Federal Register / Vol. 86, No. 131 / Tuesday, July 13, 2021 / Notices 36841 

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

2 17 CFR 240.19b–4. 

3 IM–5101–2. See Securities Exchange Act 

Release No. 58228 (July 25, 2008), 73 FR 44794 

(July 31, 2008) (adopting the predecessor to IM– 

5101–2). 

and provisions of the Act. Section 17(b) 

of the Act authorizes the Commission to 

exempt a proposed transaction from 

section 17(a) of the Act if evidence 

establishes that the terms of the 

transaction, including the consideration 

to be paid or received, are reasonable 

and fair and do not involve 

overreaching on the part of any person 

concerned, and the transaction is 

consistent with the policies of the 

registered investment company and the 

general purposes of the Act. Section 

12(d)(1)(J) of the Act provides that the 

Commission may exempt any person, 

security, or transaction, or any class or 

classes of persons, securities or 

transactions, from any provision of 

section 12(d)(1) if the exemption is 

consistent with the public interest and 

the protection of investors. Applicants 

submit that for the reasons stated in the 

Reference Order the requested relief 

meets the exemptive standards under 

sections 6(c), 17(b) and 12(d)(1)(J) of the 

Act. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–14788 Filed 7–12–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92344; File No. SR– 

NASDAQ–2021–054] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing of Proposed Rule Change To 

Modify Listing Rule IM–5101–2 To 

Permit an Acquisition Company To 

Contribute a Portion of Its Deposit 

Account to Another Entity in a Spin-Off 

or Similar Corporate Transaction 

July 7, 2021. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b-4 thereunder,2

notice is hereby given that on June 24, 

2021, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to modify 

Listing Rule IM–5101–2 to permit a 

SPAC to contribute a portion of the 

amount held in its deposit account to a 

deposit account of a new SPAC and spin 

off the new SPAC to its shareholders. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Nasdaq proposes to modify IM–5101– 

2 to allow an acquisition company listed 

under that rule to contribute a portion 

of the amount held in its deposit 

account to a deposit account of a new 

acquisition company and spin off the 

new acquisition company to its 

shareholders in certain situations where 

the new acquisition company will be 

subject to all of the same requirements 

as the original acquisition company. 

Generally, Nasdaq will not permit the 

initial or continued listing of a company 

that has no specific business plan or 

that has indicated that its business plan 

is to engage in a merger or acquisition 

with an unidentified company or 

companies. In 2008, Nasdaq adopted a 

rule to allow such companies to list if 

they meet all applicable initial listing 

requirements, as well as additional 

conditions designed to provide investor 

protections to address specific concerns 

about the structure of such companies 

(‘‘acquisition companies’’ or ‘‘SPACs’’).3

These additional conditions generally 

require, among other things, that at least 

90% of the gross proceeds from the 

initial public offering must be deposited 

in a ‘‘deposit account,’’ as that term is 

defined in the rule, and that the SPAC 

complete within 36 months, or a shorter 

period identified by the SPAC, one or 

more business combinations having an 

aggregate fair market value of at least 

80% of the value of the deposit account 

at the time of the agreement to enter into 

the initial combination. 

When a SPAC conducts its initial 

public offering, it raises the amount of 

capital that it estimates will be 

necessary to finance a subsequent 

business combination with its ultimate 

target. However, because a SPAC cannot 

identify or select a specific business 

combination target at the time of its IPO, 

it often turns out that the amount raised 

is not optimal for the needs of a specific 

target. This has resulted in the 

inefficient, current practice of SPAC 

sponsors creating multiple SPACs of 

different sizes at the same time, with the 

intention to use the SPAC that is closest 

in size to the amount a particular target 

needs. This practice creates the 

potential for conflicts between the 

multiple SPACs (each of which has 

different shareholders) and still fails to 

optimize the amount of capital that 

would benefit the SPAC’s public 

shareholders and a business 

combination target. Moreover, this 

creates the need for repetitive action 

throughout the ecosystem, including the 

filing and SEC review of multiple 

registration statements and periodic 

reports, formation of multiple boards of 

directors, multiple audits and multiple 

company listings. This practice also can 

lead to confusion amongst investors. 

Accordingly, Nasdaq proposes to 

modify IM–5101–2 to permit a more 

efficient structure whereby an 

acquisition company can raise in its 

initial public offering the maximum 

amount of capital it anticipates it may 

need for a business combination 

transaction and then ‘‘rightsize’’ itself 

by contributing any amounts not needed 

to a new SPAC (the ‘‘SpinCo SPAC’’), 

and spinning off this SpinCo SPAC to 

its shareholders. The SpinCo SPAC will 

be subject to all the provisions of IM– 

5101–2 in the same manner, and subject 

to the same timeframes, as the original 

SPAC. 

It is expected that the new structure 

will be implemented in the following 

manner. If the listed SPAC (the 

‘‘Original SPAC’’) determines that it will 

not need all of the cash in its deposit 

account for its initial business 

combination, it will designate the excess 

cash for a new deposit account held by 

a new SPAC, the SpinCo SPAC (such 


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36842 Federal Register / Vol. 86, No. 131 / Tuesday, July 13, 2021 / Notices 

4This redemption could occur, for example, 

through a partial cash tender offer for shares of the 

Original SPAC pursuant to Rule 13e–4 and 

Regulation 14E of the Securities Exchange Act of 

1934, and the redemption may be of a separate class 

of shares distributed to unitholders of the Original 

SPAC for the purpose of facilitating the redemption. 

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

6 15 U.S.C. 78f(b)(5). 

amount, the ‘‘SpinCo Deposit Account,’’ 

and the amount retained in the deposit 

account of the Original SPAC, the 

‘‘Retained SPAC Deposit Account’’), 

which will be spun off to the Original 

SPAC’s shareholders as described 

below. Until the spin-off described 

below, the amount designated for the 

SpinCo Deposit Account must continue 

to be held for the benefit of the 

shareholders of the Original SPAC. 

Following the spin-off, the SpinCo 

Deposit Account will be subject to the 

same requirements as the deposit 

account of the Original SPAC. 

The SpinCo SPAC will file a 

registration statement under the 

Securities Act of 1933 for purposes of 

effecting the spin-off of the SpinCo 

SPAC. Prior to the effectiveness of the 

registration statement, the Original 

SPAC will provide its public 

shareholders through one or more 

corporate transactions with the 

opportunity to redeem a pro rata 

amount of their holdings equal to the 

amount of the SpinCo Deposit Account 

divided by the per share amount in the 

Original SPAC’s deposit account (the 

‘‘redemption price’’).4

After completing the tender offer and 

effectiveness of the SpinCo SPAC’s 

registration statement, the Original 

SPAC will contribute the SpinCo 

Deposit Account to a deposit account 

held by the SpinCo SPAC in exchange 

for shares or units of the SpinCo SPAC, 

which the Original SPAC will then 

distribute to its public shareholders on 

a pro rata basis through one or more 

corporate transactions pursuant to the 

SpinCo SPAC’s effective registration 

statement. 

The Original SPAC will then continue 

to operate as a SPAC until it completes 

its business combination and will offer 

redemption rights to its public 

shareholders in connection with that 

business combination in the same 

manner as a traditional SPAC. The 

SpinCo SPAC will operate in the same 

manner as a traditional SPAC, except 

that it could effect a spin-off prior to its 

business combination like the Original 

SPAC. If it does not elect to effect a 

spin-off, the SpinCo SPAC will proceed 

to complete an initial business 

combination and offer redemption rights 

in connection therewith like a 

traditional SPAC. 

Nasdaq proposes adopting a new 

subsection at IM–5101–2(f) which will 

specifically permit this type of 

transaction by allowing the Original 

SPAC to contribute a portion of the 

amount held in the deposit account to 

the deposit account of SpinCo SPAC in 

a spin-off or similar corporate 

transaction where all of the conditions 

described below are satisfied: 

(i) The public shareholders of the 

Original SPAC receive a pro rata interest 

in the SpinCo SPAC, except to the 

extent that they have elected to redeem 

a portion of their shares of the Original 

SPAC in lieu of being entitled to receive 

shares or units in the SpinCo SPAC; 

(ii) public shareholders must have the 

right to convert or redeem their shares 

of common stock into a pro rata share 

of the aggregate amount then in the 

deposit account (net of taxes payable 

and amounts distributed to management 

for working capital purposes) before the 

first business combination, with part of 

such conversion or redemption able to 

be fulfilled through a redemption 

(including by means of a tender offer) in 

lieu of being entitled to receive shares 

or units in the spin-off of a SpinCo 

SPAC; 

(iii) the amount distributed to the 

SpinCo SPAC must remain in the 

SpinCo Deposit Account for the benefit 

of the shareholders of the SpinCo SPAC 

in the same manner applicable to the 

Original SPAC as described in IM– 

5101–2(a); 

(iv) the SpinCo SPAC must meet all 

applicable initial listing requirements, 

as well as the conditions described in 

IM–5101–2(a) through (e); 

(v) in the case of the SpinCo SPAC, 

and any additional entities spun off 

from the SpinCo SPAC, each of which 

will also be considered a SpinCo SPAC, 

the 36-month period described in IM– 

5101–2(b) (or such shorter period that 

the original SPAC specifies in its 

registration statement) will be 

calculated based on the date of 

effectiveness of the Original SPAC’s IPO 

registration statement; and 

(vi) in the aggregate, through one or 

more opportunities by the Original 

SPAC and one or more SpinCo SPACs, 

public shareholders will have the ability 

to convert or redeem shares, or receive 

amounts upon liquidation, for the full 

amount of the deposit account 

established by the Original SPAC as 

described in IM–5101–2(a) (excluding 

any deferred underwriters fees and taxes 

payable on the income earned on the 

deposit account). 

Proposed IM–5101–2(f) would further 

provide that, for purposes of IM–5101– 

2(b), the Original SPAC must complete 

one or more business combinations with 

an aggregate fair market value of at least 

80% of the aggregate amount remaining 

in the Retained SPAC Deposit Account 

at the time of its agreement to enter into 

its initial combination. Similarly, a 

SpinCo SPAC must complete one or 

more business combinations with an 

aggregate fair market value of at least 

80% of the aggregate amount remaining 

in the SpinCo Deposit Account at the 

time of its agreement to enter into its 

initial combination after giving effect to 

its contribution to a subsequent SpinCo 

SPAC, if any. 

In addition, proposed IM–5101–2(f) 

would provide that, for purposes of IM– 

5101–2(d) and (e), the right to convert 

and opportunity to redeem shares of 

common stock on a pro rata basis, 

respectively, will, in the case of the 

Original SPAC, be deemed to apply to 

the aggregate amount remaining in the 

Retained SPAC Deposit Account, and, 

in the case of the SpinCo SPAC, be 

deemed to apply to the aggregate 

amount in the SpinCo Deposit Account. 

Under IM–5101–2(c), a majority of the 

Original SPAC’s independent directors 

must approve its business combination 

and a majority of the independent 

directors of the SpinCo SPAC must 

approve the SpinCo SPAC’s business 

combination. 

In this manner, the structure allows 

public shareholders an additional, early 

redemption opportunity with respect to 

a portion of their holdings, before the 

time they would be able to do so in a 

traditional SPAC, and public 

shareholders would maintain the ability 

to redeem the portion of their 

investment attributable to each specific 

acquisition after reviewing all 

disclosure with respect to that 

acquisition. All other protections 

contained under IM–5101–2 would 

continue to apply, with adjustments 

only to reflect the potential for a spinoff of a new SPAC that is subject to all 

of the requirements of IM–5101–2. 

Moreover, the proposed structure would 

also provide shareholders the 

opportunity to invest with a sponsor 

without spreading that investment 

across the sponsor’s multiple SPACs. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,5 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,6

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest, by 


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Federal Register / Vol. 86, No. 131 / Tuesday, July 13, 2021 / Notices 36843 

7Securities Exchange Act Release No. 58228, 

supra note 3. 8 17 CFR 200.30–3(a)(12). 

establishing the means through which a 

SPAC can complete more than one 

business combination resulting in 

separate operating companies. 

The Commission has previously 

concluded that listing an acquisition 

company that satisfies the requirements 

of Nasdaq IM–5101–2 is consistent with 

the investor protection goals of the 

Exchange Act.7 The proposed rule 

change will extend these important 

investor protections to a new structure 

that addresses inefficiencies and 

potential conflicts of interest in the 

SPAC market. Specifically, as proposed, 

a SpinCo SPAC will be required to 

satisfy all applicable initial listing 

requirements, like any other SPAC 

listing on Nasdaq. In addition, the 

provisions of IM–5101–2(a) will apply 

to the SpinCo SPAC in the same manner 

as they apply to any other SPAC, except 

the deposit account will be contributed 

to the SpinCo SPAC by the Original 

SPAC. 

The provisions of IM–5101–2(b) and 

IM–5101–2(d) or (e), as applicable, will 

also apply to each of the Original SPAC 

and the SpinCo SPAC in the proposed 

structure in the same manner as they 

apply to any other SPAC, except that the 

80% test will be applied to the amount 

retained by the Original SPAC after 

public shareholders have had an initial, 

early redemption opportunity and the 

Original SPAC has contributed a portion 

of its deposit account to the SpinCo 

SPAC. The Exchange believes that this 

proposed difference does not adversely 

affect shareholders because the 

shareholders will still have the 

opportunity to redeem for the entire pro 

rata share of the trust account prior to 

completion of the business combination. 

The primary difference is that the 

redemption right may be effected 

through two decisions, one of which is 

accelerated to allow an earlier 

redemption than would be available to 

the public shareholders of a traditional 

SPAC and the other will come at the 

time of the business combination, just as 

in a traditional SPAC. 

As with the existing rules, each 

business combination must be approved 

by the SPAC’s independent directors, as 

required by IM–5101–2(c), and 

following each business combination, 

the combined company must satisfy all 

initial listing requirements, as required 

by IM–5101–2(d) or (e), respectively. 

Accordingly, in this manner, the 

Exchange believes that the proposed 

rule change satisfies the requirements of 

Section 6(b)(5) of the Act in that it is 

designed 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. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed rule would be available in a 

non-discriminatory way to any company 

satisfying its requirements, as well as all 

other applicable Nasdaq listing 

requirements. In addition, Nasdaq faces 

competition for listings but the 

proposed rule change does not impose 

any burden on the competition with 

other exchanges; any competing 

exchange could similarly adopt rules to 

allow listing SPACs using such a 

structure. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• 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– 

NASDAQ–2021–054 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2021–054. 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–NASDAQ–2021–054, and 

should be submitted on or before 

August 3, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–14799 Filed 7–12–21; 8:45 am] 

BILLING CODE 8011–01–P 


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