Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Notices 7757 

13 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 90245 

(October 22, 2020), 85 FR 68400 (‘‘Notice’’). 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 90644, 

85 FR 82005 (December 17, 2020). The Commission 

designated January 26, 2021, as the date by which 

the Commission shall either approve or disapprove, 

or institute proceedings to determine whether to 

disapprove, the proposed rule change, as modified 

by Amendment No. 1. 

6Nasdaq defines ‘‘round lot holder’’ as a holder 

of a normal unit of trading of unrestricted 

securities. The number of beneficial holders will be 

considered in addition to holders of record. See 

Nasdaq Rule 5005(a)(40). Nasdaq defines ‘‘normal 

unit of trading’’ to mean 100 shares of a security 

unless, with respect to a particular security, Nasdaq 

determines that a normal unit of trading shall 

constitute other than 100 shares. See Nasdaq Rule 

5005(a)(39). Nasdaq defines ‘‘unrestricted 

securities’’ to mean securities that are not restricted 

securities. See Nasdaq Rule 5005(a)(46). Nasdaq 

defines ‘‘restricted securities’’ to mean securities 

that are subject to resale restrictions for any reason, 

including, but not limited to, securities: (1) 

Acquired directly or indirectly from the issuer or 

an affiliate of the issuer in unregistered offerings 

such as private placements or Regulation D 

offerings; (2) acquired through an employee stock 

benefit plan or as compensation for professional 

services; (3) acquired in reliance on Regulation S, 

which cannot be resold within the United States; (4) 

subject to a lockup agreement or a similar 

contractual restriction; or (5) considered ‘‘restricted 

securities’’ under Rule 144. See Nasdaq Rule 

5005(a)(37). The number of required minimum 

number of round lot holders is 450 holders for the 

Nasdaq Global Select Market; 400 holders for the 

Nasdaq Global Market; and 300 holders for the 

Nasdaq Capital Market. See Nasdaq Rules 

5315(f)(1)(C), 5405(a)(3), and 5505(a)(3). Nasdaq 

defines ‘‘market value’’ as the consolidated closing 

bid price multiplied by the measure to be valued. 

See Nasdaq Rule 5005(a)(23). 

7See Notice, supra note 3, at 68401; Securities 

Exchange Act Release No. 86314 (July 5, 2019), 84 

FR 33102, 33107 (July 11, 2019) (order approving 

SR–NASDAQ–2019–009) (‘‘Required Minimum 

Amount Approval Order’’). In the Required 

Minimum Amount Approval Order, the 

Commission also approved Nasdaq’s proposal to 

exclude restricted securities (see supra note 6) from 

the calculation of publicly held shares, market 

value of publicly held shares, and round lot holders 

for initial listing purposes. According to Nasdaq, 

these changes were designed to help ensure 

adequate distribution, shareholder interest, and a 

liquid trading market for a security. See Notice, 

supra note 3, at 68401; Required Minimum Amount 

Approval Order, supra, at 33103, 33108–09. 

8See Notice, supra note 3, at 68401. See also 

Required Minimum Amount Approval Order, supra 

note 7, at 33109. 

9See Notice, supra note 3, at 68401–02. 

10See id. at 68401; Required Minimum Amount 

Approval Order, supra note 7, at 33109. 

11See Notice, supra note 3, at 68401. Nasdaq Rule 

IM–5101–2 sets forth requirements applicable to 

SPACs and requires, among other things, that at 

least 90% of the gross proceeds raised in the IPO 

and any concurrent sale by the SPAC of equity 

securities must be deposited in a trust account. See 

Nasdaq Rule IM–5101–2(a). Until a SPAC has 

completed business combinations meeting the 

requirements of IM–5101–2(b), each shareholder 

Continued 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSEArca–2021–04 and 

should be submitted on or before 

February 22, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–02003 Filed 1–29–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90995; File No. SR– 

NASDAQ–2020–069] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Order 

Approving a Proposed Rule Change, 

as Modified by Amendment No. 1, To 

Exclude Special Purpose Acquisition 

Companies From the Requirement 

That at Least 50% of a Company’s 

Round Lot Holders Each Hold 

Unrestricted Securities With a Market 

Value of at Least $2,500 

January 26, 2021. 

I. Introduction 

On October 8, 2020, The Nasdaq 

Stock Market LLC (‘‘Nasdaq’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

exclude special purpose acquisition 

companies from the requirement that at 

least 50% of a company’s round lot 

holders each hold unrestricted 

securities with a market value of at least 

$2,500. On October 21, 2020, the 

Exchange filed Amendment No. 1 to the 

proposed rule change, which amended 

and replaced the proposed rule change 

in its entirety. The proposed rule 

change, as modified by Amendment No. 

1, was published for comment in the 

Federal Register on October 28, 2020.3

On December 11, 2020, pursuant to 

Section 19(b)(2) of the Act,4 the 

Commission designated a longer period 

within which to approve or disapprove, 

or institute proceedings to determine 

whether to disapprove, the proposed 

rule change, as modified by Amendment 

No. 1.5 This order approves the 

proposed rule change, as modified by 

Amendment No. 1. 

II. Description of the Proposed Rule 

Change, as Modified by Amendment 

No. 1 

The Exchange has proposed to 

exclude companies listed pursuant to 

Nasdaq Rule IM–5101–2 whose business 

plan is to engage in a merger or 

acquisition with one or more 

unidentified companies within a 

specified period of time (‘‘SPACs’’), 

prior to the completion of any such 

merger or acquisition, from the 

requirement that at least 50% of the 

company’s required minimum number 

of round lot holders must each hold 

unrestricted securities with a market 

value of at least $2,500 at the time of 

initial listing (‘‘Required Minimum 

Amount’’).6

The Exchange states in its proposal 

that it imposed the Required Minimum 

Amount to help ensure that at least 50% 

of the required minimum number of 

shareholders hold a meaningful value of 

unrestricted securities and that a 

company has sufficient investor interest 

to support an exchange listing.7 The 

Exchange asserts that, prior to adopting 

the Required Minimum Amount, it had 

noticed problems with companies 

listing where a large number of round 

lot holders held exactly 100 shares, 

which would be worth only $400 in the 

case of a stock that is trading at the 

minimum bid price of $4 per share, or 

as little as $200 in the case of a stock 

listing under alternative price criteria.8

The Exchange further states that such 

holders held shares in the company 

prior to its IPO and that such amount 

was not a representation of genuine 

investor interest in the company 

sufficient to support an exchange 

listing.9 In proposing to adopt the 

standard, the Exchange stated that it 

believed the Required Minimum 

Amount was a more appropriate 

representation of genuine investor 

interest in the company and would 

make it more difficult to circumvent the 

round lot holder requirement through 

share transfers for no value.10

The Exchange states that it does not 

believe the Required Minimum Amount 

is as relevant to the listing of SPACs.11

7758 Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Notices 

has the right to redeem their shares into a pro rata 

share of the aggregate amount in the deposit 

account if: (i) The shareholder votes against a 

business combination; or (ii) a shareholder vote on 

the business combination is not held for which the 

company must file and furnish a proxy or 

information statement subject to Regulation 14A or 

14C under the Act. See Nasdaq Rules IM–5101–2(d) 

and (e). 

12See supra notes 8–9 and accompanying text. 

13See Notice, supra note 3, at 68401. 

14See id. 

15See id. at 68401–02. The Exchange also states 

that it believes the value of a SPAC prior to a 

business combination, unlike the value of an 

operating company, is not based solely on investor 

demand for the security but, in the Exchange’s 

view, is based primarily on the value of the cash 

held in the trust account. See id. 

16See id. at 68402. 

17See id. These initial listing requirements 

currently include, among other things, a minimum 

number of unrestricted publicly held shares, 

minimum market value of unrestricted publicly 

held shares, minimum number of round lot holders 

of unrestricted shares, and minimum bid price. See 

id. at 68402 n.9. The Commission notes, as an 

example, that a SPAC listed on the Nasdaq Capital 

Market under the Market Value of Listed Securities 

Standard must have at least one million 

unrestricted publicly held shares and a market 

value of unrestricted publicly held shares of at least 

$15 million. See Nasdaq Rules 5505(a)(2) and 

5505(b)(2)(C). See also Nasdaq Rule 5300 Series 

(The Nasdaq Global Select Market) and 5400 Series 

(The Nasdaq Global Market). 

18See Notice, supra note 3, at 68402–03. See also 

supra notes 11, 15, and accompanying text. 

19See Notice, supra note 3, at 68402. 

20See supra note 17. 

21See Notice, supra note 3, at 68402. 

22 15 U.S.C. 78f(b). In approving this proposed 

rule change, as modified by Amendment No. 1, the 

Commission has considered the proposed rule 

change’s impact on efficiency, competition, and 

capital formation. See 15 U.S.C. 78c(f). 

23 15 U.S.C. 78f(b)(5). 

24See infra notes 25–26. 

25See, e.g., Securities Exchange Act Release Nos. 

81856 (October 11, 2017), 82 FR 48296, 48298 

(October 17, 2017) (‘‘SR–NYSE–2017–31 Approval 

Order’’); 81079 (July 5, 2017), 82 FR 32022, 32023 

(July 11, 2017) (‘‘SR–NYSE–2017–11 Approval 

Order’’); 65708 (November 8, 2011), 76 FR 70799, 

70802 (November 15, 2011) (‘‘SR–NASDAQ–2011– 

073 Approval Order’’); 63607 (December 23, 2010), 

75 FR 82420, 82422 (December 30, 2010) (‘‘SR– 

NASDAQ–2010–137 Approval Order’’); 57785 (May 

6, 2008), 73 FR 27597, 27599 (May 13, 2008) (‘‘SR– 

NYSE–2008–17 Approval Order’’); and 58228 (July 

25, 2008), 73 FR 44794, 44796 (July 31, 2008) (‘‘SR– 

NASDAQ–2008–013 Approval Order’’). In addition, 

once a security has been approved for initial listing, 

maintenance criteria allow an exchange to monitor 

the status and trading characteristics of that issue 

to ensure that it continues to meet the exchange’s 

standards for market depth and liquidity so that fair 

and orderly markets can be maintained. See, e.g., 

Securities Exchange Act Release No. 82627 

(February 2, 2018), 83 FR 5650, 5653 n.53 (February 

8, 2018) (‘‘SR–NYSE–2017–30 Approval Order’’); 

SR–NYSE–2017–31 Approval Order, 82 FR at 

48298; SR–NYSE–2017–11 Approval Order, 82 FR 

at 32023; SR–NASDAQ–2010–137 Approval Order, 

75 FR at 82422; and SR–NYSE–2008–17 Approval 

Order, 73 FR at 27599. The Commission has stated 

that adequate listing standards, by promoting fair 

and orderly markets, are consistent with Section 

6(b)(5) of the Act, in that they are, among other 

things, designed to prevent fraudulent and 

manipulative acts and practices, promote just and 

equitable principles of trade, and protect investors 

and the public interest. See, e.g., SR–NYSE–2017– 

30 Approval Order, 83 FR at 5653 n.53; Securities 

Exchange Act Release Nos. 87648 (December 3, 

2019), 84 FR 67308, 67314 n.42 (December 9, 2019) 

(SR–NASDAQ–2019–059); and 88716 (April 21, 

2020), 85 FR 23393, 23395 n.22 (April 27, 2020) 

(SR–NASDAQ–2020–001). 

26See, e.g., SR–NASDAQ–2011–073 Approval 

Order, supra note 25, 76 FR at 70802; SR– 

NASDAQ–2010–137 Approval Order, supra note 

25, 75 FR at 82422; SR–NYSE–2008–17 Approval 

Order, supra note 25, 73 FR at 27599; and SR– 

NASDAQ–2008–013 Approval Order, supra note 

25, 73 FR at 44796. 

In contrast to its observations regarding 

operating companies,12 the Exchange 

states that typically the only investors 

holding shares in a SPAC prior to an 

IPO are its founders and that all other 

round lot holders generally represent 

new investors in the SPAC’s IPO.13 The 

Exchange therefore does not believe that 

SPACs present a similar risk as 

operating companies of circumventing 

the round lot holder requirement 

through share transfers for no value and 

represents that it has not observed this 

problem with SPACs.14 Further, the 

Exchange states that shareholders of 

SPACs are afforded the opportunity to 

redeem or tender their shares for a pro 

rata portion of the value of the IPO 

proceeds maintained in a trust account 

in connection with the SPAC’s business 

combination, which must occur within 

36 months of the IPO, and therefore, the 

SPAC structure provides an alternative 

liquidity mechanism that operating 

companies do not offer.15

The Exchange accordingly believes 

that SPACs should be excluded from the 

Required Minimum Amount and 

proposes to revise Nasdaq Rules 

5315(f)(1)(C) (for the Nasdaq Global 

Select Market), 5405(a)(3) (for the 

Nasdaq Global Market), and 5505(a)(3) 

(for the Nasdaq Capital Market) to 

exclude SPACs from the requirement to 

meet the Required Minimum Amount at 

the time of initial listing.16 The 

Exchange notes, however, that SPACs 

must continue to satisfy the Exchange’s 

other initial listing requirements at the 

time of listing,17 including the SPAC 

listing rules, which, among other things, 

provide shareholders the right to 

redeem or convert their shares for a pro 

rata share of the trust account in 

conjunction with the business 

combination.18 Moreover, following a 

business combination, in order to 

remain listed, the combined company 

must meet Nasdaq’s initial listing 

requirements, which include the 

Required Minimum Amount, at the time 

of the IPO.19 The Exchange states in its 

proposal that it believes that, although 

SPACs will be excluded from the 

Required Minimum Amount at the time 

of initial listing, requiring SPACs to 

satisfy Nasdaq’s other initial listing 

standards 20 would continue to help 

ensure that SPACs have sufficient 

public float, investor base, and trading 

interest likely to generate depth and 

liquidity to support exchange listing 

and trading, which should help to 

protect investors and the public 

interest.21

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change, as 

modified by Amendment No. 1, is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.22 In particular, the 

Commission finds that the proposed 

rule change, as modified by Amendment 

No. 1, is consistent with Section 6(b)(5) 

of the Act,23 which requires, among 

other things, that the rules of a national 

securities exchange be designed to 

prevent fraudulent and manipulative 

acts and practices, 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, and are not designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Commission has consistently 

recognized that the development and 

enforcement of meaningful listing 

standards for an exchange is of critical 

importance to financial markets and the 

investing public.24 Among other things, 

the Commission has stated that listing 

standards provide the means for an 

exchange to screen issuers that seek to 

become listed, and to provide listed 

status only to those that are bona fide 

companies that have or will have 

sufficient public float, investor base, 

and trading interest likely to generate 

depth and liquidity sufficient to 

promote fair and orderly markets.25

Meaningful listing standards are also 

important given investor expectations 

regarding the nature of securities that 

have achieved an exchange listing, and 

the role of an exchange in overseeing its 

market and assuring compliance with its 

listing standards.26

The Exchange has proposed to 

exclude SPACs, prior to the completion 

of a business combination, from the 

requirement to meet the Required 

Minimum Amount at the time of initial 

listing on the Nasdaq Global Select 

Market, Nasdaq Global Market, and 

Nasdaq Capital Market. As described 

above, the Exchange states that, unlike 

with operating companies where the 

Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Notices 7759 

27See supra note 14 and accompanying text. 

28See supra notes 12–13 and accompanying text. 

29For example, SPACs listed on the Nasdaq 

Capital Market under the Market Value of Listed 

Securities Standard would be required to have at 

least 1,000,000 unrestricted publicly held shares, at 

least 300 round lot holders that hold unrestricted 

shares, a minimum market value of listed securities 

of $50 million, a minimum market value of 

unrestricted publicly held shares of at least $15 

million, and at least three registered and active 

market makers. See Nasdaq Rules 5505(a)–(b). See 

also Nasdaq Rules 5315(e)–(f) (Nasdaq Global Select 

Market) and 5405(a)–(b) (Nasdaq Global Market). 

The Commission understands that, although 

Nasdaq’s rules provide alternative standards to 

satisfy in lieu of the market value standards, SPACs 

typically list under the market value standard given 

that they have no prior operating history. 30Required Minimum Amount Approval Order, 

supra note 7, at 33111. See also supra note 7. 31See, e.g., New York Stock Exchange LLC 

(‘‘NYSE’’) Listed Company Manual Section 102.06. 

The Commission notes that NYSE’s initial listing 

standards for SPACs, which require an aggregate 

market value of $100 million and market value of 

publicly-held shares of $80 million, are generally 

higher than those on Nasdaq. See supra notes 17 

and 29. See also NYSE American LLC Company 

Guide Sections 102 and 119. 

32 15 U.S.C. 78s(b)(2). 33 17 CFR 200.30–3(a)(12). 

Required Minimum Amount is 

necessary to demonstrate genuine 

investor interest in the operating 

company to support an exchange listing, 

SPACs do not present a similar risk of 

circumventing the round lot holder 

requirement through share transfers for 

no value and that removing this 

requirement will not impact the 

protection of investors.27

Given the differences between SPACs 

and operating companies, including in 

their structure, and the rights of SPAC 

shareholders to convert or redeem their 

shares upon a business combination for 

a pro rata portion of the IPO proceeds 

maintained in a trust account, the 

Commission believes that it is 

reasonable and not unfairly 

discriminatory for the Exchange to 

exclude SPACs from the requirement to 

meet the Required Minimum Amount at 

the time of initial listing of the SPAC. 

Specifically, the Commission believes 

the Exchange has provided a reasonable 

basis for its proposal to differentiate 

SPACs from operating companies in 

terms of the requirement to comply with 

the Required Minimum Amount upon 

initial listing given that, in the 

Exchange’s experience, SPACs do not 

appear to present a similar risk of 

circumventing the round lot holder 

requirement through share transfers for 

no value. As the Exchange states in its 

proposal, typically the only investors 

holding shares in a SPAC prior to an 

IPO are its founders, whereas other 

round lot holders generally represent 

new investors, in contrast to the 

Exchange’s experience with operating 

companies.28

Further, the Exchange’s other initial 

listing requirements will remain 

applicable to SPACs at the time of their 

initial listing including, among other 

things, that round lot holders hold 

unrestricted shares and that SPACs will 

continue to meet the minimum number 

and market value of unrestricted 

publicly held shares requirements as 

well as the other listing requirements on 

the applicable market tier, in addition to 

the specific listing criteria applicable to 

SPACs.29 As the Commission stated 

when approving the Exchange’s 

amendments to exclude restricted 

securities from its calculation of a 

company’s publicly held shares, market 

value of publicly held shares, and round 

lot holders for purposes of qualifying 

the company’s securities for initial 

listing, the amendments ‘‘should allow 

the Exchange to more accurately 

determine whether a security has 

adequate distribution and liquidity and 

is thus suitable for listing and trading on 

the Exchange.’’ 30 In addition, all initial 

listing requirements apply to the 

combined company upon 

consummation of a business 

combination, which would include the 

Required Minimum Amount. The 

Commission therefore believes the 

Exchange’s current listing rules will 

continue to provide appropriate listing 

standards for SPAC securities, both 

prior to and after the completion of any 

business combination. Moreover, 

investors in SPACs will continue to 

have the ability to convert or redeem 

their shares for cash into a pro rata share 

of the amount in the trust account, 

pursuant to the provisions of Nasdaq 

Rules IM–5101–2(d) and (e). 

These other listing requirements, 

taken together, should continue to help 

ensure that SPACs are listed only if 

there will be a sufficient market, with 

adequate depth and liquidity and with 

sufficient investor interest to support an 

exchange listing, and will continue to 

provide investors the redemption 

feature. The Commission also notes that 

the Exchange’s proposal is consistent 

with SPAC listing standards on other 

listing exchanges that do not require 

round lot holders to hold unrestricted 

securities of a minimum market value 

amount.31 For the reasons discussed 

above, the Commission believes the 

Exchange’s proposal is consistent with 

the requirements of Section 6(b)(5) of 

the Act and with the maintenance of fair 

and orderly markets under the Act. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,32 that the 

proposed rule change, as modified by 

Amendment No. 1 (SR–NASDAQ–2020– 

069), be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.33

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–02010 Filed 1–29–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meetings 

TIME AND DATE: 2:00 p.m. on Thursday, 

February 4, 2021. 

PLACE: The meeting will be held via 

remote means and/or at the 

Commission’s headquarters, 100 F 

Street NE, Washington, DC 20549. 

STATUS: This meeting will be closed to 

the public. 

MATTERS TO BE CONSIDERED: 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the closed meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

In the event that the time, date, or 

location of this meeting changes, an 

announcement of the change, along with 

the new time, date, and/or place of the 

meeting will be posted on the 

Commission’s website at https://

www.sec.gov. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) 

and (10) and 17 CFR 200.402(a)(3), 

(a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and 

(a)(10), permit consideration of the 

scheduled matters at the closed meeting. 

The subject matter of the closed 

meeting will consist of the following 

topics: 

Institution and settlement of 

injunctive actions; 

Institution and settlement of 

administrative proceedings; 

Resolution of litigation claims; and 

Other matters relating to examinations 

and enforcement proceedings. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting agenda items that 

may consist of adjudicatory, 

examination, litigation, or regulatory 

matters. 

CONTACT PERSON FOR MORE INFORMATION: 

For further information; please contact 

Vanessa A. Countryman from the Office 

of the Secretary at (202) 551–5400.