, but no more
than two.'' See proposed Section 4.3 of the By-Laws.
---------------------------------------------------------------------------
Section 4.9 of the By-Laws governs quorum and voting. Section 4.9
provides in part that, in general, a quorum for the transaction of all
business at all meetings of the Board shall consist of a majority of
the Board.\41\ The Exchange proposes to make a clarifying change to
specify that for purposes of this section, a majority of the Board,
means a majority of the total numbers of directors constituting the
Board.\42\ The Exchange believes this proposed change would provide
greater clarity to and facilitate the application of this provision.
The Exchange further proposes to amend Section 4.9 to clarify the
process through which notice of meetings adjourned to another time and
place may be given to each member of the Board.\43\ Specifically, the
Exchange proposes to clarify in Section 4.9 that in the absence of a
quorum, a majority of the Directors present may adjourn the meeting to
another time and place, and that notice of the time, place and purposes
of any such adjourned meeting will be given in accordance with the By-
Laws.\44\ The Exchange further proposes to clarify that, if the notice
of such adjourned meeting is announced at the meeting at which the
adjournment is taken, notice need only be given to the Directors not
present at such meeting.\45\ The Exchange believes this proposed change
would provide greater clarity to the By-Laws by providing a clear and
practical process for giving notices of adjournments to members of the
Board.
---------------------------------------------------------------------------
\41\ See Section 4.9 of the By-Laws.
\42\ See proposed Section 4.9 of the By-Laws.
\43\ See proposed Section 4.9 of the By-Laws.
\44\ See proposed Section 4.9 of the By-Laws.
\45\ See proposed Section 4.9 of the By-Laws. The Exchange
proposes to make a conforming change to Section 4.9 to delete from
the second full sentence thereof the words ``until a quorum be
present.'' See id.
---------------------------------------------------------------------------
Section 4.12 of the By-Laws governs the process for providing
notice of any meeting to Directors of the Board as well as related
waivers of such notice. The Exchange proposes to amend Section 4.12 to
remove obsolete references to certain modes of communication (both for
transmission and confirmation of receipt) other than facsimile, email,
or other means of electronic transmission.\46\ The Exchange believes
this proposed change would provide greater clarity to and facilitate
the application of this provision by eliminating modes of
communications, such as telegram, telefax, cable, and radio, that are
no longer in use. In addition, the proposed amendments reflect current
practices, as a substantial amount of communications between NASDAQ and
its directors outside of Board meetings occurs in electronic form.
---------------------------------------------------------------------------
\46\ See proposed Section 4.12(a)-(b) of the By-Laws. To effect
this change, the Exchange proposes to (1) delete from Section
4.12(a)(ii) the words ``telegraph, telefax, cable, radio, wireless''
and substitute therefor the word ``facsimile''; (2) delete from
Section 4.12(a)(ii) the word ``written''; and (3) delete from
Section 4.12(b) the parenthetical ``(or by telegram, telefax, cable,
radio, wireless, email or other means of written electronic
transmission and subsequently confirmed in writing or by electronic
transmission).'' See id.
---------------------------------------------------------------------------
Section 4.13 of the By-Laws governs matters relating to committees
of the Board. The Exchange proposes to amend Section 4.13(a) of the By-
Laws to specify that the Corporation has opted into Section141(c)(2) of
Delaware law.\47\ Section 141(c) of Delaware law describes the
formation and powers of board committees. Opting into Section 141(c)(2)
of Delaware law is a common and recommended practice for Delaware
corporations such as NASDAQ, in part because it provides corporations
with greater flexibility with respect to the formation and powers of
board committees, such as by allowing greater delegations of authority,
including as it relates to setting terms of stock. The Exchange
believes that opting into Section 141(c)(2) is appropriate to provide
the Corporation with greater flexibility with respect to the functions
and powers of committees of the Board.
---------------------------------------------------------------------------
\47\ See proposed Section 4.13(a) of the By-Laws. To effect this
change, the Exchange proposes to insert, as the first full sentence
in Section 4.13(a) the words ``The Corporation has opted into
Section 141(c)(2) of Delaware law.'' See id.
---------------------------------------------------------------------------
The Exchange further proposes to amend Section 4.13 of the By-Laws
to remove from Section 4.13(c) limitations on the ability of committees
to take certain actions, such as the authorization of preferred stock
designations. As a substitute for that limiting language, the Exchange
proposes to insert new text in Section 4.13(c) of the By-Laws that
would conform this subsection with the Delaware General Corporation
Law, which removes limitations on the ability of committees to take
certain actions, such as the authorization of preferred stock
designations, as it relates to the powers of committees of the
Board.\48\ Consistent with proposed changes for Section 4.13(a), the
Exchange believes this proposed change to Section 4.13(c) of the By-
Laws would align this provision with current Delaware General
Corporation Law, thereby updating the By-Laws as well as providing the
Corporation with greater flexibility with respect to committees of the
Board.
---------------------------------------------------------------------------
\48\ See proposed Section 4.13(c) of the By-Laws. To effect this
change, the Exchange proposes to delete from Section 4.13(c) the
words ``amending the Restated Certificate of Incorporation or the
By-Laws of the Corporation; adopting an agreement of merger or
consolidation; recommending to the stockholders the sale, lease, or
exchange of all or substantially all the Corporation's property and
assets; or recommending to the stockholders a dissolution of the
Corporation or a revocation of a dissolution. Unless the resolution
of the Board expressly so provides, no committee shall have the
power or authority to authorize the issuance of stock.'' The
Exchange further proposes to amend Section 4.13(c) to insert,
immediately after the words ``no committee shall have the power or
authority of the Board with regard to:'' the following: ``(a)
approving or adopting, or recommending to the stockholders, any
action or matter (other than the election or removal of directors)
expressly required by Delaware law to be submitted to stockholders
for approval or (b) adopting, amending or repealing any By-Law of
the Corporation.'' See id.
---------------------------------------------------------------------------
The Exchange proposes to amend Section 4.13(d)-(g) of the By-Laws
to remove all references to limitations on the terms of committee
members.\49\ To effect that change, the Exchange proposes to (1) remove
from Section 4.13(d) of the By-Laws the words ``[a]n Executive
Committee member shall hold office for a term of one year''; \50\ (2)
remove from Section 4.13(e) of the By-Laws the words ``[a] Finance
Committee member shall hold office for a term of one year''; \51\ (3)
remove from Section 4.13(f) of the By-Laws the words ``[a] Management
Compensation Committee member shall hold office for a term of one
year''; \52\ and (4) remove from Section 4.13(g) of By-Laws the words
``an Audit Committee member shall hold office for a term of one year.''
\53\ The Exchange believes that deleting all references to committee
members having a limited term is appropriate because term limits are
not customary in by-laws as they create unnecessary administrative
burdens for and limit the flexibility of a board. The Exchange notes
that the proposed changes also align the By-Laws with current practice
as the typical practice of the Board is to provide, in the annual
resolutions regarding committee appointments, that committee members
are appointed for one year or until their successors are duly elected.
---------------------------------------------------------------------------
\49\ See Section 4.13(d)-(g) of By-Laws.
\50\ See proposed Section 4.13(d) of By-Laws.
\51\ See proposed Section 4.13(e) of the By-Laws.
\52\ See proposed Section 4.13(f) of the By-Laws.
\53\ See proposed Section 4.13(g) of the By-Laws.
---------------------------------------------------------------------------
The Exchange further proposes to amend Section 4.13(g) of the By-
Laws to delete language specifying the Chair of the Audit Committee
must be a Public Director.\54\ The Exchange believes that this proposed
change would eliminate unnecessary restrictions regarding, as well as
provide the Corporation with greater flexibility with respect to, those
[[Page 47379]]
who may serve as Audit Committee Chair since the Chair of the Audit
Committee must in any event satisfy the independence standards in SEC
as well as NASDAQ rules.\55\ The proposed change would, for example,
allow an issuer representative to be appointed as Chair of the Audit
Committee. Finally, the Exchange proposes a non-substantive, clarifying
change to Section 4.13(g) to provide that the Audit and Risk Committee
(or such committee as the same may be renamed from time to time or any
successor of such committee delegated with similar duties) shall be
known as the ``Audit Committee.'' \56\ The Exchange believes these
proposed changes to Section 4.13(g) would provide greater flexibility
to the Corporation with respect to those that may serve as Chair of the
Audit Committee as well as enhance the clarity of and thus facilitate
the application of the By-Laws by making the term ``Audit Committee'' a
more clearly defined term.
---------------------------------------------------------------------------
\54\ See proposed Section 4.13(g) of the By-Laws.
\55\ See proposed Section 4.13(g) of the By-Laws. To effect this
change, the Exchange proposes to insert in the first full sentence
of Section 4.13(g) of the By-Laws and immediately after the words
``[t]he Audit'' the words and symbol ``& Risk'' and further insert,
immediately following the word ``Committee'' a parenthetical reading
as follows: ``(such committee as the same may be renamed from time
to time or any successor of such committee delegated with similar
duties, the ``Audit Committee'').''The Exchange also proposes to
renumber Section 4.13(g)(i) to delete the ``(i)'' and subsume the
text of Section 4.13(g)(i) with that of proposed Section 4.13(g).
See proposed Section 4.13(g) of the By-Laws.
\56\ See proposed Section 4.13(g) of the By-Laws.
---------------------------------------------------------------------------
The Exchange proposes to amend Section 4.13(h)(ii) of the By-Laws
to remove language providing that a ``majority vote of'' the Board is
required to remove a member of the Nominating & Governance
Committee.\57\ This change removes duplicative language and reduces
potential confusion since the voting standards for all decisions of the
board are set forth separately in Section 4.9(b) of the By-Laws.
---------------------------------------------------------------------------
\57\ See Section 4.13(h) of the By-Laws.
---------------------------------------------------------------------------
Section 4.13(j) of the By-Laws provides that, in general, a
majority of a committee shall constitute a quorum for the transaction
of business.\58\ The Exchange proposes to amend Section 4.13(j) to
specify that a majority of the members of a committee then serving in
office (rather than a majority of total directors on the committee as
Section 4.13(j) currently provides) shall constitute a quorum for the
transactions of business.\59\ The Exchange believes this proposed
change would remove barriers to and facilitate the work of Board
committees since a vacancy in a committee would not be a barrier to
action, as the quorum would be based on the directors then serving
rather than the total number of directors on the committee.
---------------------------------------------------------------------------
\58\ See Section 4.13(j) of the By-Laws.
\59\ See proposed Section 4.13(j) of the By-Laws.
---------------------------------------------------------------------------
(iii) Article VII Officers, Agents, and Employees
Article VII of the By-Laws governs matters relating to the
officers, agents, and employees of the Corporation. The Exchange
proposes to amend certain provisions in Article VII to delete
references to a corporate structure that no longer reflects the
structure at NASDAQ. Specifically, Article VII generally envisions a
corporate structure where a President is a director and/or has
executive authority over the entire company. The Exchange proposes to
amend certain sections of Article VII to delete references to such a
structure and replace them with language suited for a corporate
structure with multiple presidents, such as the current structure of
NASDAQ. To effect these changes, the Exchange proposes to amend several
provisions of Article VII as follows.
Section 7.1 of the By-Laws governs matters relating to the
principal officers of the Corporation. Section 7.1 specifies the
principal officers to be elected by the Board, including, among others,
a Chair and a President. The Exchange proposes to amend Section 7.1 to
provide that the principal officers to be elected by the Board may--
rather than must--include the roles set out in Section 7.1. The
Exchange further proposes to amend Section 7.1 to provide that one or
more Presidents, rather than only a President, may elected by the
Board, among other principal officers. Section 7.1 further provides
that in part that one person may not hold the offices and perform the
duties of both President and Vice President or of President and
Secretary. The Exchange proposes to amend Section 7.1 of the By-Laws to
delete references to ``President and Vice President or of President''
and substitute therefor the words ``Chief Executive Officer.'' \60\ As
thus proposed, one person could not hold the offices and perform the
duties of both Chief Executive Officer and Secretary (rather than of
President and Vice President or of President and Secretary).\61\
---------------------------------------------------------------------------
\60\ See proposed Section 7.1 of the By-Laws.
\61\ See proposed Section 7.1 of the By-Laws.
---------------------------------------------------------------------------
For the reasons discussed above in connection with Article VII of
the By-Laws more broadly, the Exchange further proposes to amend
Section 7.3 (Subordinate Officers, Agents, or Employees), Section 7.5
(Resignation and Removal of Officers), Section 7.9 (President), Section
7.10 (Vice President), Section 7.11 (Secretary), and Section 7.13
(Treasurer) of the By-Laws as follows.
First, the Exchange proposes to delete from Sections 7.3 and 7.5(a)
of the By-Laws the following: ``, the President.''
With respect to Section 7.9 of the By-Laws, the Exchange proposes
to (1) delete the words ``[t]he President shall, in the absence of the
Chair of the Board and the Chief Executive Officer, preside at all
meetings of the Board and stockholders at which the President is
present. The President shall have general supervision over the business
and affairs of the Corporation,'' substituting therefor the words ``The
Board or the Chief Executive Officer may appoint one or more Presidents
and each.'' The Exchange would further amend Section 7.9 to (1) delete
from its final sentence the word ``The'' replacing it with ``Each'';
(2) delete also from that final sentence the word ``the'' and replacing
it with ``such''; and (3) insert, also in that final sentence and
immediately after ``the Board'' the words ``or the Chief Executive
Officer.''
With respect to Section 7.11 and Section 7.13 of the By-Laws, the
Exchange proposes to amend these two sections to delete, from their
respective final sentences, the words ``or the President,''
substituting therefore the words ``or any other person delegated such
power by the Board or Chief Executive Officer.'' Consistent with
similarly proposed changes to Article VII of the By-Laws, the Exchange
believes that the proposed changes to Sections 7.11 and Section 7.13 of
the By-Laws would remove impediments to the proper administration of
the By-Laws as they would more closely align such By-Laws with the
current corporate structure at NASDAQ as well as provide the
Corporation with greater flexibility in the application of these
provisions.
The Exchange believes the proposed changes to these provisions of
Article VII of the By-Laws would enhance the transparency of and
facilitate the application of the By-Laws because they replace obsolete
or inaccurate textual references to an outdated corporate structure
with updated text designed to more closely reflect the current
structure of NASDAQ.
Section 7.10 of the By-Laws governs the selection of Vice
Presidents. The Exchange proposes to amend Section 7.10 of the By-Laws
to provide greater clarity with respect to the duties of as well as the
process for selecting Vice Presidents of the Corporation. Specifically,
the Exchange proposes to amend Section 7.10 of the By-Laws to
[[Page 47380]]
provide that the Board, the Chief Executive Officer or any other person
delegated such power by the Board or Chief Executive Officer, may
appoint one or more Vice Presidents. The Exchange further proposes to
clarify that, any Vice President may have such additional designations
in such Vice President's title as the Board, the Chief Executive
Officer, or the authorized person appointing such Vice President may
determine.\62\ As proposed, each Vice President would have all powers
and duties usually incident to the office of a Vice President, except
as specifically limited by the Board, the Chief Executive Officer or
the authorized person appointing such Vice President.\63\ The Exchange
also proposes to clarify in the next to final sentence of Section 7.10
that, in addition to the Board and the Chief Executive, as provided
under this section, the authorized person appointing such Vice
President may also assign such Vice President other duties and powers
as the Vice Presidents shall be authorized to exercise and perform
pursuant to the By-Laws.\64\ The Exchange believes that the proposed
changes to Section 7.10 of the By-Laws would provide greater clarity
with respect to the duties of and the process for selecting the Vice
Presidents, thereby facilitating the application of the By-Laws with
respect to Vice Presidents of the Corporation.
---------------------------------------------------------------------------
\62\ See proposed Section 7.10 of the By-Laws.
\63\ See proposed Section 7.10 of the By-Laws.
\64\ See proposed Section 7.10 of the By-Laws. To effect the
proposed changes to Section 7.10, the Exchange proposes to (1)
delete therefrom the words ``The Board shall elect'' and substitute
therefor the words ``The Board, the Chief Executive Officer or any
other person delegated such power by the Board or Chief Executive
Officer, may appoint''; (2) delete, from the second sentence of
Section 7.10 the words ``[i]n the absence or disability of the
President or if the office of President becomes vacant, the Vice
Presidents in the order determined by the Board, or if no such
determination has been made, in the order of their seniority, shall
perform the duties and exercise the powers of the President, subject
to the right of the Board at any time to extend or restrict such
powers and duties or to assign them to others''; (3) insert, in the
third sentence of Section 7.10 of the By-Laws and immediately
following the words ``as the Board'' the words ``the Chief Executive
Officer, or the authorized person appointing such Vice President'';
(4) delete, from the fourth sentence of Section 7.10 the words ``The
Vice Presidents shall generally assist the President in such manner
as the President shall direct'' substituting therefor the words
``Each Vice President shall have all powers and duties usually
incident to the office of a Vice President, except as specifically
limited by the Board, the Chief Executive Officer or the authorized
person appointing such Vice President.''; and (5) insert in the
final sentence of Section 7.10 of the By-Laws and immediately after
the words ``the Chief Executive Officer or the'' the words
``authorized person appointing such Vice.'' See id.
---------------------------------------------------------------------------
(iv) Article VIII Indemnification
Section 8.1 of Article VIII of the By-Laws governs indemnification
of Directors, officers, employees, and agents of the Corporation.
Subsection (j) of Section 8.1 addresses circumstances in which a claim
for indemnification or advancement of expenses is not paid in full
within 60 days after a written claim under this provision has been
received by the Corporation. The Exchange proposes to amend Section
8.1(j) to clarify that the Corporation will not be required to pay
claims or expenses under this provision if prohibited by law. To effect
this change, the Exchange proposes to insert within the first full
sentence and immediately after ``[the indemnified person] shall be
entitled to be paid the expense of prosecuting such claim'' the words
``to the fullest extent permitted by law.'' \65\ The Exchange believes
this proposed change is appropriate as it would enhance the clarity of
this provision by specifying that the extent of the Corporation's
obligation to pay claims or expenses under this provision is limited to
those claims or expenses not prohibited by law.
---------------------------------------------------------------------------
\65\ See proposed Section 8.1(j) of the By-Laws.
---------------------------------------------------------------------------
(v) IX Capital Stock
Section 9.2(a) of Article IX of the By-Laws governs requirements
for signatures on stock certificates of the Corporation. Section 9.2(a)
provides in part that shares of capital stock of the Corporation
represented by certificates shall be signed in the name of the
Corporation by two officers, with one being the Chair of the Board, the
Chief Executive Officer, the President, or a Vice President, and the
other being the Secretary, the Treasurer, or such other officer that
may be authorized by the Board.
The Exchange proposes to amend Section 9.2(a) to broaden the scope
of officers authorized to sign stock certificates. Specifically, the
Exchange proposes to provide that Shares of capital stock of the
Corporation represented by certificates shall be signed in the name of
the Corporation by two authorized officers which shall include, without
limitation, the Chair of the Board, the Chief Executive Officer, the
President, any Vice President, the Secretary, and the Treasurer.\66\
The Exchange believes the proposed changes to Section 9.2(a) would
remove unnecessary limitations on officers authorized to sign stock
certificates thereby providing greater flexibility in the By-Laws with
respect to officers authorized to perform this important function.
---------------------------------------------------------------------------
\66\ See proposed Section 9.2 of the By-Laws. To effect this
change as well as make conforming changes to Section 9.2 of the By-
Laws, the Exchange proposes to (1) insert, immediately after
``certificates shall be signed in the name of the Corporation by
two'' the word ``authorized''; (2) insert, immediately after
``officers'' the words ``which shall include, without limitation,'';
and (3) delete the words ``with one being,'' as well as ``or a,''
``and the other being,'' and ``, or such other officer that may be
authorized by the Board.'' See id.
---------------------------------------------------------------------------
Section 9.3 of the By-Laws governs matters relating to holders of
record as shown on the stock ledger of the Corporation. Section 9.3(b)
of the By-Laws provides that the Corporation shall be entitled to treat
the holder of record of shares of capital stock as shown on the stock
ledger as the owner thereof and as the person entitled to vote such
shares and to receive notice of meetings, and for all other purposes.
That subsection further provides that the Corporation shall not be
bound to recognize any equitable or other claim to or interest in any
share of capital stock on the part of any other person, whether or not
the Corporation shall have express or other notice thereof.\67\ The
Exchange proposes to amend Section 9.3(b) to provide for the
possibility that applicable law might require a different outcome.
Specifically, the Exchange proposes to provide that the Corporation
shall, to the fullest extent permitted by law, be entitled to treat the
holder of record of shares of capital stock as shown on the stock
ledger as the owner thereof and as the person entitled to vote such
shares and to receive notice of meetings, and for all other purposes.
As further proposed, Section 9.3 would provide that the Corporation
shall not be bound to recognize any equitable or other claim to or
interest in any share of capital stock on the part of any other person,
whether or not the Corporation shall have express or other notice
thereof, except as required by law.\68\ The Exchange believes the
proposed changes to Section 9.3 of the By-Laws would ensure the
enforceability of this provision by recognizing that there may be
circumstances where its application would be subject to and possibly
limited or otherwise affected by applicable law.
---------------------------------------------------------------------------
\67\ See Section 9.3(b) of the By-Laws.
\68\ See proposed Section 9.3(b) of the By-Laws.
---------------------------------------------------------------------------
Section 9.6 of the By-Laws governs matters relating to lost,
stolen, destroyed, and mutilated certificates for shares of stock of
the Corporation. Section 9.6 sets out procedures for addressing the
issuance of a new certificate or uncertified shares in the event that
any certificate for stock of the Corporation becomes mutilated, lost,
[[Page 47381]]
stolen, or destroyed. The Exchange proposes to amend Section 9.6 to
delete language providing that the Board or a committee thereof is
authorized to take action to address each such instance of lost,
stolen, destroyed, or mutilated certificates and in its place provide
that the Corporation (rather than solely the Board) shall have the
authority to do so.\69\ The Exchange believes this proposed change
would remove obstacles to and facilitate the reissuance of new
certificates under the specified circumstances by providing that the
Corporation is authorized to act under those circumstances and by
removing unnecessary requirements for the Board to take action in each
and every instance that that a new certificate to replace a mutilated,
lost, stolen, or destroyed certificate is sought.
---------------------------------------------------------------------------
\69\ See proposed Section 9.6 of the By-Laws. To effect his
change, the Exchange proposes to (1) delete from the fourth sentence
of Section 9.6 the words ``Board or such committee'' and substitute
therefor the word ``Corporation'' and (2) delete from the fifth
sentence the word ``Board,'' substituting therefor the word
``Corporation.'' See id.
---------------------------------------------------------------------------
(vi) Article X Miscellaneous Provisions
Section 10.4 of Article X of the By-Laws governs procedures
relating to the execution of instruments, contracts, and the like. The
Exchange proposes to delete Section 10.4 in its entirety and provide
new text to better align the provisions of this section with NASDAQ's
policies and procedures on signature authority. Specifically, the
Exchange proposes to provide that, except as otherwise provided by law,
all contracts and other documents requiring signature entered into by
or on behalf of the Corporation, including, without limitation, all (i)
checks, drafts, bills of exchange, notes, or other obligations or
orders for the payment of money, (ii) deeds, bonds, mortgages,
contracts, and other obligations or instruments, and (iii)
applications, instruments, and papers required by any department of the
United States Government or by any state, county, municipal, or other
governmental authority, shall, in each case, be executed by such
officer(s), employee(s), agent(s), or other person(s) as the Board, a
duly authorized committee thereof, or the Chief Executive Officer may
designate from time to time. As further proposed, the authority to
execute any contract or document in the name and on behalf of the
Corporation granted in accordance with this Section may (1) be general
or confined to specific instances, (2) be designated by name, title, or
role, (3) include the power to delegate signature authority further to
one or more other persons, whether by name, title, or role, to the
extent authorized by the Board, a duly authorized committee thereof, or
the Chief Executive Officer, and (4) be revoked at any time by the
Board, any committee thereof, or the Chief Executive Officer.\70\ The
Exchange believes that the proposed changes to Section 10.4 of the By-
Laws would enhance clarity and facilitate the application of the By-
Laws by removing language that has become obsolete and replacing it
with provisions that more closely reflect NASDAQ's current policies and
procedures on signature authority.
---------------------------------------------------------------------------
\70\ See proposed Section 10.4 of the By-Laws.
---------------------------------------------------------------------------
Section 10.5 of the By-Laws governs the form of records of the
Corporation. The Exchange proposes to delete Section 10.5 in its
entirety and insert in its place new text that would conform this
provision with the updated Delaware statute governing signature
authority. Specifically, the Exchange proposes to provide that any
records administered by or on behalf of the Corporation in the regular
course of its business, including its stock ledger, books of account,
and minute books, may be kept on, or by means of, or be in the form of,
any information storage device, method, or one or more electronic
networks or databases (including one or more distributed electronic
networks or databases), provided that the records so kept can be
converted into clearly legible paper form within a reasonable time and
otherwise comply with applicable law.\71\
---------------------------------------------------------------------------
\71\ See proposed Section 10.5 of the By-Laws.
---------------------------------------------------------------------------
(vii) Article XI Amendments; Emergency By-Laws
Section 11.4 of Article XI of the By-Laws addresses the adoption of
emergency by-laws. The Exchange proposes to update Section 11.4 to
reflect amendments to the emergency by-law provision of the Delaware
General Corporation Law. Specifically, the Exchange proposes to provide
that as provided in Section 11.4, the Board may adopt emergency by-laws
which shall be operative during any emergency resulting from ``any
emergency resulting from an attack on the United States or on a
locality in which the Corporation conducts its business or customarily
holds meetings of its Board of Directors or its stockholders, or during
any nuclear or atomic disaster or during the existence of any
catastrophe, including, but not limited to, an epidemic or pandemic,
and a declaration of a national emergency by the United States
government, or other similar emergency condition, irrespective of
whether a quorum of the Board of Directors or a standing committee
thereof can be readily convened for action.'' \72\ In addition, and
consistent with Delaware General Corporation Law, the Exchange proposes
to update Section 11.4 to provide, in a final sentence to Section 11.4
of the By-Laws, that ``[n]othing contained in this Section 11.4 shall
be deemed exclusive of any other provisions for emergency powers
consistent with other sections of Delaware law which have been or may
be adopted by corporations created under Delaware law.'' \73\
---------------------------------------------------------------------------
\72\ See proposed Section 11.4 of the By-Laws.
\73\ See proposed Section 11.4 of the By-Laws. The Exchange
further proposes to delete from Section 11.4 the following language
as it has become obsolete: ``nuclear or atomic disaster, an attack
on the United States or on a locality in which the Corporation
conducts its business or customarily holds meetings of the Board or
the stockholders, any catastrophe, or other emergency condition, as
a result of which a quorum of the Board or a committee thereof
cannot readily be convened for action.'' See id.
---------------------------------------------------------------------------
(viii) Article XIII Forum Selection
The Exchange proposes to adopt new language to provide the By-Laws
with a customary forum selection provision. To effect this change, the
Exchange proposes to add a new Article XIII titled ``Forum Selection''
providing as follows: \74\
---------------------------------------------------------------------------
\74\ See proposed Article XIII of the By-Laws.
Unless the Corporation consents in writing to the selection of
an alternative forum, (A) (i) any derivative action or proceeding
brought on behalf of the Corporation, (ii) any action asserting a
claim of breach of a fiduciary duty owed by any current or former
director, officer, other employee or stockholder of the Corporation
to the Corporation or the Corporation's stockholders, (iii) any
action asserting a claim arising pursuant to any provision of
Delaware law, the Restated Certificate of Incorporation or these By-
Laws (as either may be amended or restated) or as to which Delaware
law confers jurisdiction on the Court of Chancery of the State of
Delaware or (iv) any action asserting a claim governed by the
internal affairs doctrine of the law of the State of Delaware shall,
to the fullest extent permitted by law, be exclusively brought in
the Court of Chancery of the State of Delaware or, if such court
does not have subject matter jurisdiction thereof, the federal
district court of the State of Delaware; and (B) the federal
district courts of the United States shall be the exclusive forum
for the resolution of any complaint asserting a cause of action
arising under the Securities Act of 1933, as amended.
Notwithstanding the foregoing, This Section 13.1 shall not apply to
claims seeking to enforce any liability or duty created by the Act.
To the fullest extent permitted by law, any person or entity
purchasing or otherwise acquiring or holding any interest in shares
of capital stock of the Corporation shall be deemed to have notice
[[Page 47382]]
---------------------------------------------------------------------------
of and consented to the provisions of this Section 13.1.
The Exchange believes that this proposed addition of Article XIII
to the By-Laws is appropriate as it would provide the Corporation as
well as litigants with greater certainty with respect to the applicable
judicial forum for addressing claims or actions involving the
Corporation.\75\
---------------------------------------------------------------------------
\75\ The Exchange notes that the bylaws of Cboe Global Markets,
Inc. as well as those of CME Group, Inc., contain forum selection
provisions similar to those proposed by the Exchange. See Article 11
(``Forum for Adjudication of Disputes'') of the Eight Amended and
Restated Bylaws of Cboe Global Markets, Inc. (2024) <a href="https://s202.q4cdn.com/174824971/files/doc_governance/2024/Dec/04/Cboe-Global-Markets-Eighth-AR-Bylaws-2ffa4c.pdf">https://s202.q4cdn.com/174824971/files/doc_governance/2024/Dec/04/Cboe-Global-Markets-Eighth-AR-Bylaws-2ffa4c.pdf</a>; Article IX, Section 9.1
(``Forum for Adjudication of Certain Disputes'') of the Seventeenth
Amended and Restated Bylaws of CME Group, Inc. (2022) <a href="https://www.sec.gov/Archives/edgar/data/1156375/000119312522301477/d412380dex31.htm">https://www.sec.gov/Archives/edgar/data/1156375/000119312522301477/d412380dex31.htm</a>.
---------------------------------------------------------------------------
(ix) Non-Substantive Changes
The remaining proposed amendments to the By-Laws are non-
substantive changes designed to simplify and streamline the document.
Specifically, the Exchange proposes to (1) amend Article I(k) and
Article I(m) to correct typographical errors by deleting a period and
substituting in its place a semicolon and by inserting a missing
parenthesis respectively; (2) make non-substantive clarifying changes
to subparagraph (p) of Article I; (3) amend Article I(s) to correct a
typographical error by removing a period after ``and'''; and (4) delete
from Section 3.1(a) the term ``shareholder'' and substitute therefor
the word ``stockholder.'' the latter which more closely reflects
established terminology of the By-Laws. The Exchange believes the
proposed non-substantive changes are either administrative or
clarifying in nature, and that, as such, they are in the public
interest as they are designed to avoid confusion with respect to the
operation of the By-Laws thus facilitating their use.
2. Statutory Basis
The Exchange believes that the proposed changes are consistent with
Section 6(b) of the Act,\76\ in general, and furthers the objectives of
Section 6(b)(1) of the Act,\77\ in particular, in that they enable the
Exchange to be so organized so as to have the capacity to be able to
carry out the purposes of the Act and to comply, and to enforce
compliance by its members and persons associated with its members, with
the provisions of the Act, the rules and regulations thereunder, and
the rules of the Exchange. The Exchange also believes that the proposed
changes are consistent with Section 6(b) of the Act,\78\ in general,
and furthers the objectives of Section 6(b)(5) of the Act,\79\ in
particular, in that they are designed to promote just and equitable
principles of trade, 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.
---------------------------------------------------------------------------
\76\ 15 U.S.C. 78f(b).
\77\ 15 U.S.C. 78f(b)(1).
\78\ 15 U.S.C. 78f(b).
\79\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
(a) Proposed Changes to the Certificate
The Exchange believes the proposed changes to paragraphs A and B of
Article Sixth of the Certificate are in the public interest as they
would update the Certificate, consistent with developments in Delaware
General Corporation Law that enable companies incorporated in Delaware,
such as NASDAQ, to limit the liability of certain of their officers in
narrow circumstances, as discussed above. The Exchange notes that
amendments providing for officer exculpation are increasingly common
for public companies, and that the number of shareholder proposals
calling for such amendments have continued to increase since 2022 when
the Delaware law was passed.\80\
---------------------------------------------------------------------------
\80\ See supra note 3 and accompanying text.
---------------------------------------------------------------------------
(b) Proposed Changes to the By-Laws
The Exchange believes that changes proposed for Article III of the
By-Laws are in the public interest as they would update the By-Laws and
conform them to current practices and developments in the law with
respect to corporate matters such as procedures governing the annual
and special meetings of stockholders, the conduct of such meetings, and
the invocation of proxy access. The proposed changes to Article IV of
the By-Laws are either clarifying in nature or otherwise purport to
refine governance practices by providing the Corporation with greater
flexibility with respect to such matters as the qualifications of
Directors, quorum and voting, or otherwise update such provisions to
make them more consistent with current governance practices as well as
the policies and procedures of NASDAQ. The Exchange believes that
proposed changes to Articles VII through XIII are in the public
interest and consistent with the protection of investors as they are
designed to accomplish several objectives, including updating the By-
Laws to conform with current practices or recent developments in
Delaware General Corporation Law, aligning the By-Laws with current
NASDAQ policies and procedures, and enhancing the clarity of the By-
Laws thus facilitating their proper application and use. Finally, the
remaining changes can be characterized as non-substantive, because they
are designed to either correct typographical errors, conform NASDAQ
governance documents to terminology in the By-Laws, remove obsolete
text, or otherwise make non-substantive revisions to the By-Laws to
make them clearer and easier to use.
B. Self-Regulatory Organization's Statement on Burden on Competition
Because the proposed rule change relates to the governance of
NASDAQ and not to the operations of the Exchange, the Exchange does not
believe that the proposed rule change will impose any burden on
competition not necessary or appropriate in furtherance of the purposes
of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
A. by order approve or disapprove such proposed rule change, or
B. institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<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#146661787139777b7979717a6067546771773a737b62"><span class="__cf_email__" data-cfemail="b4c6c1d8d199d7dbd9d9d1dac0c7f4c7d1d79ad3dbc2">[email protected]</span></a>. Please include
file number SR-MRX-2025-23 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange
[[Page 47383]]
Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-MRX-2025-23. 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the filing 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-MRX-2025-23 and
should be submitted on or before October 22, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\81\
---------------------------------------------------------------------------
\81\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-19178 Filed 9-30-25; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on October 1, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.