Notice2025-19448
Self-Regulatory Organizations; Stock Clearing Corporation of Philadelphia; Notice of Filing of 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 3, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 190 (Friday, October 3, 2025)</title>
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[Federal Register Volume 90, Number 190 (Friday, October 3, 2025)]
[Notices]
[Pages 48062-48071]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-19448]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104155; File No. SR-SCCP-2025-01]
Self-Regulatory Organizations; Stock Clearing Corporation of
Philadelphia; Notice of Filing of Proposed Rule Change To Amend the
Amended and Restated Certificate of Incorporation and By-Laws of Its
Parent Corporation, Nasdaq, Inc.
September 30, 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 29, 2025, Stock Clearing Corporation of Philadelphia
(``SCCP'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III, below, which Items have been prepared by SCCP. 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\ 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
SCCP 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 SCCP's website
at <a href="https://listingcenter.nasdaq.com/rulebook/sccp/rulefilings">https://listingcenter.nasdaq.com/rulebook/sccp/rulefilings</a>, and at
the principal office of SCCP.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, SCCP 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. SCCP 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
SCCP is proposing to update the Certificate to reflect certain
amendments to the Delaware General Corporation Law. SCCP 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. SCCP 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--
[[Page 48063]]
have continued to increase since 2022 when the Delaware law was
passed.\3\
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\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>.
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Under NASDAQ'S Certificate and By-Laws, SCCP 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 SCCP
determined that the proposed amendments to the Certificate must be
filed with the Commission.
(2) Proposed Amendments
To effect the changes discussed above, SCCP 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, SCCP proposes to
add, after each instance of the word ``director,'' the words ``or
officer.'' \4\
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\4\ See proposed Article Sixth of the Certificate.
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SCCP 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.
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\5\ See 8 Del. C. Section 102(b)(7).
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(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, SCCP
must determine whether proposed amendments to the By-Laws must be filed
with the Commission prior to taking effect. On April 30, 2025, SCCP
determined that the proposed amendments to the By-Laws must be filed
with the Commission.
(2) Proposed Amendments
To effect the changes discussed above, SCCP 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 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\ SCCP proposes to amend
Section 3.1(b)(i) to narrow the scope of information that may be
requested under this provision. Specifically, SCCP 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\ SCCP 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. SCCP also proposes certain clarifying
changes to Section 3.1(b)(i) of the By-Laws. Specifically, SCCP
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\ SCCP believes these proposed non-
substantive changes would facilitate the application of this provision
by rendering it more specific and clearer to understand.
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\6\ See Section 3.1(b)(1) of the By-Laws. As discussed below,
SCCP 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, SCCP 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, SCCP 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,
SCCP 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. SCCP 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.
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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\ SCCP proposes to
amend Section 3.1(b)(iii)(C) to delete the
[[Page 48064]]
reference to others ``acting in concert with any of the foregoing.''
\11\ SCCP 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. SCCP thus believes it is appropriate to
delete such language from the advance notice requirements under this
section of the By-Laws.\12\
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\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. SCCP 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.
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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. SCCP 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\ SCCP 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.
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\13\ See proposed Section 3.1(b)(iii)(I) of the By-Laws.
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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\ SCCP 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\ SCCP 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.
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\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.
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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
Corporation.\17\ SCCP 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\
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\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.
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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), SCCP
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\ SCCP 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.
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\19\ See proposed Section 3.1(b)(iii)(I)-(K) of the By-Laws.
\20\ See id.
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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\ SCCP 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\ SCCP 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.
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\21\ See Section 3.1(b)(iii)(O) of the By-Laws.
\22\ To effect this change, SCCP 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. SCCP
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.
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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\ SCCP 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, SCCP 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
[[Page 48065]]
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\
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\24\ See Section 3.1(d) of the By-Laws.
\25\ See id.
\26\ See proposed Section 3.1(d) of the By-Laws.
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SCCP 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. SCCP 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\ SCCP
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.
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\27\ See proposed Section 3.2 of the By-Laws.
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SCCP 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, SCCP 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\ SCCP 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.
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\28\ See Section 3.2(a) of the By-Laws.
\29\ See proposed Section 3.2(a) of the By-Laws. SCCP 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. SCCP 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.
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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\ SCCP
proposes to amend that 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\ SCCP
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.
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\30\ See Section 3.3(a) of the By-Laws.
\31\ See proposed Section 3.3 of the By-Laws. To effect this
change, SCCP 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).'' SCCP 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.
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SCCP 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, SCCP 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. SCCP
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\ SCCP 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\ SCCP proposes
to clarify that the presiding person also shall have the right to
recess the meeting for any or no reason.\34\ SCCP 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.
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\32\ See proposed Section 3.4 of the By-Laws. To effect this
change, SCCP 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.
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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
[[Page 48066]]
committee thereof, in each case, in its sole discretion.'' \35\ SCCP
proposes to amend Section 3.6(d) to delete therefrom the words ``in
each case, in its sole discretion.'' \36\ SCCP 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.
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\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.
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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. SCCP 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\
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\38\ To effect this proposed change, SCCP 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.
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(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. SCCP 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 officers of NASDAQ-listed companies
to join the Board.
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\40\ To effect this change, SCCP 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.
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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\ SCCP 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\
SCCP believes this proposed change would provide greater clarity to and
facilitate the application of this provision. SCCP 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, SCCP 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\ SCCP 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\ SCCP
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.
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\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. SCCP 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.
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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. SCCP 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\ SCCP 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.
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\46\ See proposed Section 4.12(a)-(b) of the By-Laws. To effect
this change, SCCP 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.
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Section 4.13 of the By-Laws governs matters relating to committees
of the Board. SCCP 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. SCCP 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.
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\47\ See proposed Section 4.13(a) of the By-Laws. To effect this
change, SCCP 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.
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SCCP 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, SCCP 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\
[[Page 48067]]
Consistent with proposed changes for Section 4.13(a), SCCP 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.
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\48\ See proposed Section 4.13(c) of the By-Laws. To effect this
change, SCCP 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.'' SCCP
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.
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SCCP 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, SCCP 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\ SCCP 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. SCCP 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.
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\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.
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SCCP 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\ SCCP believes that this proposed change would
eliminate unnecessary restrictions regarding, as well as provide the
Corporation with greater flexibility with respect to, those 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, SCCP 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\ SCCP 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, SCCP 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'').'' SCCP 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.
---------------------------------------------------------------------------
SCCP 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\ SCCP 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\ SCCP 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. SCCP 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. SCCP 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, SCCP 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. SCCP 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. SCCP 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. SCCP 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\
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\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, SCCP 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, SCCP proposes to delete from Sections 7.3 and 7.5(a) of the
By-Laws the following: ``, the President.''
[[Page 48068]]
With respect to Section 7.9 of the By-Laws, SCCP 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.'' SCCP 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, SCCP
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, SCCP 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.
SCCP 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. SCCP 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,
SCCP proposes to amend Section 7.10 of the By-Laws to 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. SCCP 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\ SCCP 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\ SCCP 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, SCCP 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.
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(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. SCCP 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, SCCP 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\ SCCP 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.
SCCP proposes to amend Section 9.2(a) to broaden the scope of
officers authorized to sign stock certificates. Specifically, SCCP
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\
SCCP 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, SCCP 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.
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Section 9.3 of the By-Laws governs matters relating to holders of
record as shown on the stock ledger of the
[[Page 48069]]
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\ SCCP proposes to amend Section 9.3(b) to
provide for the possibility that applicable law might require a
different outcome. Specifically, SCCP 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\ SCCP 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,
stolen, or destroyed. SCCP 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\ SCCP 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.
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\69\ See proposed Section 9.6 of the By-Laws. To effect his
change, SCCP 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.
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(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. SCCP
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, SCCP 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\ SCCP 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. SCCP 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,
SCCP 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.
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(vii) Article XI Amendments; Emergency By-Laws
Section 11.4 of Article XI of the By-Laws addresses the adoption of
emergency by-laws. SCCP proposes to update Section 11.4 to reflect
amendments to the emergency by-law provision of the Delaware General
Corporation Law. Specifically, SCCP 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, SCCP 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
[[Page 48070]]
be adopted by corporations created under Delaware law.'' \73\
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\72\ See proposed Section 11.4 of the By-Laws.
\73\ See proposed Section 11.4 of the By-Laws. SCCP 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.
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(viii) Article XIII Forum Selection
SCCP proposes to adopt new language to provide the By-Laws with a
customary forum selection provision. To effect this change, SCCP
proposes to add a new Article XIII titled ``Forum Selection'' providing
as follows: \74\
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\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
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of and consented to the provisions of this Section 13.1.
SCCP 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\
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\75\ SCCP 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 SCCP. 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>.
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(ix) Non-Substantive Changes
The remaining proposed amendments to the By-Laws are non-
substantive changes designed to simplify and streamline the document.
Specifically, SCCP 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. SCCP 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
SCCP 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 SCCP 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 SCCP.
SCCP 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.
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\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).
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(a) Proposed Changes to the Certificate
SCCP 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. SCCP 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\
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\80\ See supra note 3 and accompanying text.
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(b) Proposed Changes to the By-Laws
SCCP 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. SCCP 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 SCCP, SCCP
[[Page 48071]]
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 (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which SCCP consents, the Commission shall: (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#f486819891d9979b9999919a8087b4879197da939b82"><span class="__cf_email__" data-cfemail="0173746d642c626e6c6c646f7572417264622f666e77">[email protected]</span></a>. Please include
file number SR-SCCP-2025-01 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-SCCP-2025-01. 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 SCCP. 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-SCCP-2025-01 and should be submitted on or
before October 24, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\81\
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\81\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-19448 Filed 10-2-25; 8:45 am]
BILLING CODE 8011-01-P
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