31614 Federal Register / Vol. 83, No. 130 / Friday, July 6, 2018 / Notices 

89 Id. 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 82948 

(March 27, 2018), 83 FR 14074 (‘‘Notice’’). 

4See letters to Brent J. Fields, Secretary, 

Commission, from Tony Davis, CEO, Inherent 

Group, dated April 19, 2018 (‘‘Inherent Group 

Letter’’); Morgan Housel, Partner, The Collaborative 

Fund, dated April 20, 2018 (‘‘Collaborative Fund 

Letter’’); Chris Brummer, Professor of Law, Faculty 

Director, Institute of International Economic Law, 

Georgetown University Law Center, dated April 22, 

2018 (‘‘Brummer Letter’’); Dick Costolo, dated April 

23, 2018 (‘‘Costolo Letter’’); James Anderson, 

Partner and Head of Global Equities, Baillie Gifford 

& Co, dated April 23, 2018 (‘‘Baillie Gifford Letter’’); 

Marcie Frost, Chief Executive Officer, California 

Public Employees’ Retirement System Investment 

Office, dated April 23, 2018 (‘‘CalPERS Letter’’); 

Evan Williams, Co-Founder and James Joaquin, CoFounder & Managing Director, Obvious Ventures, 

dated April 23, 2018 (‘‘Obvious Ventures Letter’’); 

Douglas K. Chia, Executive Director, Governance 

Center, The Conference Board, Inc., dated April 23, 

2018 (‘‘Conference Board Letter’’); Steve Case, 

Chairman and CEO, Revolution, dated April 23, 

2018 (‘‘Revolution Letter’’); Marc Andreessen, 

Cofounder and General Partner, Andreessen 

Horowitz, dated April 23, 2018 (‘‘Andreessen 

Horowitz Letter’’); John Buhl, dated April 23, 2018 

(‘‘Buhl Letter’’); Sam Altman, President, Y 

Combinator, dated April 23, 2018 (‘‘Y Combinator 

Letter’’); Andrew Mason, CEO, Descript, dated April 

23, 2018 (‘‘Descript Letter’’); Judith Samuelson, 

Vice President, Founder & Director, The Business 

& Society Program, and Alastair Fitzpayne, 

Executive Director, The Future of Work Initiative, 

The Aspen Institute, dated April 23, 2018 (‘‘Aspen 

Institute Letter’’); Brian Singerman, Partner, 

Founders Fund, dated April 23, 2018 (‘‘Founders 

Fund Letter’’); David Brown and David Cohen, 

Founders and Co-CEOs, Techstars, dated April 23, 

2018 (‘‘Techstars Letter’’); Tony Hsieh, Founder, 

proposed Clearing Fund and stress 

testing methodologies and processes, (2) 

would be reasonably and fairly implied 

by the proposed Rules, Policy, and 

Methodology Description, and/or (3) 

would otherwise not be deemed to be 

material aspects of OCC’s Clearing 

Fund-related operations. Accordingly, 

OCC believes the proposed changes 

would be consistent with the 

requirements of Rule 17Ad–22(e)(1).89

III. Date of Effectiveness of the Advance 

Notice and Timing for Commission 

Action 

The proposed change may be 

implemented if the Commission does 

not object to the proposed change 

within 60 days of the later of (i) the date 

the proposed change was filed with the 

Commission or (ii) the date any 

additional information requested by the 

Commission is received. OCC shall not 

implement the proposed change if the 

Commission has any objection to the 

proposed change. 

The Commission may extend the 

period for review by an additional 60 

days if the proposed change raises novel 

or complex issues, subject to the 

Commission providing the clearing 

agency with prompt written notice of 

the extension. A proposed change may 

be implemented in less than 60 days 

from the date the advance notice is 

filed, or the date further information 

requested by the Commission is 

received, if the Commission notifies the 

clearing agency in writing that it does 

not object to the proposed change and 

authorizes the clearing agency to 

implement the proposed change on an 

earlier date, subject to any conditions 

imposed by the Commission. 

OCC shall post notice on its website 

of proposed changes that are 

implemented. 

The proposal shall not take effect 

until all regulatory actions required 

with respect to the proposal are 

completed. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the advance notice is 

consistent with the Clearing 

Supervision 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 rule-comments@

sec.gov. Please include File Number SR– 

OCC–2018–803 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549. 

All submissions should refer to File 

Number SR–OCC–2018–803. 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 advance notice that 

are filed with the Commission, and all 

written communications relating to the 

advance notice 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 OCC and on OCC’s website at 

https://www.theocc.com/components/ 

docs/legal/rules_and_bylaws/sr_occ_18_

803.pdf. 

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–OCC–2018–803 and should 

be submitted on or before July 23, 2018. 

By the Commission. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–14459 Filed 7–5–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83558; File No. SR–IEX– 

2018–06] 

Self-Regulatory Organizations; 

Investors Exchange LLC; Notice of 

Filing of Amendment No. 1 and Order 

Granting Accelerated Approval of a 

Proposed Rule Change, as Modified by 

Amendment No. 1, To Establish a New 

Optional Listing Category on the 

Exchange, ‘‘LTSE Listings on IEX’’ 

June 29, 2018. 

I. Introduction 

On March 15, 2018, Investors 

Exchange LLC (the ‘‘Exchange’’ or 

‘‘IEX’’) filed with the Securities and 

Exchange Commission (‘‘SEC’’ or 

‘‘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 

establish a new optional listing category 

on the Exchange, referred to as the 

‘‘LTSE Listings on IEX’’ or ‘‘LTSE 

Listings.’’ The proposed rule change 

was published for comment in the 

Federal Register on April 2, 2018.3 The 

Commission received 23 comment 

letters on the proposed rule change.4 On 


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Downtown Project, dated April 23, 2018 

(‘‘Downtown Project Letter’’); Aaron Bertinetti, SVP, 

Research & Engagement, Glass, Lewis & Co., LLC, 

dated April 23, 2018 (‘‘Glass, Lewis Letter’’); Jeff 

Weiner, CEO, LinkedIn, dated April 23, 2018 

(‘‘LinkedIn Letter’’); Chris Concannon, President 

and COO, Cboe Global Markets, Inc. (‘‘Cboe Letter’); 

Reid Hoffman, Partner, Greylock Partners, dated 

April 23, 2018 (‘‘Greylock Partners Letter’’); Aneesh 

Chopra, President, CareJourney, dated April 23, 

2018 (‘‘CareJourney Letter’’); and Alexis Ohanian, 

General Partner/Cofounder, and Garry Tan, 

Managing Partner/Cofounder, Initialized Capital, 

dated April 23, 2018 (‘‘Initialized Capital Letter’’). 

All comments received by the Commission on the 

proposed rule change are available at: https://

www.sec.gov/comments/sr-iex-2018-06/ 

iex201806.htm. 

5See letter to Brent J. Fields, Secretary, 

Commission, from Claudia Crowley, Chief 

Regulatory Officer, Investors Exchange LLC, dated 

April 26, 2018 (‘‘IEX Response Letter’’). The 

Exchange’s response letter is available at: https://

www.sec.gov/comments/sr-iex-2018-06/iex201806- 

3520149-162294.pdf. 

6 In Amendment No. 1, the Exchange proposes to 

amend: (1) Proposed Rule 14A.001(a) to clarify that 

an LTSE Listings Issuer must qualify for listing 

under Chapter 14 of the IEX Rules and the LTSE 

Listings Rules, except as otherwise provided in the 

LTSE Listings Rules; (2) proposed Rule 

14A.200(c)(2) to specify that when a company lists 

on LTSE Listings, in addition to the requirement 

that the company must not have any security listed 

for trading on the Exchange or any other national 

securities exchange, the company also must be 

listing in connection with its initial public offering; 

(3) proposed Rule 14A.210 to indicate that when 

the LTSE Listings Issuer is dually-listed on the 

Exchange and on another national securities 

exchange that is the Primary Listing Market and 

that requires a minimum number of market makers, 

IEX Rules 14.310 and 14.320 requiring a minimum 

number of market makers for IEX listed companies 

would not apply; and (4) proposed Rule 14A.413 by 

adding paragraph (c) to require an LTSE Listings 

Issuer to post prominently on its website a plain 

English explanatory statement regarding 

shareholders’ rights under the long-term voting 

provisions included in its governance documents, 

including how the shareholder’s voting power may 

increase over time and the administrative steps the 

shareholder must take to allow the shares’ voting 

power to increase over time. To promote the 

transparency of its proposed amendment, when IEX 

filed Amendment No. 1 with the Commission, it 

also submitted Amendment No. 1 as a comment 

letter to the file, which the Commission posted on 

its website and placed in the public comment file 

for SR–IEX–2018–06 (available at https://

www.sec.gov/comments/sr-iex-2018-06/ 

iex201806.htm). 

7See Notice, supra note 3, at 14074. 

8See id. at 14077. 

9See id. at 14076–77. 

10See id. at 14075–76. 

11See Notice, supra note 3, at 14074–75; see also 

proposed Rules 14A.001(a) and 14A.200, and 

Amendment No. 1, supra note 6. 

12See Notice, supra note 3, at 14077. 

13 Id. 

14See Amendment No. 1, supra note 6. 

15See Notice, supra note 3, at 14075; see also 

proposed Rule 14A.200(c)(2). In connection with an 

initial public offering on the Exchange, the 

proposed LTSE Listings Rules would permit the 

dual-listing of companies seeking to list 

concurrently on LTSE Listings and another national 

securities exchange. See infra Section III.F.2. and 

proposed Rule 14A.210. 

16See proposed Rule 14A.001(b). 

17See Notice, supra note 3, at 14074. The 

Exchange states that it understands that LTSE 

anticipates separately registering a subsidiary as a 

national securities exchange in the future. See id. 

18See id. at 14077. 

19See id. The Exchange represents that the LTSE 

Listing Agents’ involvement would not extend to 

other matters within the Exchange’s jurisdiction 

and that IEX would retain full self-regulatory 

responsibility for determining initial and 

continuing compliance with the Exchange’s listing 

standards, including for those companies that elect 

to be subject to the LTSE Listings Rules. See id. 

April 26, 2018, the Commission 

received a response letter from the 

Exchange.5 On June 27, 2018, the 

Exchange submitted Amendment No. 1 

to the proposed rule change.6 The 

Commission is publishing this notice to 

solicit comments on Amendment No. 1 

from interested persons, and is 

approving the proposed rule change, as 

modified by Amendment No. 1, on an 

accelerated basis. 

II. Background of the Proposed Rule 

Change 

The Exchange proposes to adopt rules 

to create a new optional listing category 

on the Exchange for common equity 

securities, referred to as the ‘‘LTSE 

Listings on IEX’’ or ‘‘LTSE Listings.’’ 

According to the Exchange, the new 

optional listing category would provide 

a differentiated choice for issuers and 

investors that prefer listing standards 

that are expressly designed to promote 

long-term value creation.7 Specifically, 

the Exchange believes that LTSE 

Listings would promote the interests of 

companies that seek to focus on longterm value creation, as well as to 

respond to the transparency and 

governance concerns of long-term 

focused investors.8

The Exchange believes that the 

proposed LTSE Listings Rules could 

encourage greater participation in the 

public markets by companies and 

potentially increase the number of 

companies willing to undertake an 

initial public offering (‘‘IPO’’).9

According to the Exchange, the total 

number of listed companies in the 

United States and the number of IPOs 

have declined in the past few decades, 

and the Exchange states that many 

academics, market participants, and 

other commenters believe that these 

declines are the result of short-term 

pressures placed on public 

companies.10

III. Description of the Proposed Rule 

Change, as Modified by Amendment 

No. 1 

The proposed rules for LTSE Listings 

would be located in new Chapter 14A 

of the Exchange’s rules (‘‘LTSE Listings 

Rules’’ or ‘‘Rules’’). Companies choosing 

to list on the Exchange (‘‘LTSE Listings 

Issuers’’) could elect to be subject to the 

LTSE Listings Rules, and such 

companies also would be subject to the 

listing and applicable requirements set 

forth in current Chapter 14 of the IEX 

Rulebook (‘‘IEX Rules’’) for IEX listed 

companies, except as those rules may be 

modified by the LTSE Listings Rules.11

The LTSE Listings Rules would 

include the following features: (i) Rules 

relating to the board of directors and 

committee requirements; (ii) rules 

requiring supplemental long-term 

disclosures; (iii) rules requiring longterm alignment of executive 

compensation; (iv) rules requiring a 

long-term shareholder voting structure; 

and (v) certain other rules that the 

Exchange believes would encourage 

LTSE Listings Issuers to focus on longterm value creation.12 In addition, the 

Exchange is proposing rules that would 

clarify the application of certain existing 

Exchange rules to LTSE Listings 

Issuers.13 The Exchange would limit the 

availability of LTSE Listings to 

companies seeking to list on LTSE 

Listings concurrently with their IPO 

(whether listing on LTSE Listings only 

or dually listing on LTSE Listings and 

another national securities exchange) 14

and would not permit issuers already 

listed on another national securities 

exchange to transfer to LTSE Listings.15

LTSE Listings Issuers may list only 

common equity securities on LTSE 

Listings.16

A. The Exchange’s Arrangement With 

LTSE Holdings, Inc. 

The Exchange notes that the LTSE 

Listings Rules initially were developed 

by LTSE Holdings, Inc. (together, with 

its affiliates, ‘‘LTSE’’), and that the 

Exchange has entered into an 

arrangement with LTSE to authorize the 

Exchange to make the LTSE Listings 

Rules available to interested companies 

as a listing category of the Exchange.17

The Exchange states that, although the 

LTSE Listings Rules were developed by 

LTSE, the Exchange would retain full 

self-regulatory responsibility for 

determining initial and continuing 

compliance with the Exchange’s listing 

standards, including for those 

companies that elect to be subject to the 

LTSE Listings Rules.18

The Exchange further states that it 

would retain, as its agents, a small 

number of staff that also are employed 

by LTSE (‘‘LTSE Listings Agents’’) 

solely to provide IEX with expertise in 

interpreting the LTSE Listings Rules and 

assistance in conducting the LTSE 

Listings business, and that the Exchange 

would not receive regulatory services 

from LTSE itself.19 Specifically, the 


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20See id. at 14077 n.34. The Exchange states that, 

for example, LTSE Listings Agents would evaluate 

issuers seeking to list on the Exchange under the 

LTSE Listings Rules and would assist in monitoring 

LTSE Listings Issuers for compliance with the LTSE 

Listings Rules. See id. 

21See id. at 14077. The Exchange notes that, at 

all times, LTSE Listings Agents would be subject to 

the satisfaction and the oversight of the Exchange’s 

Chief Regulatory Officer, with all actions proposed 

by LTSE Listings Agents subject to the Exchange’s 

regulatory authority. See id. at 14077 n.34. The 

Exchange represents that, notwithstanding the 

services provided by the LTSE Listings Agents to 

the Exchange, all actions taken by the Exchange 

ultimately would be based on the Exchange’s 

determination that the action is appropriate and 

consistent with the Act, the Commission’s rules 

thereunder, and the Exchange’s rules. See id. 

22See id. at 14077 n.34. According to the 

Exchange, each LTSE Listings Agent would be 

considered to be an agent of the Exchange in 

connection with the performance of services under 

the Exchange’s arrangement with LTSE, pursuant to 

Article XI, Section 4 of the Exchange’s Amended 

and Restated Operating Agreement. Among other 

things, the Exchange represents that, pursuant to 

the Exchange’s arrangement with LTSE, the 

Exchange would not share confidential regulatory 

information with LTSE (other than with LTSE 

regulatory personnel that are LTSE Listings Agents 

and that do not have direct involvement in LTSE’s 

commercial operations). In addition, the Exchange 

represents that LTSE has agreed that each LTSE 

Listings Agent would be required to consent in 

writing to the application to such agent of the 

following provisions, which are consistent with 

Article VII of the Bylaws of IEX Group, Inc.: noninterference with, and due regard for, the 

Exchange’s self-regulatory function; confidentiality 

of the Exchange’s books and records pertaining to 

its self-regulatory function; maintenance of books 

and records related to services under the 

Exchange’s arrangement with LTSE and services 

provided to the Exchange by LTSE Listings Agents 

at a location within the United States; compliance 

with the federal securities laws and the rules and 

regulations promulgated thereunder and 

cooperation with the SEC in respect of the SEC’s 

oversight responsibilities regarding the Exchange 

and the self-regulatory functions and 

responsibilities of the Exchange; and consent to 

jurisdiction of the United States federal courts, the 

SEC, and the Exchange for purposes of any suit, 

action, or proceeding arising out of or relating to 

services provided to the Exchange and the 

Exchange’s arrangement with LTSE. See id. 

23See id. 

24See id. 

25See proposed Rule 14A.405(c)(4). 

26See proposed Rule 14A.405(c)(1). 

27See proposed Rule 14A.405(c)(3)(B)(i)–(v). 

Proposed Rule 14A.405(c)(3)(C) would require that 

the LTSP Committee’s charter be made available on 

or through the LTSE Listings Issuer’s website. 

28 If the nominating/corporate governance 

committee is comprised of at least three members, 

one director, who is not an ‘‘Independent Director’’ 

as defined in IEX Rule 14.405(a)(2) and is not 

currently an Executive Officer or employee or a 

Family Member of an Executive Officer, may be 

appointed to the nominating/corporate governance 

committee if the board, under exceptional and 

limited circumstances, determines that such 

individual’s membership on the committee is 

required by the best interests of the LTSE Listings 

Issuer and its shareholders. See proposed Rule 

14A.405(d)(2). An LTSE Listings Issuer that relies 

on this exception must disclose the nature of the 

relationship and the reasons for the determination, 

as well as provide any disclosure required by 

Instruction 1 to Item 407(a) of Regulation S–K 

regarding its reliance on this exception. See id. In 

addition, a member appointed under this exception 

may not serve longer than two years. See id. 

29See proposed Rule 14A.405(d)(3). 

30This charter must be made available on or 

through the LTSE Listings Issuer’s website. See 

proposed Rule 14A.405(d)(6)(B). 

Exchange notes that the LTSE Listings 

Agents would provide certain advisory, 

marketing, public communications, and 

sales services to IEX in connection with 

LTSE Listings.20 The Exchange, 

however, represents that the LTSE 

Listings Agents would be subject to the 

Exchange’s oversight and regulatory 

authority as the responsible selfregulatory organization.21 The Exchange 

states that it has an arrangement with 

the LTSE Listings Agents that includes 

restrictions designed to protect the 

Exchange’s responsibilities as a selfregulatory organization and the 

confidentiality of its books and 

records.22 Separately, the Exchange 

states that it would permit LTSE to use 

and redistribute written marketing, 

public communications, and sales 

materials concerning the LTSE Listings 

business, subject to the Exchange’s 

consent.23

B. Board of Directors and Committee 

Requirements 

As more fully described below, the 

LTSE Listings Rules would create new 

requirements for the boards of directors 

and board committees of LTSE Listings 

Issuers, which are intended to align the 

boards with the objectives of the LTSE 

Listings Rules. The LTSE Listings Rules 

would require each LTSE Listings Issuer 

to establish board committees dedicated 

to overseeing the issuer’s strategies for 

creating and sustaining long-term 

growth and for selecting or 

recommending qualified director 

nominees. The LTSE Listings Rules also 

would impose additional obligations on 

audit committees and compensation 

committees with the aim of increasing 

oversight and transparency.24

1. Long-Term Strategy and Product 

Committee 

Proposed Rule 14A.405(c)(1) would 

require that each LTSE Listings Issuer’s 

board of directors maintain a committee 

specifically dedicated to overseeing the 

LTSE Listings Issuer’s strategic plans for 

long-term growth, the Long Term 

Strategy and Product Committee (‘‘LTSP 

Committee’’). The LTSP Committee 

must include a minimum of three 

members of the board, a majority of 

whom must be independent directors.25

The LTSP Committee cannot assume 

any roles or responsibilities that are 

required to be undertaken by the LTSE 

Listings Issuer’s board committees 

comprised solely of independent 

directors.26

Pursuant to proposed Rule 

14A.405(c)(3)(A), each LTSE Listings 

Issuer must certify that it has adopted a 

formal written LTSP Committee charter 

and that the LTSP Committee would 

review and reassess the adequacy of the 

formal written charter on an annual 

basis. The charter must specify, among 

other things, the scope of the LTSP 

Committee’s responsibilities, and how it 

would carry out those responsibilities, 

including structure, processes, and 

membership requirements, and that the 

LTSP Committee must report regularly 

to the board of directors.27

2. Nominating/Corporate Governance 

Committee 

Pursuant to proposed Rule 

14A.405(d)(1), the director nominees of 

an LTSE Listings Issuer must be either 

selected, or recommended for the 

board’s selection, by a nominating/ 

corporate governance committee that is 

comprised solely of independent 

directors. Director nominees of an LTSE 

Listings Issuer may not be selected, or 

recommended for the board’s selection, 

by the independent directors 

constituting a majority of the board’s 

independent directors, as provided in 

IEX Rule 14.405(e)(1)(A), subject to an 

exception for exceptional and limited 

circumstances.28 Independent Director 

oversight of director nominations would 

not apply in cases where the right to 

nominate a director legally belongs to a 

third party.29

Proposed Rule 14A.405(d)(6)(A) 

would require that each LTSE Listings 

Issuer adopt a formal written 

nominating/corporate governance 

committee charter and to review and 

reassess the adequacy of the formal 

written charter on an annual basis. 

Among other things, the charter would 

need to specify the scope of the 

nominating/corporate governance 

committee’s responsibilities, and how 

the committee would carry out those 

responsibilities, including structure, 

processes, and membership 

requirements. The charter also would be 

required to specify that the nominating/ 

corporate governance committee must 

report regularly to the board of 

directors.30

3. Audit Committee and Compensation 

Committees 

Proposed Rule 14A.405 imposes 

requirements on the audit committee 

and compensation committee in 

addition to the requirements imposed 


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31See proposed Rule 14A.405(b)(2)(A)(ii). 

Proposed Rule 14A.405(b)(4) clarifies that ‘‘Smaller 

Reporting Companies,’’ as defined in Rule 12b–2 

under the Act, 17 CFR 240.12b–2, are not exempt 

from these additional compensation committee 

requirements. 

32See proposed Rules 14A.405(a)(2) and 

14A.405(b)(2)(B). 

33See proposed Rules 14A.405(c)(2), 

14A.405(d)(5), and 14A.405(b)(2)(B). 

34See proposed Rules 14A.405(c)(3)(C), 

14A.405(d)(6)(B), and 14A.405(b)(2)(B). 

35See Supplementary Material .01 to proposed 

Rule 14A.405, which would apply to LTSE Listings 

Issuers in lieu of existing Supplementary Material 

.08 to IEX Rule 14.405 (Independent Director 

Oversight of Director Nominations). 

36See proposed Rule 14A.405, Supplementary 

Material .01. 

37An LTSE Listings Issuer would be required to 

make its corporate governance guidelines available 

on or through its website. See proposed Rule 

14A.409(b). 

38See proposed Rule 14A.409(a)(4). An LTSE 

Listings Issuer would be required to disclose in its 

corporate governance guidelines what it considers 

to be ‘‘long-term’’ for this purpose. See id. 

39See id. 

40See Notice, supra note 3, at 14080. Proposed 

Rule 14A.207(a) specifies that nothing in the rule 

shall affect the obligation of an LTSE Listings Issuer 

to comply with applicable securities laws. In 

addition, proposed Rule 14A.207(b) states that all 

disclosures must comply with applicable securities 

laws, including rules and regulations pertaining to 

the use and reconciliation of non-GAAP financial 

measures and any securities law obligations 

regarding updating or correcting prior public 

statements or disclosures. 

41See proposed Rule 14A.207(b). Proposed Rule 

14A.002(a)(1) states that ‘‘Annual Report’’ means 

‘‘consistent with IEX Rule 14.207(d), the annual 

report made available to Shareholders containing 

audited financial statements of the LTSE Listings 

Issuer and its subsidiaries (which, for example, may 

be on Form 10–K, 20–F, 40–F or N–CSR) within a 

reasonable period of time following the filing of the 

annual report with the Commission.’’ 

42See id. In addition, ‘‘[e]ach LTSE Listings 

Issuer must include a statement in its Annual 

Report that the LTSP Disclosures are available in 

the Annual Report Supplement and provide the 

website address,’’ as well as ‘‘notify IEX Regulation 

once its Annual Report Supplement has been made 

publicly available on its website.’’ Id. 

43 Id. The LTSP Committee must determine 

whether to recommend to the board of directors that 

the LTSP Disclosures be included in the Annual 

Report Supplement, and any board and committee 

approvals should be reflected in board resolutions 

as appropriate. See id. 

44See proposed Rule 14A.002(a)(11). 

45See proposed Rule 14A.207(c)(1)(A). 

46Proposed Rule 14A.002(a)(10) defines ‘‘Leading 

Indicators’’ as ‘‘quantitative metrics (financial or 

non-financial) that an LTSE Listings Issuer’s 

management uses to help forecast revenue, profit or 

other common after-the-event measures of longterm success. These current and predictive metrics 

[would be] used by management to focus on dayto-day results as they work towards achieving the 

LTSE Listings Issuer’s Long-Term Growth Strategy, 

Continued 

by current IEX Rules 14.405(c) and 

14.405(d), respectively. Under proposed 

Rules 14A.405(a)(1) and 

14A.405(b)(2)(A)(i), an LTSE Listings 

Issuer’s audit committee and 

compensation committee charters must 

specify that the committees must report 

regularly to the board of directors. In 

addition, the compensation committee 

charter must specify that the 

compensation committee must adopt 

executive compensation guidelines in 

accordance with proposed Rule 

14A.405(b)(3) (Executive Compensation 

Guidelines).31 An LTSE Listings Issuer 

would be required to make both the 

audit committee charter and 

compensation committee charter 

available on or through its website.32

4. Committee Delegations and ThirdParty Nominations 

The proposed rules would allow the 

responsibilities of certain committees to 

be delegated to other committees. 

Specifically, the proposed rules would 

permit the board of directors to allocate 

the responsibilities of the LTSP 

Committee, the nominating/corporate 

governance committee, and 

compensation committee to committees 

of their own denomination, provided 

that, in each case the committee with 

the allocated committee responsibilities 

must satisfy the same compositional 

requirements of the original committee 

and must be subject to a formal written 

charter that satisfies the same committee 

charter requirements of the original 

committee.33 Furthermore, if any 

function of the LTSP Committee, the 

nominating/corporate governance 

committee, or compensation committee 

has been delegated to another 

committee, the charter of the committee 

receiving such delegation must also be 

made available on or through the LTSE 

Listings Issuer’s website.34

Under the proposal, the charters of 

each committee of LTSE Listings Issuers 

also would be permitted to address the 

authority of the committee to delegate 

its responsibilities to subcommittees of 

the committee, provided that any such 

subcommittee must meet the applicable 

committee composition requirements 

with respect to independence.35

However, this LTSE Listings Rule would 

not apply in cases where the right to 

nominate a director legally belongs to a 

third party, because the right to 

nominate directors in such a case does 

not reside with the LTSE Listings 

Issuer.36

5. Corporate Governance Guidelines 

Proposed Rule 14A.409 would require 

each LTSE Listings Issuer to adopt and 

disclose certain corporate governance 

guidelines that address director 

qualification standards, director 

responsibilities, director access to 

management, director compensation, 

director orientation and continuing 

education, management succession, and 

annual performance evaluations of the 

board.37 Among other things, these 

corporate governance guidelines must 

specify that no less than 40% of director 

compensation must be paid in stockbased compensation tied to long-term 

periods.38 In addition, LTSE Listings 

Issuers must adopt director stock 

ownership guidelines, which must 

include minimum ownership 

requirements that can be met over the 

length of board service.39

C. Long-Term Strategy and Other 

Disclosure Requirements 

The Exchange notes that, in addition 

to and separate from all disclosures 

required under applicable securities 

laws, the Commission’s rules, and the 

Exchange’s other rules, proposed Rule 

14A.207 would require LTSE Listings 

Issuers to provide certain supplemental 

disclosures (‘‘LTSP Disclosures’’).40 The 

LTSP Disclosures would be made 

publicly available pursuant to a 

supplement to the LTSE Listings 

Issuer’s Annual Report (‘‘Annual Report 

Supplement’’) that must be distributed 

to shareholders along with, and in the 

same manner as, the LTSE Listings 

Issuer’s Annual Report.41 In addition, 

LTSE Listings Issuers must make the 

Annual Report Supplement available on 

or through the LTSE Listings Issuer’s 

website.42 The LTSP Disclosures also 

must be reviewed and approved by the 

LTSP Committee on at least an annual 

basis.43

1. Long-Term Growth Strategy 

Proposed Rule 14A.207(c)(1) would 

require each LTSE Listings Issuer to 

disclose its ‘‘Long-Term Growth 

Strategy.’’ Long-Term Growth Strategy is 

defined as ‘‘the strategy, as determined 

by management and the board of 

directors and approved by the LTSP 

Committee, that is focused on achieving 

long-term growth.’’ 44 The Exchange 

states that this proposed requirement is 

designed to increase transparency for 

shareholders on the strategic goals of the 

company’s managers and provide for 

greater alignment and accountability 

between a company’s long-term vision 

and investor expectations. An LTSE 

Listings Issuer must include how it 

defines ‘‘long-term’’ for purposes of its 

Long-Term Growth Strategy, including a 

discussion of how it made this 

determination.45

Proposed Rule 14A.207(c) outlines 

other required aspects of the Long-Term 

Growth Strategy disclosure. This 

disclosure must include a discussion of 

the LTSE Listings Issuer’s ‘‘Leading 

Indicators,’’ 46 as well as key milestones 


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and provide useful information for timely decisionmaking in the shorter term.’’ 

47See proposed Rule 14A.207(c)(1)(B). 

48See id. 

49See proposed Rule 14A.207(c)(2). 

50See proposed Rule 14A.207(c)(1)(C). 

51See Notice, supra note 3, at 14081. 

52See proposed Rule 14A.207(c)(3). 

53 Id. 

54See proposed Rules 14A.002(a)(6) and 

14A.207(d). Pursuant to proposed Rule 

14A.002(a)(3), ‘‘Buybacks’’ means issuer 

repurchases that are required to be disclosed 

pursuant to Item 703 of Regulation S–K. 

55See proposed Rules 14A.002(a)(7) and 

14A.207(e). Proposed Rule 14A.207(e) defines 

‘‘Human Capital Investment’’ as the aggregate 

amount an LTSE Listings Issuer spends on formal 

training of workers in new skills to improve job 

performance, including, among other things, 

amounts spent on fees or expenses related to 

personnel hired or retained to train employees, 

training materials, tuition assistance, and 

continuing education or similar programs. Each 

LTSE Listings Issuer must also disclose the amount 

spent on Human Capital Investment per full-time 

equivalent employee. Id. 

56See proposed Rule 14A.207(f). Each LTSE 

Listings Issuer must also disclose how it defines 

‘‘short-term’’ and ‘‘long-term’’ for these purposes 

and how it determined such definitions. Id. 

57See proposed Rule 14A.207(g)(1). The initial 

disclosure must be made in compliance with the 

rules and regulations relating to the dissemination 

of free writing prospectuses, if applicable. Id. 

58See proposed Rule 14A.207(g)(2). 

59See id. 

60 IEX Rule 14.405(a)(1) defines ‘‘Executive 

Officer’’ as persons meeting the definition of 

‘‘officer’’ in Rule 16a–1(f) under the Act, 17 CFR 

240.16a–1(f). 

61Proposed Rule 14A.002(a)(8) defines 

‘‘Incentive-Based Compensation’’ as any variable 

compensation, fees, or benefits that serve as an 

incentive or reward for performance. 

62See proposed Rule 14A.405(b)(3)(A)(i). In 

addition, the LTSE Listings Issuer must disclose in 

its proxy statement, or Annual Report Supplement 

if no proxy statement is filed, whether or not the 

compensation committee has determined that such 

time periods and performance metrics are 

consistent with the LTSE Listings Issuer’s LongTerm Growth Strategy. See id. 

63See proposed Rule 14A.405(b)(3)(B)(i). 

64See proposed Rule 14A.405(b)(3)(B)(ii). The 

vesting scheduling must reflect the long-term focus 

of the equity grant and could allow for accelerated 

vesting only upon the death of the Executive Officer 

or the occurrence of a disability that renders the 

that the LTSE Listings Issuer aims to 

achieve with respect to the Leading 

Indicators.47 The LTSE Listings Issuer 

also must report on the progress that the 

LTSE Listings Issuer has made in 

achieving these key milestones.48 In 

addition, the Long-Term Growth 

Strategy must include details relating to 

different businesses of the LTSE Listings 

Issuer if the information is material to 

the overall strategy.49 Lastly, LTSE 

Listings Issuers must include a 

discussion of any changes to the LTSE 

Listings Issuer’s Long-Term Growth 

Strategy, Leading Indicators, and/or key 

milestones since the publication of the 

LTSE Listings Issuer’s previous LongTerm Growth Strategy.50

Proposed Rule 14A.207(c)(3) would 

provide an exception from the 

requirement to disclose aspects of an 

LTSE Listings Issuer’s Long-Term 

Growth Strategy. Specifically, if the 

LTSE Listings Issuer’s LTSP Committee 

makes a determination that disclosure of 

any aspect of the LTSE Listings Issuer’s 

Long-Term Growth Strategy would be 

‘‘reasonably likely to result in material 

harm’’ to the LTSE Listing Issuer’s 

competitive position, the LTSE Listings 

Issuer could exclude such information 

from its LTSP Disclosures. A process for 

making this determination would be 

required to be disclosed in the issuer’s 

LTSP Committee Charter pursuant to 

proposed Rule 14A.405(c)(3)(B)(iv) and 

any such determination must be 

documented by the LTSP Committee 

and be made in accordance with its 

fiduciary duties.51 In addition, the LTSE 

Listings Issuer must disclose in its LTSP 

Disclosures that it is withholding 

certain aspects of its Long-Term Growth 

Strategy as a result of competitive 

concerns.52 Upon the time that any 

withheld information is no longer 

competitively sensitive, the LTSE 

Listings Issuer would be required to 

disclose that information in its LTSP 

Disclosures, even though this 

information may no longer be relevant 

to its current Long-Term Growth 

Strategy.53

2. Other Supplemental Disclosure 

Requirements 

In addition to the Long-Term Growth 

Strategy disclosure, proposed Rule 

14A.207 would require issuers to make 

disclosures relating to buybacks, human 

capital investment, and research and 

development, as described below: 

Buybacks: Each LTSE Issuer must 

disclose its EPS Net of Buybacks, 

defined as the quotient calculated by 

dividing (i) net income (as reported in 

the LTSE Listings Issuer’s financial 

statements in its most recent Annual 

Report) by (ii) the sum of outstanding 

shares and shares that were subject to a 

Buyback during the prior fiscal year.54

Human Capital Investment: Each 

LTSE Listings Issuer must disclose the 

extent to which the LTSE Listings 

Issuer’s selling, general, and 

administrative expenses (as reported in 

the LTSE Listings Issuer’s most recent 

Annual Report) consisted of ‘‘Human 

Capital Investment.’’ 55

Research and Development: Each 

LTSE Listings Issuer must disclose the 

amount of research and development 

spending that is short-term focused and 

the amount of such spending that is 

long-term focused.56

3. Timing for Supplemental Disclosures 

Proposed Rule 14A.207(g) describes 

when these supplemental disclosures 

must be made. An LTSE Listings Issuer 

must disclose its Long-Term Growth 

Strategy on its website no later than at 

the time of its initial listing, and it must 

remain on the LTSE Listings Issuer’s 

website until the LTSE Listings Issuer is 

required to make the disclosure 

annually in its Annual Report 

Supplement.57 After initial listing, an 

LTSE Listings Issuer must make the 

disclosures relating to buybacks, human 

capital investment, and research and 

development publicly available on its 

website by the earlier of when the LTSE 

Listings Issuer files its Form 10–K or 

distributes its Annual Report 

Supplement.58 Thereafter, the LTSE 

Listings Issuer must make this 

disclosure annually in its Annual 

Report Supplement, as set forth in 

proposed Rule 14A.207(b).59

D. Executive Compensation 

Requirements 

Proposed Rule 14A.405(b)(3) requires 

an LTSE Listings Issuer’s compensation 

committee to adopt a set of executive 

compensation guidelines applicable to 

Executive Officers,60 which the 

Exchange states are designed to link 

executive compensation to the longterm value of the LTSE Listings Issuer. 

These guidelines must include general 

principles for determining the form and 

amount of Executive Officer 

compensation, and for reviewing those 

principles, as appropriate. Specifically, 

the compensation committee must 

ensure that the time periods and 

performance metrics used to determine 

Incentive-Based Compensation 61 for 

Executive Officers are consistent with 

the LTSE Listings Issuer’s Long-Term 

Growth Strategy, and may consult with 

the LTSP Committee in assessing 

whether such time periods and 

performance metrics are consistent with 

the LTSE Listings Issuer’s Long-Term 

Growth Strategy.62

Proposed Rule 14A.405(b)(3)(B) 

imposes additional requirements related 

to the compensation of Executive 

Officers. An LTSE Listings Issuer may 

not provide Executive Officers with any 

Incentive-Based Compensation that is 

tied to a financial or performance metric 

that is measured over a time period of 

less than one year or grant any timebased equity compensation that has any 

portion that vests in less than a year 

from the grant date (or from the hire 

date, in the case of new hire grants).63

In addition, equity compensation 

awarded to Executive Officers must be 

subject to a period of vesting over at 

least five years.64


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Executive Officer permanently unable to remain 

employed at the LTSE Listings Issuer in any 

capacity. Id. The compensation committee must 

determine appropriate Vesting Periods and 

amounts, as well as holding periods, for equity 

compensation awarded to Executive Officers that 

apply following an Executive Officer’s retirement or 

resignation. See proposed Rule 14A.405(b)(3)(B)(iv). 

65See proposed Rule 14A.405(b)(3)(B)(iii). 

However, the amount of equity awards granted in 

the aggregate that vests before the first anniversary 

of the grant date, or that does not meet the 

minimum five-year vesting schedule, cannot exceed 

5% of the total number of shares authorized for 

grant in any fiscal year. See id. 

66See proposed Rule 14A.405(b)(3)(C). Proposed 

Rule 14A.405(b)(4) clarifies that ‘‘Smaller Reporting 

Companies,’’ as defined in Rule 12b–2 under the 

Act, 17 CFR 240.12b–2, are not exempt from the 

executive compensation guidelines described in 

proposed Rule 14A.405(b)(3). 

67See Notice, supra note 3, at 14083. 

68 Id. 

69See proposed Rule 14A.413(b). 

70Pursuant to IEX Rule 14.002(a)(15), the term 

‘‘Foreign Private Issuer’’ as used in the Exchange’s 

rules has the same meaning as in Rule 3b–4 under 

the Act, 17 CFR 240.3b–4. 

71 15 U.S.C. 78q–1. See also proposed Rules 

14A.200(c)(1) and 14A.208. 

72See proposed Rule 14A.413(b)(2). For these 

purposes, record owners of shares listed on LTSE 

Listings include those shareholders holding a 

physical paper certificate of such shares and 

shareholders holding shares through a DRP. See 

proposed Rule 14A.413(b)(3). 

73See Notice, supra note 3, at 14084. 

74See proposed Rule 14A.413(b)(1). 

75See proposed Rule 14A.413(b)(3). Pursuant to 

proposed Rule 14A.413, Supplementary Material 

.01(b), an LTSE Listings Issuer would be permitted 

to provide that the voting rights of shareholders 

holding in record name increase at a rate greater 

than one twelfth (1/12th) per month, provided that 

the voting power of such shares may not increase 

to a level that exceeds ten times their Initial Voting 

Power. 

76Proposed Rule 14A.413(b)(4). Proposed Rule 

14A.413(b)(5) requires that, prior to listing 

securities on LTSE Listings, a prospective LTSE 

Listings Issuer must obtain from its transfer agent 

a certification confirming that the transfer agent has 

software or other systems or processes available to 

the LTSE Listings Issuer that would enable the 

transfer agent and LTSE Listings Issuer to 

determine, as of a particular record date, the LTSE 

Listings Issuer’s shareholder’s voting rights 

calculated in accordance with proposed Rule 

14A.413(b) (Long-Term Voting). 

77See IEX Rule 14.413. 

78See id. Proposed Rule 14A.413, Supplementary 

Material .01(a) states that, so long as not 

inconsistent with IEX Rule 14.413, an LTSE Listings 

Issuer could (i) maintain multiple classes of 

securities, including shares that have voting power 

per share in excess of the Initial Voting Power of 

the securities listed on the Exchange, and/or (ii) 

establish or maintain classes of shares not listed on 

the Exchange that do not comply with proposed 

Rule 14A.413(b). 

79See Notice, supra note 3, at 14085–86. 

80See IEX Rule 14.413. IEX Rule 14.413 notes that 

examples of such corporate action or issuance 

include, but are not limited to, the adoption of timephased voting plans, the adopting of capped voting 

rights, the issuance of super-voting stock, or the 

issuance of stock with voting rights less than the 

per share voting rights of the existing common stock 

through an exchange offer. Id. 

The proposed LTSE Listings Rules 

provide for two exceptions to the 

executive compensation requirements 

discussed above. First, the 

compensation committee may provide 

alternative time periods for incentive 

and equity compensation if there is a 

‘‘business necessity,’’ and the LTSE 

Listings Issuer discloses and explains 

such business necessity.65 Second, any 

executive compensation that is subject 

to an existing written agreement entered 

into at least one year prior to the initial 

listing of an LTSE Listings Issuer on the 

Exchange need not comply with the 

requirements, but usage of this 

exemption must be disclosed in the 

Annual Report Supplement.66

E. Long-Term Shareholder Voting 

Structure 

According to the Exchange, it is 

consistent with the focus of the LTSE 

Listings category to provide a 

differentiated choice for issuers and 

investors that prefer listing standards 

that are explicitly designed to promote 

long-term value creation.67 Thus, the 

Exchange proposes Rule 14A.413(b) to 

require that LTSE Listings Issuers 

maintain certain voting rights 

provisions in their corporate 

organizational documents that would 

provide shareholders with the ability, 

according to the shareholder’s option, to 

accrue additional voting power over 

time.68 LTSE Listings Issuers would be 

required to comply with the obligations 

set forth in IEX Rule 14.413 and in 

proposed Rule14A.413, both of which 

relate to voting rights. Under proposed 

Rule 14A.413, LTSE Listings Issuers 

would be required to include certain 

voting rights provisions in their 

corporate organizational documents that 

provide shareholders the ability to 

accrue additional voting power over 

time.69 Under proposed Rule 

14A.413(b)(2), all securities listed on 

LTSE Listings, including securities 

issued by Foreign Private Issuers,70

must be eligible for a Direct Registration 

Program (‘‘DRP’’) operated by a clearing 

agency registered under Section 17A of 

the Act.71

Voting power would accrue only to 

shareholders who are beneficial owners; 

register such shares in their name as 

‘‘record holders’’ on the books of the 

LTSE Listings Issuer (including through 

the use of a DRP); and continue to hold 

such shares as record holders over a 

period of time.72 Shares held in ‘‘street 

name,’’ that is, shares registered on the 

books of an issuer’s transfer agent in the 

name of a nominee selected by the 

Depository Trust Company, would not 

accrue additional voting power over 

time.73

As of the date of the company’s initial 

listing on LTSE Listings, each holder of 

equity securities listed on LTSE Listings 

must be entitled to an equal number of 

votes per share (the ‘‘Initial Voting 

Power’’) on a per class basis.74 For each 

full calendar month following the date 

of the LTSE Listings Issuer’s listing on 

the Exchange during which a 

shareholder maintains continuous 

record ownership of shares, the voting 

power of such shares for so long as they 

are held of record by such shareholder 

would be required to increase by at least 

one twelfth (1/12th) over the shares’ 

Initial Voting Power on the last business 

day of the month, up to an amount that 

is ten times their Initial Voting Power.75

If, at any time, a shareholder transfers 

shares out of record ownership, then on 

the date of such transfer, such shares 

would revert to entitling the shareholder 

to the Initial Voting Power of such 

shares.76

In addition, although the 

requirements of proposed Rule 

14A.413(b) could be viewed as similar 

to time-phased voting plans, the 

Exchange believes that proposed Rule 

14A.413(b) is consistent with IEX Rule 

14.413, which is the Exchange’s Voting 

Rights Policy.77 IEX Rule 14.413 bars a 

company already listed on the Exchange 

from undertaking any of the prohibited 

corporate actions specified therein, 

including the adoption of time-phased 

voting plans.78 The Exchange notes that, 

because LTSE Listings Issuers would be 

required as a pre-condition to listing on 

LTSE Listings to have in place a voting 

rights structure as of the date of its 

initial listing that complies with 

proposed Rule 14A.413(b), no new 

corporate action that disparately 

reduces voting rights would be 

permitted to be taken subsequent to the 

LTSE Listings Issuer’s listing on the 

Exchange.79

The proposed LTSE Listings Rules 

also contain various provisions relating 

to the determination of record 

ownership for purposes of accreting 

voting power: 

Accreting Voting and the Exchange’s 

Voting Rights Policy: The proposed 

rules describe how to determine what is 

considered ‘‘super-voting’’ stock for 

purposes of IEX Rule 14.413, which 

provides that voting rights of existing 

shareholders of publicly traded common 

stock registered under Section 12 of the 

Act cannot be disparately reduced or 

restricted through any corporate action 

or issuance.80 Proposed Rule 14A.413, 

Supplementary Material .01(f) would 

prohibit an issuer from disparately 

reducing or restricting the voting rights 

of existing shareholders by issuing a 


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81See proposed Rule 14A.413, Supplementary 

Material .01(f). 

82See id. 

83See proposed Rule 14A.413, Supplementary 

Material .01(c). Any LTSE Listings Issuer that 

provides in its governance documents that the 

board of directors may make such a determination 

must also adopt in its governance documents a 

process for any shareholders directly affected by 

such determination to challenge such 

determination. This process must provide the 

affected shareholders with an opportunity to 

present additional information demonstrating that a 

change of beneficial ownership has not occurred. 

See id. 

84See proposed Rule 14A.413, Supplementary 

Material .01(d). The proposed rule further states 

that an example of this could be where a 

shareholder changes its legal name, or where 

ownership of shares by an individual is re-titled to 

reflect joint ownership with a spouse. See id. 

85See proposed Rule 14A.413, Supplementary 

Material .01(e). The proposed rule further states that 

an example could be if Investment Fund ABC 

maintains custody of its assets through Bank XYZ, 

Investment Fund ABC may be recognized as the 

record holder of the shares of an LTSE-Listed 

company solely for purposes of this rule if Bank 

XYZ registers the shares on the books of the LTSEListed Issuer as being owned by ‘‘Bank XYZ, as 

custodian for Investment Fund ABC.’’ See id. 

86See proposed Rule 14A.200 and Amendment 

No. 1, supra note 6. 

87See proposed Rule 14A.200(a). 

88See proposed Rule 14A.200(b). 

89 15 U.S.C.781(b). See also proposed Rule 

14A.200(b). 

90See proposed Rule 14A.200(c)(2) and 

Amendment No. 1, supra note 6. 

91See proposed Rule 14A.210(a). 

92See proposed Rule 14A.210, Supplementary 

Material .01. 

93See Notice, supra note 3, at 14087. 

94See id. at 14087 n.74. ‘‘Primary Listing Market’’ 

is defined in proposed Rule 14A.002(a)(14) as 

having the same meaning as that term is defined in 

the Nasdaq Unlisted Trading Privileges national 

market system plan and consistent with the use of 

the term ‘‘listing market’’ in the Consolidated 

Quotation Service and Consolidated Tape 

Association national market system plans. 

95See id. at 14087 n.73. In addition, proposed 

Rule 14A.210(b) imposes notification requirements 

on a dually-listed LTSE Listings Issuer if its 

securities have fallen below the continued listing 

requirements of LTSE Listings or the other market. 

Proposed Rule 14A.210(c) also provides that, for an 

LTSE Listings Issuer with a dually-listed security, 

if IEX is not the Primary Listing Market and the 

Primary Listing Market requires a minimum 

number of market makers, the minimum market 

maker requirements of IEX Rules 14.310 and 14.320 

that require a company listed on the Exchange to 

maintain a particular minimum number of 

registered and active Market Makers would not be 

applicable to the LTSE Listings Issuer’s duallylisted security. See Amendment No. 1, supra note 

6. 

96Proposed Rule 14A.401(b) provides that LTSE 

Listings Issuers may request from IEX a written 

interpretation of the LTSE Listings Rules, and a 

response to such request generally would be 

provided within one week following receipt by IEX 

Regulation of all information necessary to respond 

to the request. 

new class of super-voting stock.81 For 

purposes of LTSE Listings, a class of 

securities shall be considered supervoting stock if (i) the Initial Voting 

Power of such class of securities 

exceeds the Initial Voting Power of any 

of the LTSE Listings Issuer’s existing 

classes of common stock listed on LTSE 

Listings or (ii) the rate at which the 

voting power of such class may increase 

over time is greater than the 

corresponding rate for any of the LTSE 

Listings Issuer’s existing classes of 

common stock listed on LTSE 

Listings.82

Potential Evasion of Loss of LongTerm Voting Power: An LTSE Listings 

Issuer may provide in its governance 

documents that if its board of directors 

adopts a resolution reasonably 

determining that, notwithstanding 

technical compliance with the 

provisions of the LTSE Listings Issuer’s 

governance documents relating to the 

increasing voting power of long-term 

shareholders and continuity of record 

ownership, there has in fact been a 

change in beneficial ownership with 

respect to shares held of record that 

would evade the purposes of this LTSE 

Listings Rule 14A.413(b), such shares 

may be treated as being entitled only to 

their Initial Voting Power.83

Technical Changes in Ownership: An 

LTSE Listings Issuer may adopt a 

process by which a shareholder may 

demonstrate that, notwithstanding a 

technical change in record ownership, a 

change in beneficial ownership has not 

occurred.84

Shareholders Holding Through 

Custodians: In the case of a shareholder 

that holds its shares in an LTSE Listings 

Issuer through a custodian consistent 

with applicable regulatory 

requirements, an LTSE Listings Issuer 

may recognize such shareholder as a 

holder of record solely for purposes of 

proposed Rule 14A.413(b), so long as 

the custodian becomes the shareholder 

of record in a manner that indicates the 

name of the ultimate beneficial owner.85

F. Proposed Rules Concerning the 

Application of Certain Existing 

Exchange Rules 

Certain of the proposed LTSE Listings 

Rules clarify the application of existing 

Exchange listings rules to LTSE Listings 

Issuers, as described further below. 

1. General Procedures for Initial and 

Continued Listing on LTSE Listings 

A company seeking the initial listing 

of one or more classes of securities on 

LTSE Listings must comply with the 

requirements and procedures set forth 

in the IEX Rule Series 14.200, as well as 

the supplemental requirements set forth 

in proposed Rule 14A.200.86 The 

Exchange must first determine that a 

company is eligible for listing under the 

LTSE Listings Rules and meets the 

Exchange’s other listing criteria before it 

would provide a clearance letter, as 

defined in IEX Rule 14.201.87 After 

receiving a clearance letter pursuant to 

IEX Rule 14.201, a company choosing to 

list as an LTSE Listings Issuer must file 

an original listing application.88 To 

apply for listing on LTSE Listings, a 

company must execute a Listing 

Agreement and a Listing Application on 

the forms designated by the Exchange 

for an LTSE Listings Issuer, which 

would provide the information required 

by Section 12(b) of the Act.89 At the 

time of listing, the company may not 

already have any security listed for 

trading on the Exchange or any other 

national securities exchange and the 

company must be listing on LTSE 

Listings in connection with its initial 

public offering.90

2. Dually-Listed Securities 

The Exchange proposes to permit 

LTSE Listings Issuers to list a class of 

securities that, in connection with its 

IPO, has been approved for listing on 

another national securities exchange.91

The Exchange would make an 

independent determination of whether 

any such companies satisfy all 

applicable listing requirements and 

shall require companies to enter into a 

dual-listing agreement with the 

Exchange.92 In the event that an issuer 

chooses to dually list on both LTSE 

Listings and another national securities 

exchange in connection with its IPO, the 

Exchange would expect such other 

national securities exchange to be the 

LTSE Listings Issuer’s ‘‘Primary Listing 

Market.’’ 93 The Exchange states that 

when an LTSE Listings Issuer is duallylisted on another national securities 

exchange, the initial trading of such 

issuer’s securities on the Exchange 

would not occur until after the 

completion of the opening auction for 

such securities on the first day of listing 

on the ‘‘Primary Listing Market.’’ 94 The 

Exchange further states that it would 

monitor the dually-listed LTSE Listings 

Issuer for compliance with all 

applicable IEX Rules on an ongoing 

basis, as it would for any other LTSE 

Listings Issuer.95 Proposed 

Supplementary Material .01 to Rule 

14A.210 would clarify the application of 

certain IEX Rules, such as rules 

governing trading halts, for dually-listed 

LTSE Listings Issuers. 

Proposed Rule 14A.435 would require 

LTSE Listings Issuers to certify, at or 

before the time of listing, that all 

applicable listing criteria have been 

satisfied, as set forth in IEX Rule 

14.202(b).96 In addition, the Chief 

Executive Officer of each LTSE Listings 


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97See proposed Rule 14A.435(b). In addition, an 

LTSE Listings Issuer must provide the Exchange 

with prompt notification after an Executive Officer 

of the LTSE Listings Issuer becomes aware of any 

noncompliance by the LTSE Listings Issuer with the 

requirements of the proposed Rule Series 14A.400. 

See proposed Rule 14A.410. 

98See proposed Rule 14A.200(c)(3). 99See Notice, supra note 3, at 14092. 100See id. at 14090. 101See id.; see also IEX Rule 14.412(a)(1)(A). 102See Notice, supra note 3, at 14090. 

103See id. This general formula is subject to 

certain exceptions. See IEX Rule 14.412. 

104See Notice, supra note 3, at 14090–91. 

105See id. at 14091. Proposed Rule 14A.412(c)(1) 

defines ‘‘Long-Term Voting Factor’’ as the quotient 

calculated by dividing (i) the voting power 

outstanding as of the Shareholder Approval 

Calculation Date by (ii) the number of shares 

outstanding as of the Shareholder Approval 

Calculation Date multiplied by the Initial Voting 

Power of those outstanding shares. 

106See proposed Rule 14A.412(a)(2). 

107Proposed 14A.412(c)(2) defines ‘‘Shareholder 

Approval Calculation Date’’ as the date on which 

an LTSE Listings Issuer enters into a binding 

agreement to conduct a transaction that may require 

shareholder approval under IEX Rule 14.412 

(Shareholder Approval). 

108See Notice, supra note 3, at 14092. 

109See id. 

110 ‘‘The Exchange shall consider the factors 

enumerated in IEX Rule 14.102(a) for determining 

whether a change of control has occurred.’’ See 

proposed Rule 14A.102(a)(1). Any combined entity 

applying for initial listing must agree to comply 

with all applicable requirements of Chapter 14A, 

including requirements relating to long-term voting 

set forth in proposed Rule 14A.413, to apply to list 

as permitted by proposed Rule 14A.102. See id. 

111 If an initial listing following a change of 

control meets applicable listing requirements and 

the LTSE Listings Issuer is the surviving entity 

following the business combination, any shares of 

the LTSE Listings Issuer that have accrued 

additional voting power pursuant to proposed Rule 

14A.413(b) prior to the business combination would 

retain such additional voting power following the 

business combination. See proposed Rule 

14A.102(a)(2). Conversely, if the non-LTSE Listings 

Issuer is the surviving entity or a new entity is 

formed following the business combination, all 

shares of the class or classes of securities to be 

listed on LTSE Listings would have voting power 

equal to their Initial Voting Power at the time of 

such listing. See id. 

112A ‘‘Reverse Merger’’ is generally defined as 

‘‘any transaction whereby an operating company 

becomes an Exchange Act reporting company by 

combining, either directly or indirectly, with a shell 

company which is an Exchange Act reporting 

Continued 

Issuer must annually certify to the 

Exchange that: (i) The LTSE Listings 

Issuer is in compliance with the 

proposed Rule Series 14A.400, 

qualifying the certification to the extent 

necessary, and (ii) the LTSE Listings 

Issuer has designated an employee 

responsible for ensuring that the voting 

power of the LTSE Listings Issuer’s 

securities is determined in accordance 

with proposed Rule 14A.413(b) (LongTerm Voting).97

LTSE Listings Issuers would not be 

required to pay the fees described in IEX 

Rule Series 14.600.98 The Exchange 

represents that it intends to file a 

separate proposed rule change that 

would address listing fees applicable to 

LTSE Listings Issuers.99

3. Shareholder Approval Calculation 

Proposed Rule 14A.412 describes the 

circumstances in which an Exchangelisted company is required to obtain 

shareholder approval prior to the 

issuance of securities in connection 

with certain transactions. Under IEX 

Rule 14.412, an Exchange-listed 

company is required to obtain 

shareholder approval in connection 

with: (1) The acquisition of the stock or 

assets of another company; (2) a change 

of control; (3) equity-based 

compensation of officers, directors, 

employees, or consultants; and (4) 

private placements.100 Among the 

potential triggers that would require 

shareholder approval, shareholder 

approval is required if the common 

stock being issued ‘‘has or will have 

upon issuance voting power equal to or 

in excess of 20% of the voting power 

outstanding before the issuance.’’ 101 In 

light of the potential increased future 

voting power of new shares to be issued, 

the Exchange believes that it is 

appropriate in calculating the 

shareholder approval threshold to 

require that LTSE Listings Issuers assign 

a greater level of voting power to the 

newly issued shares than the Initial 

Voting Power of those shares, on the 

presumption that the ultimate voting 

power of those shares would increase 

over time.102 Proposed Rule 14A.412 

would implement a special calculation 

to determine whether or not the 

issuance of new shares by an LTSE 

Listings Issuer would surpass the 20% 

threshold. 

Under current IEX Rule 14.412, 

determining whether an issuance equals 

or exceeds this shareholder approval 

threshold is generally calculated by 

multiplying the number of shares to be 

issued by the voting power of such 

shares and dividing this number by the 

voting power of the shares outstanding 

before the issuance.103 However, 

because the shares of LTSE Listings 

Issuers would have accruing voting 

power, the Exchange is proposing Rule 

14A.412 to provide a different means of 

calculating the numerator and 

denominator that would be applied to 

LTSE Listings Issuers.104

Pursuant to proposed Rule 

14A.412(a)(1), for LTSE Listings Issuers 

that have been listed on LTSE Listings 

for at least five years, the numerator of 

the shareholder approval calculation 

would be the number of shares to be 

issued multiplied by the product of the 

Initial Voting Power of such shares and 

the Long-Term Voting Factor.105 For 

LTSE Listings Issuers that have been 

listed on LTSE Listings for fewer than 

five years, the numerator would be the 

greater of (i) the number of shares to be 

issued multiplied by the product of the 

Initial Voting Power of such shares and 

the Long-Term Voting Factor and (ii) the 

number of shares to be issued 

multiplied by twice the Initial Voting 

Power of such shares.106

Instead of applying the existing rule 

for determining the denominator of the 

calculation—the voting power of shares 

outstanding at issuance as described in 

IEX Rule 14.412(e)(2)—proposed Rule 

14A.412(b) states that the following 

provision shall apply, ‘‘[v]oting power 

outstanding refers to the aggregate 

number of votes which may be cast by 

holders of those shares outstanding 

which entitle the holders thereof to vote 

generally on all matters submitted to the 

company’s shareholders for a vote, as of 

the Shareholder Approval Calculation 

Date.’’ 107 All other provisions of IEX 

Rule 14.412 would continue to apply.108

The Exchange believes that the 

provisions of proposed Rule 14A.412 for 

calculating when shareholder approval 

would be required in connection with 

certain transactions would be a 

reasonable and balanced approach, 

while taking into account the potential 

increased future voting power of new 

shares to be issued.109

4. Change of Control Transactions and 

Reverse Mergers 

The proposed LTSE Listings Rules set 

forth procedures for change of control 

transactions, which would operate in 

conjunction with existing IEX Rule 

14.102(a). Proposed Rule 14A.102(a)(1) 

would require an LTSE Listings Issuer 

to apply for initial listing in connection 

with a transaction whereby the LTSE 

Listings Issuer combines with, or into, 

an entity that is not listed on LTSE 

Listings, resulting in a change of control 

of the LTSE Listings Issuer and 

potentially allowing the non-LTSE 

Listings entity to obtain a listing on 

LTSE Listings.110 Proposed Rule 

14A.102(a)(2) describes the impact of a 

change of control transaction on the 

proposed long-term voting provisions of 

LTSE Listings and voting power of such 

shares.111 Proposed Rule 14A.102(b) 

states that an entity formed by a Reverse 

Merger 112 would not be eligible to 


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company, whether through a reverse merger, 

exchange offer, or otherwise.’’ See IEX Rule 

14.002(a)(27). 

113See Notice, supra note 3, at 14089. IEX Rule 

14.407(a) provides exemptions to certain of the 

Exchange’s corporate governance requirements for 

asset-backed issuers and other passive issuers, 

cooperatives, Foreign Private Issuers, limited 

partnerships and management investment 

companies. 

114 IEX Rule 14.407(b) allows a company listed on 

the Exchange to phase-in its compliance with 

certain Exchange rules over a period of time in 

certain situations, for example, for a company 

emerging from bankruptcy. See id. 

115See proposed Rule 14A.407(b). Specifically, 

that LTSE Listings Issuer would be permitted to 

phase in its compliance with the committee 

composition requirements set forth in proposed 

Rule 14A.405(c)(4) as follows: (1) At least one 

member of the LTSP Committee must be an 

Independent Director at the time of listing, and (2) 

a majority of the members of the LTSP Committee 

must be Independent Directors within 90 days of 

listing. See id. 

116The term ‘‘Controlled Company’’ is defined in 

IEX Rule 14.407(c)(1) as an Exchange-listed 

company of which more than 50% of the voting 

power for the election of directors is held by an 

individual, a group or another company. 

117However, Controlled Companies would not be 

exempt from the executive compensation 

requirements of proposed Rule 14A.405(b)(3). See 

proposed Rule 14A.407(c)(1). If a Controlled 

Company does not have a compensation committee, 

the Independent Directors on the LTSP Committee, 

or the Independent Directors of the board, would 

be responsible for compliance with the executive 

compensation requirements. See proposed Rule 

14A.407(c)(2). 

118Pursuant to proposed Rule 14A.002(a)(5), 

‘‘Earnings Guidance’’ means any public disclosure 

made to Shareholders containing a projection of the 

LTSE Listings Issuer’s revenues, income (including 

income loss), or earnings (including earnings loss) 

per share. Any Earnings Guidance, including 

updates and supplementary disclosure related to 

Earnings Guidance, must also comply with the 

disclosure and notification requirements of IEX 

Rule 14.207(b)(1). See proposed Rule 14A.420(b). 

119See Notice, supra note 3, at 14086. 

120For documents available on or through an 

LTSE Listings Issuer’s website, such website must 

be accessible from the United States, must clearly 

indicate in the English language the location of 

such documents on the website and such 

documents must be available in a printable version 

in the English language. See proposed Rule 

14A.430. 

121See Amendment No. 1, supra note 6. 

122See supra note 4. 

123See supra note 5. 

124See Inherent Group Letter and Glass, Lewis 

Letter. 

125See Collaborative Fund Letter at 1; Costolo 

Letter; Case Letter; Conference Board Letter at 2; 

Andreessen Horowitz Letter; Obvious Ventures 

Letter; Founders Fund Letter; Descript Letter; 

LinkedIn Letter; Y Combinator Letter at 1–2; 

Techstars Letter at 1; Downtown Project Letter; 

CareJourney Letter; Brummer Letter at 3. See also 

apply for initial listing on LTSE 

Listings. 

5. Exemptions From Certain Corporate 

Governance Requirements 

Proposed Rule 14A.407 modifies the 

exemptions from certain governance 

requirements for LTSE Listings Issuers. 

Applicability of Exemptions to 

Corporate Governance Requirements: 

Proposed Rule 14A.407(a) would 

provide that an LTSE Listings Issuer 

may not rely on the exemptions set forth 

in IEX Rule 14.407(a) with respect to the 

requirements of Chapter 14A.113

Proposed Rule 14A.407(a) clarifies that 

a Foreign Private Issuer who meets the 

requirements of Chapter 14A, including 

the requirement to distribute an Annual 

Report Supplement, may list on LTSE 

Listings. 

Phase-in of Compliance With LTSP 

Committee Composition Requirements: 

In addition to the phase-in schedules 

provided in existing IEX Rule 

14.407(b),114 an LTSE Listings Issuer 

that is listing in connection with its IPO 

or that is emerging from bankruptcy 

would be permitted to phase-in its 

compliance with the LTSP Committee 

composition requirements.115

Controlled Companies: Proposed Rule 

14A.407(c)(1) states that an LTSE 

Listings Issuer that is a Controlled 

Company 116 would be exempt from the 

additional compensation committee 

requirements of proposed Rule 

14A.405(b) and the nominating/ 

corporate governance committee 

requirements of proposed Rule 

14A.405(d).117

G. Other Requirements for LTSE Listings 

Issuers 

Earnings Guidance: Proposed Rule 

14A.420 prohibits LTSE Listings Issuers 

from providing Earnings Guidance more 

frequently than annually, unless such 

disclosure would be required by IEX 

Rule 14.207(b)(1) (Disclosure of Material 

Information), other applicable law or to 

make the previously issued Earnings 

Guidance not misleading.118

Long-Term Stakeholder Policies: 

Proposed Rule 14A.425 requires LTSE 

Listings Issuers to develop and publish: 

(i) A policy regarding the LTSE Listings 

Issuer’s impact on the environment and 

community; and (ii) a policy explaining 

the LTSE Listings Issuer’s approach to 

diversity throughout the LTSE Listings 

Issuer.119 The LTSE Listings Issuer must 

review the policies required by 

proposed Rule 14A.425 at least annually 

and make such policies available on or 

through its website. 

Website Requirements: Several of the 

proposed LTSE Listings rules require 

LTSE Listings Issuers to make certain 

disclosures or documents publicly 

available on the LTSE Listings Issuer’s 

website, and proposed Rule 14A.430 

would explicitly require LTSE Listings 

Issuers to have and maintain a public 

available website.120 In addition, 

proposed Rule 14A.413 would require 

each LTSE Listings Issuer to prepare 

and maintain an explanatory statement 

that must be written in plain English 

and posted prominently on the LTSE 

Listings Issuer’s website and that must 

explain how a shareholder’s voting 

power in the LTSE Listings Issuer’s 

securities may increase over time, and 

explain the particular conditions that 

must be satisfied and the administrative 

steps that the shareholder must take to 

hold shares in a manner that would 

allow such voting power to increase 

over time.121

H. Failure To Meet LTSE Listings 

Standards 

Pursuant to IEX Rule 14.500(a), a 

failure to meet the listing standards set 

forth in the LTSE Listings Rules would 

be treated as a failure to meet the listing 

standards set forth in Chapter 14 of the 

IEX Rules, for purposes of the IEX Rule 

Series 14.500. As a result, the 

procedures for the independent review, 

suspension, and delisting of companies 

that fail to satisfy one or more standards 

for continued listing would apply to any 

LTSE Listings Issuer that fails to comply 

with listing standards in the LTSE 

Listings Rules as well as in Chapter 14 

of the IEX Rules. 

Proposed Rule 14A.500(b) would 

provide that a failure to satisfy one or 

more of the LTSE Listings Rules would 

be treated as a deficiency for which a 

company may submit a plan to regain 

compliance in accordance with IEX 

Rule 14.501(d)(2). Absent an extension, 

such a plan must be provided within 45 

calendar days of IEX Staff’s notification 

of deficiency in accordance with IEX 

Rule 14.501(d)(2)(C) (Timeline for 

Submission of Compliance Plans). 

Proposed Rule 14A.500 would permit 

an issuer to remain listed on the 

Exchange as a standard IEX listed 

company should the LTSE Listings 

Issuer become subject to delisting for 

failure to satisfy one or more LTSE 

Listings Rules, but remains in 

compliance with all other applicable 

listing rules of the Exchange. 

IV. Summary of Comments and IEX’s 

Response Letter 

As noted above, the Commission 

received twenty-three comment letters 

regarding the proposed rule change 122

and one response letter from the 

Exchange.123 All commenters expressed 

their support for the proposed rule 

change, although two commenters 

indicated that they generally preferred 

single class voting structures.124 Several 

commenters suggested that IEX’s 

proposed rule change may encourage 

additional companies to pursue an 

initial public offering with an increased 

focus on long-term objectives.125 Many 


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Greylock Partners Letter (expressing support for ‘‘a 

new option that aims to build an ecosystem that 

enables opportunity and connects long-term 

visionaries from all sides of the economy’’). Two 

commenters supporting the proposal discussed the 

benefits of a new exchange designed to promote 

long-term objectives. See Collaborative Fund Letter 

at 1; Baillie Gifford Letter at 1–2. The Commission 

notes that IEX’s proposed rule change would simply 

provide an additional listings tier on IEX, and that 

IEX is not proposing an application for registration 

as a separate national securities exchange. 

126See, e.g., Inherent Group Letter at 1; Buhl 

Letter; Conference Board Letter at 1–2; Andreessen 

Horowitz Letter; Obvious Ventures Letter; Greylock 

Partners Letter; Aspen Institute Letter; Descript 

Letter; LinkedIn Letter; Techstars Letter at 1; 

Downtown Project Letter; CareJourney Letter; 

Revolution Letter. 

127See Cboe Letter at 1. 

128See Glass, Lewis Letter at 1–2. 

129See Initialized Capital Letter. 

130See Revolution Letter; Inherent Group Letter at 

1; CareJourney Letter; Brummer Letter at 4–5; 

CalPERS Letter at 2. 

131See CalPERS Letter at 2; Brummer Letter at 3– 

4. 

132See Inherent Group Letter at 1; Andreessen 

Horowitz Letter; Brummer Letter at 3–4. 

133See Brummer Letter at 4. 

134See id. 

135See id. 

136See Glass, Lewis Letter at 2. 

137See id. 

138See id. 

139See Inherent Group Letter at 1. 

140See id. 

141See IEX Response Letter at 1. 

142See id. at 1–2. 

143See id. at 2. 

144 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

145 15 U.S.C. 78f(b)(1) and 15 U.S.C. 78f(b)(5). 

146 15 U.S.C. 78f(b)(5). 

147See Section IV., supra. 

commenters expressed a related view 

that the current market structure 

disproportionately encourages shortterm outlooks.126 One commenter 

suggested that the proposal would 

encourage additional new listings by 

increasing competition and providing 

an alternative model in the exchange 

market for listings.127 Another 

commenter commended IEX more 

broadly for its proposal’s innovation in 

areas such as increasing transparency in 

reporting and disclosure of long-term 

strategy, aligning board incentives with 

the interests of long-term shareholders, 

aligning executive compensation with 

long-term performance, and recognizing 

environmental, social, and governance 

priorities.128 Yet another commenter 

remarked that founders today feel the 

need to grow large in the private 

markets in order to sustain and protect 

their cultures, thinking, and values 

when they enter the public markets.129

Five commenters specifically 

supported providing longer-tenured 

investors in a company with greater 

input in corporate governance.130 In 

addition to the proposed long-term 

voting system, two of these commenters 

also highlighted the benefits of the 

additional disclosure requirements that 

are focused on long-term growth.131

Three commenters stated that the 

proposed listing standards would 

increase transparency to investors, such 

as with respect to long-term goals, 

metrics, and performance, and would 

help align executive compensation with 

these long-term measures.132 One of 

these commenters suggested that IEX’s 

proposal to require a board committee 

focused on long-term growth strategies 

and the disclosure of such strategies 

could better encourage long-term 

relationships between issuers and their 

shareholders through the increased 

transparency that the proposal would 

promote.133 This commenter also 

highlighted the proposal’s required 

disclosure of human capital expenses 

and short-term vs. long-term research 

and development spending as features 

that could provide valuable insight into 

how issuers are effectively investing in 

their long-term growth and thereby 

mitigate concerns about short-term 

fluctuations in earnings.134 This 

commenter further noted that the 

proposed executive compensation 

requirements would better tie 

management’s incentives to the listed 

company’s disclosed long-term growth 

strategy.135

One commenter, while generally 

supporting IEX’s proposal, expressed 

concern about the proposed increasing 

voting rights that are based on the 

length of time that the shares are 

held.136 This commenter noted that 

dual-class voting structures ‘‘are 

generally not in the best interests of 

common shareholders; this includes any 

equity structures providing unequal 

voting rights, regardless of the number 

of share classes issued.’’ 137 This 

commenter acknowledged, however, 

that the long-term shareholder voting 

feature of the IEX proposal may be 

preferable to some investors compared 

to other existing unequal voting 

structures.138 Another commenter, 

while not expressing a concern specific 

to IEX’s proposal, noted that it 

‘‘generally prefer[s] single-class share 

structures,’’ but ‘‘support[s] mechanisms 

that reward long-term shareholders with 

a greater say in corporate governance 

issues than short-term shareholders.’’ 139

This commenter cautioned that any 

such mechanisms ‘‘must maintain 

management accountability, preserve 

adequate liquidity in the public 

markets, and balance the interests of 

small and large—and short-term and 

long-term—shareholders.’’ 140

In its response to the commenters, IEX 

stated that its proposed long-term voting 

provisions differ from existing dualclass and uneven voting structures 

because its proposed voting structure 

treats all common shareholders equally 

in their ability to gain additional voting 

power based on the length of time that 

their shares are held.141 According to 

the Exchange, this proposed structure is 

designed to more directly align voting 

rights with long-term engagement with 

the issuer.142 The Exchange further 

noted that the proposed voting structure 

should not be mandated for any issuer 

but is an important alternative that 

would be available to issuers that elect 

to list on the proposed new IEX listings 

tier.143

V. Discussion and Commission Findings 

After careful review and 

consideration of the comments received, 

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.144 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.145 Section 

6(b)(5) of the Act146 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 foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in securities, to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest; and 

not be designed to permit unfair 

discrimination between customers, 

issuers, brokers or dealers. 

As noted above, the Commission 

received 23 comment letters on the 

proposed rule change, as well as a 

response letter from the Exchange. The 

commenters generally expressed 

support for the Exchange’s proposal, 

although two commenters indicated that 

they preferred single-class voting 

structures, but acknowledged that they 

otherwise supported the aim of the 

Exchange’s proposal to favor long-term 

shareholder value.147

The Exchange proposes to adopt 

listing rules for a new tier of listings on 

its market, LTSE Listings. The Exchange 

states that it believes that companies 


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148See Ritter, J., Initial Public Offerings: Updated 

Statistics, January 2018, https://

site.warrington.ufl.edu/ritter/files/2018/01/ 

IPOs2017Statistics_January17_2018.pdf (retrieved 

Jun. 20, 2018). The sample excludes IPOs with 

offers prices below $5, ADRs, units, closed-end 

funds, REITs, natural resource limited partnerships, 

small best efforts offers, banks and thrifts, and 

stocks not listed on Amex, NYSE, and NASDAQ. 

149 Id. Peak technology bubble years (1999 and 

2000) are excluded. If 2008 and 2009 are excluded, 

the decrease in the average number of IPOs per year 

from 1990–1998 to 2001–2017 is estimated to be 

approximately 70%. 

The decline is smaller but still considerable when 

an earlier time period is used for comparison. The 

average number of IPOs per year decreased by 

approximately 47% from 1980–1989 to 2001–2017 

(approximately 42%, excluding 2008–2009). 

150The estimate is based on Staff calculations 

based on World Bank’s World Development 

Indicators data on the number of domestic listed 

companies in the US (retrieved April 23, 2018). The 

average number of listed companies is estimated to 

have decreased by approximately 23% from 1980– 

1989 to 2001–2017. 

151See, e.g., Engel, E., Hayes, R., Wang, X., 2007, 

The Sarbanes–Oxley Act and Firms’ Going-Private 

Decisions, Journal of Accounting and Economics 

44(1–2), 116–145; Kamar, E., Karaca-Mandic, P., 

Talley, E., 2009, Going-Private Decisions and the 

Sarbanes-Oxley Act of 2002: A Cross-Country 

Analysis, Journal of Law, Economics, & 

Organization 25(1), 107–133; Bova, F., MinuttiMeza, M., Richardson, G., Vyas, D., 2014, The 

Impact of SOX on the Exit Strategies of Private 

Firms, Contemporary Accounting Research 31(3), 

818–850. 

152See, e.g., Gao, X., Ritter, J., Zhu, Z., 2013, 

Where have all the IPOs gone? Journal of Financial 

and Quantitative Analysis 48(6), 1663–1692. 

153See, e.g., Ewens, M., Farre-Mensa, J., 2018, 

The deregulation of the private equity markets and 

the decline in IPOs, Working paper, https://

ssrn.com/abstract_id=3017610 (retrieved Jun. 20, 

2018); Doidge, C., Kahle, K., Karolyi, A., Stulz, R., 

2018, Eclipse of the Public Corporation or Eclipse 

of the Public Markets? Journal of Applied Corporate 

Finance 30(1), 8–16. 

154See, e.g., Lowry, M., 2003, Why does IPO 

volume fluctuate so much? Journal of Financial 

Economics 67(1), 3–40; Alti, A., 2005, IPO Market 

Timing, Review of Financial Studies 18(3), 1105– 

1138; Yung, C., Colak, G., Wang, W., 2008, Cycles 

in the IPO market, Journal of Financial Economics 

89(1), 192–208. 

155See, e.g., IPO taskforce, Rebuilding the IPO 

On-Ramp: Putting Emerging Companies and the Job 

Market Back on the Road to Growth, October 20, 

2011, https://www.sec.gov/info/smallbus/acsec/ 

rebuilding_the_ipo_on-ramp.pdf (retrieved Jun. 27, 

2018); Committee on Capital Markets Regulation, 

U.S. Public Markets are Stagnating, April 2017, 

http://www.capmktsreg.org/wp-content/uploads/ 

2017/06/US-Public-Equity-Markets-areStagnating.pdf (retrieved Jun. 27, 2018). Besides 

ongoing costs of periodic reporting, observers have 

pointed to other considerations, such as the costs 

of the IPO, disclosure requirements, audits, 

litigation, investor relations, shareholder activism, 

etc. 

156See, e.g., Eule, A., Are Unicorns Killing the 

2016 IPO Market? June 4, 2016, Barron’s, http://

www.barrons.com/articles/are-unicorns-killing-the2016-ipo-market-1465018470 (retrieved Jun. 27, 

2018); Zanki, T., 4 Reasons Cos. Are Staying Private 

Longer, March 14, 2017, Law360, New York, 

https://www.law360.com/articles/901768?scroll=1 

(retrieved Jun. 27, 2018); Hutchinson, J., Why Are 

More Companies Staying Private? February 15, 

2017, https://www.sec.gov/info/smallbus/acsec/ 

hutchinson-goodwin-presentation-acsec-021517.pdf 

(retrieved Jun. 27, 2018). See also Notice, supra 

note 3, at 14075 n.10. 

157See supra notes 67–68 and accompanying text. 

158See supra note 74 and accompanying text. 

159Only shareholders of an LTSE Listings Issuer 

who register such shares in their name as record 

holders on the books of the LTSE Listings Issuer, 

including through the use of a DRP, would be 

eligible for these accreting voting rights. See supra 

note 72 and accompanying text. 

should be able to maintain a public 

listing on an exchange that provides a 

differentiated choice for issuers and 

investors that prefer listing standards 

that the Exchange explicitly has 

designed with the aim of promoting 

long-term value creation. Although 

companies today could list on the 

Exchange and voluntarily choose to 

focus on long-term value creation, the 

Exchange believes that providing a 

listing category with listing rules that 

the Exchange has designed to address 

some of the concerns regarding ‘‘shorttermism’’ could encourage greater 

participation in the public markets by 

long-term focused companies and 

investors 

In support of its proposal, the 

Exchange notes that many academics, 

commentators, market participants, and 

others have expressed concerns 

regarding ‘‘short termism’’ and the 

potential impact on issuers when some 

investors’ focus on short-term results. 

The Exchange points to data indicating 

that the average number of IPOs per year 

from 2001 through 2016 was 

approximately one-third of the average 

number of IPOs between 1998 and 2000, 

and that the number of listed companies 

fell by nearly 50% from 1996 through 

2016. 

An analysis of IPO data,148 prepared 

by the Commission’s Division of 

Economic Research and Analysis, 

similarly points to a decline in the 

number of IPOs and public companies 

compared to the nineties. For example, 

the number of IPOs declined by 

approximately 77% from 1997 to 2017, 

while the average number of IPOs per 

year declined by approximately 73% 

from 1990–1998 to 2001–2017.149 The 

number of listed companies decreased 

by approximately 45% from 1997 to 

2017 and the average number of listed 

companies decreased by approximately 

34% from 1990–1998 to 2001–2017.150

Academic studies have similarly 

demonstrated a decline in the number of 

U.S. IPOs and listed companies in 

recent years and have cited various 

potential reasons for this decline, 

including a high cost of going public 

and being a reporting company,151 the 

advantages of being acquired by a larger 

firm,152 and the expanding role of 

private markets.153 Other studies 

generally note the cyclical nature of 

offering activity.154

Other observers have offered various 

reasons for the IPO decline, including 

high costs of an IPO and of being a 

public company155 and the 

attractiveness of private placements and 

of being acquired.156

Issuers that list on the LTSE Listings 

tier would be subject to the listing 

standards in proposed Chapter 14A of 

IEX’s rules, as well as Chapter 14 of 

IEX’s rules relating to its standard 

listing tier. Significant features of 

proposed Chapter 14A, which are 

discussed in more detail below, pertain 

to: (1) The opportunity for shareholders 

to receive accreting voting rights; (2) an 

alternative calculation for determining 

shareholder approval requirements; (3) 

additional corporate governance and 

other requirements for LTSE Listings 

Issuers; and (4) provisions pertaining to 

dually-listed securities. 

A. Mandatory Accreting Voting Rights 

A key feature of the Exchange’s 

proposal is the requirement that 

companies electing to list their common 

equity securities on the Exchange’s 

LTSE Listings tier must comply with the 

voting rights requirements set forth in 

proposed Rule 14A.413 with respect to 

those listed securities. In the Exchange’s 

view, the proposed voting rights 

structure is designed to more directly 

align shareholders’ voting rights with 

long-term issuer engagement.157

Specifically, proposed Rule 14A.413(b) 

would require an LTSE Listings Issuer 

to establish an Initial Voting Power158

associated with its listed securities, and 

that Initial Voting Power would be 

required to increase at a rate of at least 

1/12th per month for each eligible 

shareholder 159 that owns the issuer’s 

shares continuously as of the date that 

the shareholder appears as the record 

owner on the LTSE Listings Issuer’s 

books or through DRP. Under Rule 

14A.413(b), the voting power of the 

shares would be required to accrete up 

to an amount that is ten times their 

Initial Voting Power. However, if at any 

time, the shareholder ceases to hold the 

LTSE Listing Issuer’s shares in record 

form or transfers those shares out of 

record ownership (whether for purposes 

of sale or otherwise), then on the date 

of such transfer the increased voting 

power of the shares would revert to 

their Initial Voting Power. The 

Exchange states that the voting rights 

provisions are designed to align with 

the long-term focus of the LTSE Listings 

category by providing long-term 

investors in an LTSE Listings Issuer 

with a greater role in corporate 


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160See Notice, supra note 3, at 14083. The 

Exchange believes that long-term investors in a 

public company are more likely than short-term 

shareholders to exercise their voting rights in a 

manner that prioritizes long-term growth over shortterm results. See id. 161See Inherent Group Letter and Glass, Lewis 

Letter at 2. 162See Glass, Lewis Letter at 2. 163See Inherent Group Letter. 164See IEX Response Letter at 1. 165See id. at 2. 166See supra note 79 and accompanying text. 

167See IEX Rule 14.413. 

168See supra note 81 and accompanying text; 

proposed Rule 14A.413, Supplementary Material 

.01(f). 

169See Amendment No. 1, supra note 6. 

170See id. 

171See Notice, supra note 3, at 14090. Under the 

proposal, transferring shares out of record form or 

transferring ownership to another person would 

revert the voting rights associated with the shares 

to their Initial Voting Power. 

172See id. at 14090–91. 

governance than short-term 

shareholders.160

Although the commenters generally 

supported the Exchange’s proposal, two 

commenters expressed a concern about 

the proposed voting rights structure.161

Specifically, one commenter noted a 

concern that dual-class voting structures 

generally are not in the best interests of 

shareholders, and that skewing the 

alignment of ownership and voting 

rights presents agency risks.162 The 

other commenter stated that 

mechanisms that reward long-term 

shareholders with a greater say in 

corporate governance nonetheless 

should balance the interests of small 

and large, and short-term and long-term, 

shareholders.163 The Exchange 

responded by noting that its proposal 

differs from existing dual-class and 

uneven voting structures because its 

proposed voting structure would treat 

the LTSE Listings Issuer’s common 

shareholders equally in their ability to 

gain additional voting power based on 

their ownership tenure.164 The 

Exchange further noted that its 

proposed voting structure would 

provide an alternative available to 

issuers that elect to list on the proposed 

LTSE Listings tier.165 In its proposal, the 

Exchange also stated that because LTSE 

Listings Issuers would be required, as a 

pre-condition to listing on LTSE 

Listings, to already have in place a 

voting rights structure as of the date of 

its initial listing that complies with 

LTSE Listings Rule 14A.413(b), no new 

corporate action that disparately 

reduces voting rights would be taken 

subsequent to listing on the 

Exchange.166

Section 6(b)(5) of the Exchange Act 

requires that an exchange’s rules be 

designed to promote just and equitable 

principles of trade and not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers 

and, in general, to protect investors and 

the public interest. The proposed voting 

rights structure rule would require an 

LTSE Listings Issuer to differentiate in 

the allocation of voting rights based on 

the manner in which its shareholders 

hold their shares (whether in DRP or 

record name or whether in street name) 

and for the length of time that they hold 

their shares. The proposed voting rights 

rule is intended to allow shareholders of 

an LTSE Listings Issuer to increase the 

voting power of their shares as long as 

they continue to hold such shares as 

record holders on the books of the LTSE 

Listings Issuer, including through DRP. 

The proposal does not make any other 

distinction in voting rights among the 

LTSE Listings Issuer’s shareholders, and 

any shareholders that continuously hold 

their shares in record form would be 

eligible to increase their voting power 

up to the maximum allowable voting 

power consistent with proposed Rule 

14A.413(b). LTSE Listings Issuers also 

would be required to comply with IEX’s 

existing voting rights policy, which 

provides that the voting rights of 

existing shareholders of listed stock 

cannot be disparately reduced or 

restricted through any corporate action 

or issuance, including, but not limited 

to, the adoption of time-phased voting 

plans, the adoption of capped voting 

rights plans, the issuance of supervoting stock, or the issuance of stock 

with voting rights less than the per 

share voting rights of the existing 

common stock through an exchange 

offer.167 To address the restrictions in 

this voting rights policy, the proposal 

prohibits an LTSE Listings Issuer from 

issuing additional classes of common 

stock that exceeds the Initial Voting 

Power of any of the LTSE Listings 

Issuer’s existing classes of common 

stock listed on LTSE Listings. In 

addition, the proposal prohibits 

issuances where the rate at which the 

voting power of such class may increase 

over time at a rate greater than the 

corresponding rate for any of the LTSE 

Listings Issuer’s existing classes of 

common stock listed on LTSE 

Listings.168

The Commission also notes that, 

pursuant to proposed Rule 

14A.200(c)(2), at the time that a 

company initially lists on the LTSE 

Listings tier, that company may not 

have any securities listed for trading on 

IEX or any other national securities 

exchange, and that a company would be 

permitted to list on LTSE Listings only 

in connection with its initial public 

offering.169 The proposal also would 

require an LTSE Listings Issuer to 

prepare and maintain an explanatory 

statement, written in plain-English, and 

posted prominently on its website, 

which provides information regarding 

the rights of shareholders under the 

issuer’s long-term voting provisions, 

including, at a minimum, explanations 

of how a shareholder’s voting power 

may increase over time, the particular 

conditions that must be satisfied in 

order for such additional voting power 

to increase, and the administrative steps 

that a shareholder must take to hold 

shares in a manner that will allow their 

voting power to increase over time.170 In 

light of the foregoing, the Commission 

finds that the Exchange’s voting rights 

proposal is consistent with Section 

6(b)(5) of the Act. 

B. Alternative Calculation for Requiring 

Shareholder Approval 

The Exchange proposes a modified 

shareholder approval calculation 

formula for LTSE Listings Issuers to be 

used for determining when shareholder 

approval is required for additional 

issuances of securities. While the 

calculation for shareholder approval 

ordinarily would be based on the legal 

maximum potential voting power of the 

shares to be issued (which in the case 

of the proposed rules would multiply 

the Initial Voting Power by ten), the 

Exchange asserts that this approach 

would not be appropriate because it 

believes that it would be extremely 

unlikely that all shares of a new 

issuance would be held in record name 

by the same shareholder uninterrupted 

for a period of 10 years.171 The 

Exchange also states that it would be 

even more unlikely for all shares of a 

new issuance to accrue votes up to the 

maximum amount while the shares 

outstanding remain static and do not 

accrue any additional voting rights. The 

Exchange therefore argues that requiring 

issuers to make these particular 

assumptions would result in LTSE 

Listings Issuers having to obtain 

shareholder approval for transactions 

that would not be materially dilutive to 

existing shareholders. The Exchange 

further contends that imposing the 

burden of obtaining shareholder 

approval (including the monetary costs, 

as well as the time involved and 

uncertainty of outcome) would not be 

justified for transactions that, in the 

Exchange’s view, are unlikely to be 

materially dilutive to the voting power 

of existing shareholders.172

The Exchange notes that, because 

shareholders may or may not elect to 

hold their shares in record ownership, 


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173See id. at 14090. 

174See supra note 105 and accompanying text, for 

a description of the Long-Term Voting Factor. 

175See Notice, supra note 3, at 14091. 176See id. at 14091 n.87. 177See id. at 14077. 

and may hold them in such manner for 

varying lengths of time, it is not possible 

to determine with precision how many 

shares issued in any transaction would 

accumulate additional voting power or 

the extent of voting power that those 

shares eventually would attain.173 The 

Exchange proposes two alternative 

means for calculating the maximum 

potential voting power of the new 

shares: (i) for issuers that have been 

listed on LTSE Listings for at least five 

years, this value would be the number 

of shares to be issued multiplied by both 

the Initial Voting Power and Long-Term 

Voting Factor,174 and (ii) for issuers that 

have been listed on LTSE Listings for 

fewer than five years, this value would 

be the greater of (x) the number of 

shares to be issued multiplied by both 

the Initial Voting Power and Long-Term 

Voting Factor or (y) the number of 

shares to be issued multiplied by the 

Initial Voting Power, multiplied by two. 

The Exchange states that the LongTerm Voting Factor is intended to 

estimate the extent of the increase in 

voting power that the new shares to be 

issued are likely to obtain based on the 

percentage of increased voting power 

that existing issued shares have already 

obtained. The Exchange also believes 

that, for companies that have been listed 

for a shorter period of time, a minimum 

multiple of two is appropriate because 

the actual Long-Term Voting Factor that 

these companies would have 

experienced is likely to be lower than 

that of longer-listed companies and may 

not be representative of the longer-term 

growth in voting power that the new 

shares may ultimately attain.175

The Commission notes that the 

rationale for the Exchange’s proposed 

modification to the shareholder 

approval calculation is based on the 

unique features of the proposed voting 

rights structure. The traditional 

shareholder approval calculation 

assumes that the maximum voting rights 

of any newly issued shares definitely 

would be reached. However, because of 

the way the Exchange’s proposal would 

work (i.e., with the voting rights 

reverting to their Initial Voting Power 

upon any trade, and accreting voting 

rights available only for record holders), 

it is difficult to predict what the 

maximum voting rights of the newlyissued shares would be. While the 

proposed formula for modifying the 

calculation of the maximum potential 

voting power of the newly-issued shares 

may appear reasonable, it is difficult to 

assess whether it is in fact appropriate 

because there is no available data on the 

behavior of securities subject to the 

proposed voting structure. The 

Commission notes that the Exchange 

has represented that, if approved, it 

would periodically assess whether a five 

year cut-off for applying a minimum 

Long-Term Voting Factor and the 

minimum Long-Term Voting Factor of 

two continue to be appropriate, or 

whether either element should be 

modified based on the Exchange’s 

experience with LTSE Listings Issuers. 

For example, the Exchange would 

consider when the rate of growth of the 

voting power of an LTSE Listings 

Issuer’s shares typically becomes 

relatively stable and at what level.176

The Commission believes that that these 

representations by the Exchange are 

important for ensuring that the 

calculation for shareholder approval is 

appropriately established for LTSE 

Listings Issuers and that the 

requirement for shareholder approval 

for required transactions remains robust. 

In addition, the Commission notes that 

LTSE Listings Issuers would have to 

comply with all the other provisions of 

the shareholder approval rules that 

require a shareholder vote. For example, 

an issuance that results in a change of 

control would need to have shareholder 

approval irrespective of whether the 

issuance exceeded the 20% provision as 

calculated under the LTSE Listings 

rules. 

For the foregoing reasons, the 

Commission finds that the Exchange’s 

proposal with regard to the proposed 

shareholder approval calculation is 

consistent with the Act, particularly 

Section 6(b)(5) thereunder. The 

Commission notes, however, that in the 

case of an LTSE Listings Issuer whose 

securities are dually-listed under 

proposed Rule 14A.210, such issuers 

would be required to comply with the 

stricter listing standard for calculating 

the requirement for shareholder 

approval, which could be the rule of the 

other listing exchange. 

C. Additional Corporate Governance 

and Other Requirements 

The Exchange’s proposal contains a 

number of additional corporate 

governance requirements for LTSE 

Listings issuers, which would be in 

addition to or in lieu of the corporate 

governance requirements contained in 

Chapter 14 of IEX’s rules. The proposed 

new requirements for boards of directors 

and board committees are designed to 

align the board with the objectives of 

the LTSE Listings rules.177 The proposal 

would require the boards of an LTSE 

Listings issuer to establish an LTSP 

Committee, which would be dedicated 

to overseeing the issuer’s strategies for 

creating and sustaining long-term 

growth, and a nominating/corporate 

governance committee. The proposal 

also would require committees, 

including the audit and compensation 

committees, to report to the board and 

to make their charters available on the 

issuer’s website, and would retain the 

composition and transparency 

requirements of those committees, if 

their functions were transferred to 

another committee. LTSE Listings 

Issuers would be required to provide 

more transparency about their 

operations, and in particular their longterm goals, strategies, and performance, 

in the form of additional disclosures, 

i.e., the LTSP Disclosures, in an Annual 

Report Supplement. The proposal also 

would require LTSE Listings Issuers to 

adopt corporate governance guidelines 

and executive compensation guidelines, 

which would impose certain 

requirements and restrictions on 

executive compensation that the 

Exchange believes are measures 

intended to capture the long-term 

performance of the issuer. 

These additional corporate 

governance requirements were 

supported by the commenters. 

Commenters particularly supported the 

proposed increased transparency for 

investors and the proposed 

requirements that the Exchange has 

designed with the intent of aligning 

executive compensation with long-term 

measures of the issuer’s performance. 

The Commission finds that the 

proposed additional corporate 

governance requirements are consistent 

with the Act, particularly Section 6(b)(5) 

thereunder. 

D. Dual Listings 

The Exchange proposes to allow an 

LTSE Listings Issuer to list a class of 

securities that, in connection with its 

IPO, has been approved for listing on 

another national securities exchange. 

The Exchange would make an 

independent determination of whether 

such issuer satisfies all the applicable 

listing requirements of the Exchange 

and would require such issuer to enter 

into a dual-listing agreement with the 

Exchange. The Exchange would expect 

the other national securities exchange to 

be the LTSE Listings Issuer’s primary 

listing market. The proposed rules 

would require prompt notification by 

the LTSE Listings Issuer if it falls below 


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the listing standards of the other 

exchange (and vice versa), and also 

would honor the trade halt authority of 

Primary Listing Market, as designated 

under the CQ and CTA Plans or the UTP 

Plan. 

The Commission finds that the 

proposal to allow dual-listings of 

securities listed on LTSE Listings, 

which would allow such dual-listings to 

occur in connection with the initial 

public offering of those securities, is 

consistent with the Exchange Act. The 

Commission notes that dually-listed 

securities of LTSE Listings issuers 

would need to satisfy the listing 

standards of both exchanges in order to 

maintain both listings, and could not 

rely on satisfying one exchange’s listing 

standards to maintain its listing on the 

other exchange. The Commission also 

notes that in instances where one 

exchange has a higher or more stringent 

requirement than the other exchange, 

the issuer would be required to comply 

with the higher or more stringent 

requirement. For example, as noted 

above, if an LTSE Listings Issuer’s 

security is also listed on another 

exchange and that other exchange has a 

more stringent requirement for applying 

its shareholder approval calculation 

requirement, the more stringent 

requirement of the other exchange 

would be applied to the LTSE Listings 

issuer. Similarly, if the other exchange 

has a lower requirement or no 

requirement with respect to a corporate 

governance requirement imposed by the 

Exchange for an LTSE Listings Issuer, 

such as the LTSP Disclosures 

requirement, the LTSE Listings Issuer 

would have to comply with the higher 

standard imposed by the Exchange. 

In light of the foregoing, the 

Commission finds that the Exchange’s 

proposal to adopt rules relating to 

supplemental listing standards for LTSE 

Listings Issuers is consistent with the 

Act, particularly Section 6(b)(5) 

thereunder. The Commission believes 

that the proposed rules are appropriate 

in that they aim to provide issuers that 

believe the LTSE Listings standards to 

be better aligned with their objectives, 

and potentially with the governance 

preferences of their shareholders, with 

the option to comply with certain 

additional listing requirements, which 

in turn would provide shareholders 

with the opportunity to increase their 

voting power in the issuer’s listed 

securities. 

VI. Solicitation of Comments on 

Amendment No. 1 to the Proposed Rule 

Change 

Interested persons are invited to 

submit written data, views, and 

arguments concerning whether 

Amendment No. 1 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 rule-comments@

sec.gov. Please include File Number SR– 

IEX–2018–06 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–IEX–2018–06. 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 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–IEX–2018–06, and should 

be submitted on or before July 27, 2018. 

VII. Accelerated Approval of Proposed 

Rule Change, as Modified by 

Amendment No. 1 

The Commission finds good cause to 

approve the proposed rule change, as 

modified by Amendment No. 1, prior to 

the thirtieth day after the date of 

publication of notice of the filing of 

Amendment No. 1 in the Federal 

Register. As discussed above, 

Amendment No. 1 revises the proposal 

to: (1) Clarify in proposed Rule 

14A.001(a) that an LTSE Listings Issuer 

must qualify for listing under Chapter 

14 of the IEX Rules and the LTSE 

Listings Rules, except as otherwise 

provided in the LTSE Listings Rules; (2) 

specify in proposed Rule 14A.200(c)(2) 

that when a company lists on LTSE 

Listings, in addition to the requirement 

that the company must not have any 

security listed for trading on the 

Exchange or any other national 

securities exchange, the company also 

must be listing in connection with its 

initial public offering; (3) add paragraph 

(c) to proposed Rule 14A.210 to provide 

that if dually-listed securities are listed 

on another national securities exchange 

that is the primary listing market and 

requires a minimum number of market 

makers, the minimum market maker 

requirements of IEX Rules 14.310 and 

14.320 would not be applicable to such 

dually-listed securities; and (4) add 

paragraph (c) to proposed Rule 14A.413 

to require each LTSE Listings Issuer to 

prepare and maintain an explanatory 

statement that must be written in plain 

English, made publicly available, and 

posted prominently on its website and 

that must describe how the voting 

power of the issuer’s securities may 

increase over time, and the conditions 

and administrative steps necessary for 

such voting power to increase. 

With respect to not applying the 

minimum market maker requirements of 

IEX Rules 14.310 and 14.320 when 

another national securities exchange is 

the Primary Listing Market for the LTSE 

Listing Issuer’s dually-listed securities, 

the Exchange notes that such 

requirements are not necessary if the 

Primary Listing Market imposes 

minimum market maker requirements. 

With respect to requiring each LTSE 

Listings Issuer to make an explanatory 

statement publicly available and posted 

prominently on the issue’s website 

explaining the long-term voting 

provisions, the Exchange believes that 

the new rule language would help 

ensure that an LTSE Listings Issuer’s 

shareholders would be able to easily 

obtain necessary information about the 

LTSE Listings Issuer’s long-term voting 

structure and how such shareholders, if 

they so choose, may accrue additional 

voting power over time. With respect to 

the amendments to proposed Rules 

14A.001(a) and 14A.200(c)(2), the 

Exchange notes that these are simply 

conforming and clarifying changes to 

the proposed rule text. 

The Commission believes that 

Amendment No. 1 would help increase 

transparency by providing clear and 

easily accessible information to 


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178 15 U.S.C. 78s(b)(2). 

179 Id. 

180 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3SPAC initial listing requirements are currently 

set forth in Section 102.06 of the Manual and SPAC 

continued listing requirements are in Section 

802.01B of the Manual. 

4See Securities Exchange Act Release No. 82180 

(November 30, 2017), 82 FR 57632. 

5See Letters to Brent J. Fields, Secretary, 

Commission, from Michael Kitlas, dated November 

30, 2017 (‘‘Kitlas Letter’’); Jeffrey P. Mahoney, 

General Counsel, Council of Institutional Investors, 

dated December 20, 2017 (‘‘CII Letter’’). 

6See Securities Exchange Act Release No. 82531 

(January 18, 2018), 83 FR 3371. 

7See Securities Exchange Act Release No. 82804, 

83 FR 10530 (March 9, 2018). 

8See Letter to Brent J. Fields, Secretary, 

Commission, from Jeffrey P. Mahoney, General 

Counsel, Council of Institutional Investors, dated 

March 26, 2018 (‘‘CII Letter II’’). 

9See Securities Exchange Act Release No. 83355, 

83 FR 26331 (June 6, 2018). 

10 17 CFR 200.30–3(a)(12). 

shareholders and potential shareholders 

regarding an LTSE Listings Issuer’s 

long-term voting structure and regarding 

how they can accrue additional voting 

power over time. The Commission also 

believes that it is appropriate for the 

Exchange to not apply the minimum 

market maker requirements of IEX Rules 

14.310 and 14.320 when another 

national securities exchange is the 

Primary Listing Market for the LTSE 

Listings Issuer’s dually-listed securities. 

The Commission believes that 

Amendment No. 1 does not raise any 

new or novel regulatory issues, and 

provides additional transparency to 

investors, further facilitating the 

Commission’s ability to make the 

findings set forth above to approve the 

Exchange’s proposed rule change. For 

these reasons, the Commission finds 

good cause, pursuant to Section 19(b)(2) 

of the Act,178 to approve the proposed 

rule change, as modified by Amendment 

No. 1, on an accelerated basis. 

VIII. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,179 that the 

proposed rule change (SR–IEX–2018– 

06), as modified by Amendment No. 1, 

be, and hereby is, approved on an 

accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.180

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–14461 Filed 7–5–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83570; File No. SR–NYSE– 

2017–53] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Withdrawal of Proposed Rule Change 

To Amend the Listed Company Manual 

for Special Purpose Acquisition 

Companies To Lower the Initial 

Holders Requirement From 300 to 150 

Round Lot Holders and To Eliminate 

Completely the Public Stockholders 

Continued Listing Requirement, To 

Require at Least $5 Million in Net 

Tangible Assets for Initial and 

Continued Listing, and To Impose a 30- 

Day Deadline To Demonstrate 

Compliance With Certain Initial Listing 

Requirements Following a Business 

Combination 

June 29, 2018. 

On November 16, 2017, New York 

Stock Exchange LLC (‘‘NYSE’’ 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 

amend the Listed Company Manual 

(‘‘Manual’’) for Special Purpose 

Acquisition Companies (‘‘SPACs’’) to 

lower the initial holders requirement 

from 300 to 150 round lot holders and 

to eliminate the continued listing 

requirement of 300 public stockholders 

completely, to require at least $5 million 

in net tangible assets for initial listing 

and continued listing, and to allow 

companies 30 days to demonstrate 

compliance with the applicable holder 

requirements of Section 102.01A in the 

Manual following a business 

combination.3 Finally, NYSE proposed 

to eliminate certain alternative initial 

listing distribution criteria for securities 

of SPACs that list in connection with a 

transfer or quotation. 

The proposed rule change was 

published for comment in the Federal 

Register on December 6, 2017.4 The 

Commission received two comments on 

the proposal in response.5 On January 

18, 2018, the Commission extended the 

time period within which to approve 

the proposed rule change, disapprove 

the proposed rule change, or institute 

proceedings to determine whether to 

approve or disapprove the proposed 

rule change, to March 6, 2018.6 On 

March 5, 2018, the Commission issued 

an order instituting proceedings under 

Section 19(b)(2)(B) of the Act to 

determine whether to approve or 

disapprove the proposed rule change.7

The Commission received one 

additional comment.8 On May 31, 2018, 

the Commission designated a longer 

period for the Commission to issue an 

order approving or disapproving the 

proposed rule change.9 On June 21, 

2018, the Exchange withdrew the 

proposed rule change (SR–NYSE–2017– 

53). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–14464 Filed 7–5–18; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF STATE 

[Public Notice: 10457] 

Certification Pursuant to Section 

7045(a)(4)(B) of the Department of 

State, Foreign Operations, and Related 

Programs Appropriations Act, 2017 

By virtue of the authority vested in 

me as the Secretary of State, including 

pursuant to section 7045(a)(4)(B) of the 

Department of State, Foreign 

Operations, and Related Programs 

Appropriations Act 2017 (Div. J, Pub. L. 

115–31), I hereby certify that the central 

Government of Guatemala is taking 

effective steps, which are in addition to 

those steps taken since the certification 

and report submitted during the prior 

year, to: 

• Work cooperatively with an 

autonomous, publicly accountable 

entity to provide oversight of the Plan; 

• Combat all forms of government 

and international agency corruption and 

impunity when credibly alleged; 

• Implement reforms, policies, and 

programs to improve transparency and 

strengthen public institutions, including 


daltland on DSKBBV9HB2PROD with NOTICES