[Federal Register Volume 85, Number 146 (Wednesday, July 29, 2020)]
[Notices]
[Pages 45720-45722]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16372]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89386; File No. SR-NASDAQ-2020-039]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Listing Rule IM-5900-4 To Waive the All-Inclusive Annual Listing
Fee for Any Company Not Listed on a National Securities Exchange That
Is Listing Upon Closing of Its Acquisition of a Special Purpose
Acquisition Company Listed on Another National Securities Exchange
July 23, 2020.
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 July 9, 2020, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II 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.
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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
The Exchange proposes to amend Listing Rule IM-5900-4 to waive the
All-Inclusive Annual Listing Fee for any company not listed on a
national securities exchange that is listing upon closing of its
acquisition of a special purpose acquisition company listed on another
national securities exchange.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at
the principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the 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
Nasdaq proposes to amend Listing Rule IM-5900-4 to waive the All-
Inclusive Annual Listing Fee for any company not listed on a national
securities exchange that is listing upon closing of its acquisition of
a special purpose acquisition company (``Acquisition Company'') listed
on another national securities exchange.
When an Acquisition Company consummates its business combination,
it may choose a new listing venue for its post-business combination
existence as an operating company. In most such cases, the Acquisition
Company is the legal acquirer in the business combination transaction
and thus the company transferring its listing to Nasdaq is the same
entity as was listed on the other national securities exchange prior to
the acquisition (i.e., the Acquisition Company). When an Acquisition
Company that is the legal acquirer transfers its listing to Nasdaq
following the business combination, the first All-Inclusive Annual
Listing Fee is waived. Specifically, Listing Rule IM-5900-4 provides
that ``Nasdaq has determined to waive for the year of transfer the All-
Inclusive Annual Listing Fee applicable to the year such transfer is
made in the case of securities that . . . are listed on a national
securities exchange but not listed on Nasdaq, if the issuer of such
securities transfers their listing exclusively to Nasdaq.''
However, in fulfilling the requirements for an Acquisition Company
to complete an acquisition under applicable exchange rules,
occasionally the Acquisition Company is not the legal acquirer in the
business combination and, instead, the business combination is
structured so that the Acquisition Company is acquired by the operating
company. Under the current
[[Page 45721]]
Nasdaq rules, a company listing in connection with its acquisition of
an Acquisition Company listed on another national securities exchange
would not benefit from a similar waiver of listing fees.
To address this disparity, Nasdaq proposes to amend the fee waiver
provisions of Listing Rule IM-5900-4. Specifically, the Exchange
proposes to extend to any company that is not listed immediately prior
to listing its class of primary equity securities upon closing of its
acquisition of an Acquisition Company listed on another national
securities exchange the benefits similar to those provided by Listing
Rule IM-5900-4 that waives for companies transferring their securities
from another exchange the requirement to pay the All-Inclusive Annual
Listing Fee with respect to that class of primary equity securities or
any other securities transferred in conjunction therewith for the
remainder of the calendar year in which the transfer occurs. The
decision whether to structure a business combination with the
Acquisition Company as the legal acquirer rather than the other party
does not result in the listing of a substantively different entity.
Accordingly, the Exchange believes there is no basis for charging fees
purely on the basis of the structure of the business combination chosen
by the parties. The Exchange does not expect there to be a significant
number of listings in which this proposed fee waiver will be
applicable. Consequently, the proposed rule change would not affect the
Exchange's commitment of resources to its regulatory oversight of the
listing process or its regulatory programs.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\3\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\4\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees and other charges
among members and issuers and other persons using any facility, and is
not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(4) and (5).
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As a preliminary matter, Nasdaq competes for listings with other
national securities exchanges and companies can easily choose to list
on, or transfer to, those alternative venues. As a result, the fees
Nasdaq can charge listed companies are constrained by the fees charged
by its competitors and Nasdaq cannot charge prices in a manner that
would be unreasonable, inequitable, or unfairly discriminatory.
The Exchange believes that the proposed fee waivers are equitable
as it being implemented to avoid an anomalous fee outcome arising from
the manner in which an Acquisition Company business combination has
been structured.
The Exchange believes that the proposal is not unfairly
discriminatory, because the proposed waivers are intended to avoid the
impact on a small group of issuers of an anomalous fee outcome arising
from the manner in which an Acquisition Company business combination
has been structured. Nasdaq also notes that such waiver is not intended
to provide these issuers with any benefit that would place them in a
more favorable position than other newly-listed companies, including
specifically other previously unlisted companies that list upon
completion of an acquisition of a company listed on Nasdaq.\5\ An
Acquisition Company is a shell company with no business operations.
Consequently, the parties to a business combination between an
Acquisition Company and an operating company have significant
flexibility in how they choose to structure the business combination,
including in determining which entity will be the legal acquirer.
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\5\ Listing Rule IM-5900-1 provides for certain credits that
benefit a non-Nasdaq company that lists in connection with its
acquisition of a Nasdaq listed company.
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Accordingly, the Exchange is proposing to amend its fee structure
to reflect the incidental nature of the resulting Acquisition Company
business combination and to avoid treating companies undergoing similar
business combinations disparately.
By contrast to an Acquisition Company business combination, there
are typically more significant limitations on the ability of the
parties to a merger between two operating companies to make decisions
about which entity will be the acquirer, including, for example, the
desire to maintain the acquirer's SEC registration and concerns about
how to present the combined entity to the market. As such, it is much
more likely that the listing fee implications of how the transaction is
structured would be a major consideration for the parties to an
Acquisition Company business combination than would be the case in a
merger between two operating companies. As the implications of the
proposed fee waivers for decisions relating to the transaction
structures utilized by unlisted companies listing in connection with
the acquisition of an Acquisition Company are typically greater than
for other companies listing in conjunction with merger transactions,
the proposed waivers are not unfairly discriminatory.
For the foregoing reasons, the Exchange believes that the proposal
is consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
The proposed waiver will be available to all similarly situated
issuers on the same basis. The Exchange does not believe that the
proposed waivers will have any meaningful effect on the competition
among issuers listed on the Exchange.
The Exchange operates in a highly competitive market in which
issuers can readily choose to list new securities on other exchanges
and transfer listings to other exchanges if they deem fee levels at
those other venues to be more favorable. Because competitors are free
to modify their own fees in response, and because issuers may change
their listing venue, the Exchange does not believe its proposed fee
change can impose any burden on intermarket competition.
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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \6\ and Rule 19b-4(f)(2) \7\ thereunder. At
any time within 60 days of the filing of the proposed rule change, the
Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act. If the Commission takes such
action, the Commission shall institute proceedings to determine whether
the proposed rule should be approved or disapproved.
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\6\ 15 U.S.C. 78s(b)(3)(A)(ii).
\7\ 17 CFR 240.19b-4(f)(2).
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[[Page 45722]]
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
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NASDAQ-2020-039 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2020-039. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-NASDAQ-2020-039 and should be submitted on or before
August 19, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-16372 Filed 7-28-20; 8:45 am]
BILLING CODE 8011-01-P