24210 Federal Register / Vol. 87, No. 78 / Friday, April 22, 2022 / Notices 

20 17 CFR 200.30–3(a)(12). 

1Capital Southwest was incorporated in Texas in 

1961. On March 30, 1988 Capital Southwest elected 

to be regulated as a BDC. Section 2(a)(48) of the Act 

defines a BDC to be any closed-end investment 

company that operates for the purpose of making 

investments in securities described in sections 

55(a)(1) through 55(a)(3) of the Act and makes 

available significant managerial assistance with 

respect to the issuers of such securities. 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

CboeBZX–2022–026 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–CboeBZX–2022–026. 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 (https://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–CboeBZX–2022–026 and 

should be submitted on or before May 

13, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2022–08569 Filed 4–21–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

34560; 812–15213] 

Capital Southwest Corporation 

April 19, 2022. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice. 

Notice of an application for an order 

under section 6(c) of the Investment 

Company Act of 1940 (the ‘‘Act’’) for an 

exemption from sections 23(a), 23(b) 

and 63 of the Act, and pursuant sections 

57(a)(4) and 57(i) of the Act and rule 

17d–1 under the Act permitting certain 

joint transactions otherwise prohibited 

by section 57(a)(4) of the Act, and 

pursuant section 23(c)(3) of the Act for 

an exemption from section 23(c) of the 

Act. 

SUMMARY OF THE APPLICATION: Capital 

Southwest Corporation (‘‘Company’’ or 

‘‘Applicant’’), requests an order 

(‘‘Order’’) to (a) permit it to issue 

restricted shares of its common stock 

(‘‘Restricted Stock’’) under the terms of 

its 2021 Employee Restricted Stock 

Award Plan (the ‘‘2021 Employee Plan’’) 

and its 2021 Non-Employee Director 

Restricted Stock Award Plan (the ‘‘2021 

Non-Employee Director Plan’’) as part of 

the compensation package for Employee 

Participants (as defined below) and 

Non-Employee Director Participants (as 

defined below), respectively and (b) to 

allow the Company to withhold shares 

of the Company’s common stock or 

purchase shares of the Company’s 

common stock from the Employee 

Participants and Non-Employee Director 

Participants to satisfy tax withholding 

obligations relating to the vesting of 

Restricted Stock pursuant to the 2021 

Employee Plan and the 2021 NonEmployee Director Plan, respectively. 

APPLICANT: Capital Southwest 

Corporation. 

FILING DATES: The application was filed 

on March 29, 2021 and amended on 

January 21, 2022. 

HEARING OR NOTIFICATION OF HEARING: An 

order granting the requested relief will 

be issued unless the Commission orders 

a hearing. Interested persons may 

request a hearing by emailing the 

Commission’s Secretary at SecretarysOffice@sec.gov and serving applicants 

with a copy of the request by email. 

Hearing requests should be received by 

the Commission by 5:30 p.m. on May 

15, 2022, and should be accompanied 

by proof of service on the applicants, in 

the form of an affidavit, or, for lawyers, 

a certificate of service. Pursuant to rule 

0–5 under the Act, hearing requests 

should state the nature of the writer’s 

interest, any facts bearing upon the 

desirability of a hearing on the matter, 

the reason for the request, and the issues 

contested. Persons who wish to be 

notified of a hearing may request 

notification by emailing the 

Commission’s Secretary at SecretarysOffice@sec.gov. 

ADDRESSES: The Commission: 

Secretarys-Office@sec.gov. Applicant: 

bdiehl@capitalsouthwest.com; 

msarner@capitalsouthwest.com; 

sarasabour@eversheds-sutherland.com. 

FOR FURTHER INFORMATION CONTACT: 

Asen Parachkevov, Senior Counsel or 

Lisa Reid Ragen, Branch Chief, at (202) 

551–6825 (Division of Investment 

Management, Chief Counsel’s Office). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

website by searching for the file 

number, or for an applicant using the 

Company name box, at http://

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Applicant’s Representations 

1. The Company, a Texas corporation, 

is an internally managed, nondiversified, closed-end investment 

company that has elected to be 

regulated as a business development 

company (‘‘BDC’’) under the Act.1 The 

Company’s investment objective is to 

produce attractive risk-adjusted returns 

by generating current income from its 

debt investments and capital 

appreciation from its equity and equity 

related investments. 

2. Shares of the Company’s common 

stock are traded on the NASDAQ Global 

Select Market under the symbol 

‘‘CSWC.’’ As of March September 30, 

2021, there were 25,680,551 and 

23,341,039 shares of the Company’s 


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2 ‘‘Prior Order’’ refers to the exemptive order 

issued by the Commission on July 19, 2021 (see 

Capital Southwest Corporation, Investment 

Company Act Release Nos. 34309 (notice) (June 22, 

2021) and 34335 (order) (July 19, 2021)). 

3For purposes of calculating compliance with 

this limit, Capital Southwest counts as Restricted 

Stock all shares of its common stock that are issued 

pursuant to the 2021 Employee Plan and the 2021 

Non-Employee Director Plan, less any shares that 

are forfeited back to Capital Southwest and 

cancelled as a result of forfeiture restrictions not 

lapsing. 

4Section 57(o) of the Act provides that the term 

‘‘required majority,’’ when used with respect to the 

approval of a proposed transaction, plan, or 

arrangement, means both a majority of a BDC’s 

directors or general partners who have no financial 

interest in such transaction, plan, or arrangement 

and a majority of such directors or general partners 

who are not interested persons of such company. 

common stock issued and outstanding, 

respectively. As of September 30, 2021, 

the Company had an aggregate of 24 

employees. 

3. The Company currently has a 

seven-member board of directors (the 

‘‘Board’’) of whom one is an ‘‘interested 

person’’ of the Company within the 

meaning of section 2(a)(19) of the Act 

and six are not interested persons (the 

‘‘Non-interested Directors’’). The 

Company has six directors who are 

neither officers nor employees of the 

Company. 

4. The Company believes that its 

successful performance depends on its 

ability to offer fair compensation 

packages to its professionals that are 

competitive with those offered by other 

investment management businesses. 

The Company believes the highly 

specialized nature of its business, the 

competitiveness of its market and the 

small size of its employee base relative 

to its assets and revenue make such 

retentions even more critical for the 

Company, and that the ability to offer 

equity-based compensation to its 

professionals is vital to the Company’s 

future growth and success. 

5. The Commission previously issued 

a certain exemptive order (the ‘‘Prior 

Order’’), which, among other things, (i) 

permits the Company to issue restricted 

shares of its common stock under the 

terms of the Company’s 2021 Employee 

Plan as part of the compensation 

packages for certain of its employees 

and certain employees of its whollyowned subsidiaries (‘‘Employee 

Participants’’), and (ii) allows the 

Company to withhold shares of the 

Company’s common stock or purchase 

shares of the Company’s common stock 

from the Employee Participants to 

satisfy tax withholding obligations 

relating to the vesting of Restricted 

Stock (as defined in the 2021 Employee 

Plan) pursuant to the 2021 Employee 

Plan.2

6. The Company states that the relief 

it is seeking under the requested Order 

is the same type of relief previously 

provided by the Commission under the 

Prior Order, but the requested Order 

will cover both Employee Participants 

and non-employee directors of the 

Board (‘‘Non-Employee Director 

Participants’’, and together with 

Employee Participants, the 

‘‘Participants’’). The Order would 

supersede the Prior Order, with the 

result that the Company will no longer 

rely on the Prior Order if the Order is 

granted. 

7. The 2021 Employee Plan will 

authorize the issuance of shares of 

Restricted Stock by the Company to 

certain of its employees. The Company 

states that the Restricted Stock will be 

subject to restrictions on transferability 

and other restrictions as required by the 

compensation committee of the Board, 

which will be comprised solely of ‘‘nonemployee directors’’ within the meaning 

of rule 16b-3 under the Securities 

Exchange Act of 1934 (the ‘‘Exchange 

Act’’), each of whom also is not an 

‘‘interested person’’ of the Company 

within the meaning of section 2(a)(19) of 

the Act (‘‘Compensation Committee). 

The Company states that except to the 

extent restricted under the terms of the 

2021 Employee Plan, an Employee 

Participant who is granted Restricted 

Stock will have all the rights of any 

other shareholder, including the right to 

vote the Restricted Stock and the right 

to receive dividends. The Company 

states that during the restriction period 

(i.e., prior to the lapse of the applicable 

forfeiture restrictions), the Restricted 

Stock generally may not be sold, 

transferred, pledged, hypothecated, 

margined or otherwise encumbered by 

the Employee Participant. The Company 

states that except as the Board otherwise 

determines, upon termination of a 

Participant’s employment during the 

applicable restriction period, Restricted 

Stock for which forfeiture restrictions 

have not lapsed at the time of such 

termination shall be forfeited. 

8. The 2021 Non-Employee Director 

Plan will authorize the issuance of 

shares of Restricted Stock by the 

Company to Non-Employee Director 

Participants. The Company states that 

the Restricted Stock will be subject to 

restrictions on transferability and other 

restrictions as required by the 

Compensation Committee of the Board. 

The Company states that except to the 

extent restricted under the terms of the 

2021 Non-Employee Director Plan, a 

Non-Employee Director Participant who 

is granted Restricted Stock will have all 

the rights of any other shareholder, 

including the right to vote the Restricted 

Stock and the right to receive dividends. 

The Company states that during the 

restriction period (i.e., prior to the lapse 

of the applicable forfeiture restrictions), 

the Restricted Stock generally may not 

be sold, transferred, pledged, 

hypothecated, margined or otherwise 

encumbered by the Non-Employee 

Director Participant. The Company 

states that unless otherwise specified in 

the award agreement or the Board 

determines in any individual case, 

Restricted Stock awards to NonEmployee Director Participants vest at 

the end of each one-year term of service 

on the Board. 

9. The Company states that the value 

of Restricted Stock generally will be 

taxable to the recipient as ordinary 

income in the years in which the 

restrictions on the shares lapse and that 

such value will be the fair market value 

of the shares on the dates the 

restrictions lapse. The Company states 

that each of the 2021 Employee Plan 

and the 2021 Non-Employee Director 

Plan authorizes the Company to 

withhold common stock (in whole or in 

part) from any award of restricted shares 

granted at the time the Restricted Stock 

is taxed in satisfaction of a Participant’s 

tax obligations. 

10. The Company states that 

maximum amount of Restricted Stock 

that may be issued and outstanding will 

not at the time of issuance of any 

Restricted Stock exceed 10% of the 

Company’s outstanding voting 

securities.3 In addition, the Company 

states that no Employee Participant may 

be granted more than 25% of the shares 

reserved for issuance under the 2021 

Employee Plan and no Non-Employee 

Director Participant may be granted 

more than 25% of the shares reserved 

for issuance under the 2021 NonEmployee Director Plan. 

11. The Company states that each 

issuance of Restricted Stock under the 

2021 Employee Plan or the 2021 NonEmployee Director Plan will be 

approved by the required majority, as 

defined in section 57(o) of the Act,4 of 

the Company’s directors on the basis 

that the issuance is in the best interests 

of the Company and its shareholders. 

The Company states that the date on 

which the required majority approves 

an issuance of Restricted Stock will be 

deemed the date on which the subject 

Restricted Stock is granted. 

12. The Company states that the 2021 

Employee Plan was approved by the 

Board as a whole, including the 

required majority as defined in section 

57(o) of the Act, on March 26, 2021 and 

was approved by the Company’s 

shareholders on July 28, 2021. In 


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5See Executive Compensation and Related Party 

Disclosure, Securities Act Release No. 8655 (Jan. 27, 

2006) (proposed rule); Executive Compensation and 

Related Party Disclosure, Securities Act Release No. 

8732A (Aug. 29, 2006) (final rule and proposed 

rule), as amended by Executive Compensation 

Disclosure, Securities Act Release No. 8765 (Dec. 

22, 2006) (adopted as interim final rules with 

request for comments). 

addition, the Company states that the 

2021 Non-Employee Director Plan was 

approved by the Board as a whole, 

including the required majority as 

defined in section 57(o) of the Act, on 

March 26, 2021. The Company states 

that if the Commission issues the Order, 

the 2021 Non-Employee Director Plan 

will become effective upon receipt of 

the approval of the Company’s 

shareholders. 

Applicant’s Legal Analysis 

Sections 23(a) and (b), Section 63 

1. Under section 63 of the Act, the 

provisions of section 23(a) of the Act 

generally prohibiting a registered 

closed-end investment company from 

issuing securities for services or for 

property other than cash or securities 

are made applicable to BDCs. This 

provision would prohibit the issuance 

of Restricted Stock as a part of the 2021 

Employee Plan and the 2021 NonEmployee Director Plan. 

2. Section 23(b) generally prohibits a 

registered closed-end management 

investment company from selling its 

common stock at a price below its 

current net asset value (‘‘NAV’’). Section 

63(2) makes section 23(b) applicable to 

BDCs unless certain conditions are met. 

Because Restricted Stock that would be 

granted under the 2021 Employee Plan 

and the 2021 Non-Employee Director 

Plan would not meet the terms of 

section 63(2), sections 23(b) and 63 

prohibit the issuance of the Restricted 

Stock. 

3. Section 6(c) provides, in part, that 

the Commission may, by order upon 

application, conditionally or 

unconditionally exempt any person, 

security, or transaction, or any class or 

classes of persons, securities or 

transactions, from any provision of the 

Act, if and to the extent that the 

exemption is necessary or appropriate 

in the public interest and consistent 

with the protection of investors and the 

purposes fairly intended by the policy 

and provisions of the Act. 

4. The Company requests an order 

pursuant to section 6(c) of the Act 

granting an exemption from the 

provisions of sections 23(a) and (b) and 

section 63 of the Act. The Company 

states that the concerns underlying 

those sections include: (a) Preferential 

treatment of investment company 

insiders and the use of options and 

other rights by insiders to obtain control 

of the investment company; (b) 

complication of the investment 

company’s structure that makes it 

difficult to determine the value of the 

company’s shares; and (c) dilution of 

shareholders’ equity in the investment 

company. The Company states that the 

2021 Employee Plan and the 2021 NonEmployee Director Plan do not raise 

concerns about preferential treatment of 

the Company’s insiders because each of 

the 2021 Employee Plan and the 2021 

Non-Employee Director Plan is a bona 

fide compensation plan of the type 

common among corporations generally. 

In addition, section 61(a)(4)(B) of the 

Act permits a BDC to issue to its 

officers, directors and employees, 

pursuant to an executive compensation 

plan, warrants, options and rights to 

purchase the BDC’s voting securities, 

subject to certain requirements. The 

Company states that while it is not 

aware of any specific discussion in the 

legislative history of section 61 of the 

Act regarding the use of direct grants of 

stock as incentive compensation, the 

legislative history recognizes the crucial 

role that equity-based compensation 

played in the operation of a private 

equity fund and its ability to attract and 

retain employees. The Company 

believes that the issuance of Restricted 

Stock is substantially similar, for 

purposes of investor protection under 

the Act, to the issuance of warrants, 

options, and rights as contemplated by 

section 61 of the Act. The Company also 

asserts that the 2021 Employee Plan and 

the 2021 Non-Employee Director Plan 

would not become a means for 

Participants to obtain control of the 

Company because the number of shares 

of the Company issuable under the 2021 

Employee Plan and the 2021 NonEmployee Director Plan would be 

limited as set forth in the application. 

5. The Company further states that the 

2021 Employee Plan and the 2021 NonEmployee Director Plan will not unduly 

complicate the Company’s structure 

because equity-based compensation 

arrangements are widely used among 

corporations and commonly known to 

investors. The Company notes that the 

2021 Non-Employee Director Plan will 

be submitted to its shareholders for their 

approval. The Company represents that 

a concise, ‘‘plain English’’ description of 

the 2021 Non-Employee Director Plan, 

including its potential dilutive effect, 

will be provided in the proxy materials 

that will be submitted to the Company’s 

shareholders. The Company also states 

that it will comply with the proxy 

disclosure requirements in Item 10 of 

Schedule 14A under the Exchange Act. 

The Company further notes that the 

2021 Employee Plan and the 2021 NonEmployee Director Plan will be 

disclosed to investors in accordance 

with the requirements of the Form 

N–2 registration statement for closedend investment companies, and 

pursuant to the standards and 

guidelines adopted by the Financial 

Accounting Standards Board for 

operating companies. In addition, the 

Company will comply with the 

disclosure requirements for executive 

compensation plans applicable to 

BDCs.5 The Company thus concludes 

that the 2021 Employee Plan and the 

2021 Non-Employee Director Plan will 

be adequately disclosed to investors and 

appropriately reflected in the market 

value of the Company’s shares. 

6. The Company acknowledges that, 

while awards granted under the 2021 

Employee Plan and the 2021 NonEmployee Director Plan may have a 

dilutive effect on the shareholders’ 

equity in the Company, that effect 

would be outweighed by the anticipated 

benefits of the 2021 Employee Plan and 

the 2021 Non-Employee Director Plan to 

the Company and its shareholders. The 

Company asserts that it needs the 

flexibility to provide the requested 

equity-based employee compensation in 

order to be able to compete effectively 

with other financial services firms for 

talented professionals. These 

professionals, the Company suggests, in 

turn are likely to increase the 

Company’s performance and 

shareholder value. The Company also 

asserts that equity-based compensation 

would more closely align the interests of 

the Company’s employees with those of 

its shareholders. In addition, the 

Company states that its shareholders 

will be further protected by the 

conditions to the requested order that 

assure continuing oversight of the 

operation of the 2021 Employee Plan 

and the 2021 Non-Employee Director 

Plan by the Company’s Board. 

Section 57(a)(4), Rule 17d–1 

7. Section 57(a) proscribes certain 

transactions between a BDC and persons 

related to the BDC in the manner 

described in section 57(b) (‘‘57(b) 

persons’’), absent a Commission order. 

Section 57(a)(4) generally prohibits a 

57(b) person from effecting a transaction 

in which the BDC is a joint participant 

absent such an order. Rule 17d–1, made 

applicable to BDCs by section 57(i), 

proscribes participation in a ‘‘joint 

enterprise or other joint arrangement or 

profit-sharing plan,’’ which includes a 

stock option or purchase plan. 


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6The 2021 Employee Plan was approved by 

Capital Southwest’s shareholders on July 28, 2021. 

Employees and directors of a BDC are 

57(b) persons. Thus, the issuance of 

shares of Restricted Stock could be 

deemed to involve a joint transaction 

involving a BDC and a 57(b) person in 

contravention of section 57(a)(4). Rule 

17d–1(b) provides that, in considering 

relief pursuant to the rule, the 

Commission will consider (i) whether 

the participation of the company in a 

joint enterprise is consistent with the 

Act’s policies and purposes and (ii) the 

extent to which that participation is on 

a basis different from or less 

advantageous than that of other 

participants. 

8. The Company requests an order 

pursuant to section 57(a)(4) and 57(i) of 

the Act and rule 17d–1 to permit the 

Company to issue Restricted Stock 

under the 2021 Employee Plan and the 

2021 Non-Employee Director Plan. The 

Company states that the 2021 Employee 

Plan and the 2021 Non-Employee 

Director Plan, although benefiting the 

Participants and the Company in 

different ways, is in the interests of the 

Company’s shareholders because the 

2021 Employee Plan and the 2021 NonEmployee Director Plan will help align 

the interests of the Company’s 

employees and directors with those of 

its shareholders, which will encourage 

conduct on the part of those employees, 

officers and directors designed to 

produce a better return for the 

Company’s shareholders. Additionally, 

section 57(j)(1) of the Act expressly 

permits any director, officer or 

employee of a BDC to acquire warrants, 

options and rights to purchase voting 

securities of such BDC, and the 

securities issued upon the exercise or 

conversion thereof, pursuant to an 

executive compensation plan which 

meets the requirements of section 

61(a)(4)(B) of the Act. Applicant submits 

that the issuance of Restricted Stock 

pursuant to the 2021 Employee Plan and 

the 2021 Non-Employee Director Plan 

poses no greater risk to stockholders 

than the issuances permitted by section 

57(j)(1) of the Act. 

Section 23(c) 

9. Section 23(c) of the Act, which is 

made applicable to BDCs by section 63 

of the Act, generally prohibits a BDC 

from purchasing any securities of which 

it is the issuer except in the open market 

pursuant to tenders, or under other 

circumstances as the Commission may 

permit to ensure that the purchases are 

made in a manner or on a basis that 

does not unfairly discriminate against 

any holders of the class or classes of 

securities to be purchased. Applicant 

states that to the extent that the 

transactions between Applicant and the 

respective Participants described in the 

application with respect to the 2021 

Employee Plan and the 2021 NonEmployee Director Plan constitute 

‘‘purchases’’ by Applicant of its own 

securities, Section 23(c), absent relief, 

would prohibit such transactions. 

10. Section 23(c)(3) of the Act permits 

a BDC to purchase securities of which 

it is the issuer in circumstances in 

which the repurchase is made in a 

manner or on a basis that does not 

unfairly discriminate against any 

holders of the class or classes of 

securities to be purchased. Applicant 

believes that the requested relief meets 

the standards of section 23(c)(3). 

11. Applicant submits that these 

purchases will be made in a manner that 

does not unfairly discriminate against 

Applicant’s stockholders because all 

purchases of Applicant’s stock will be at 

the closing price of the common stock 

on the Nasdaq Global Select Market (or 

any primary exchange on which its 

shares of common stock may be traded 

in the future) on the relevant date (i.e., 

the public market price on the date of 

grant of Restricted Stock). Applicant 

submits that because all transactions 

with respect to the 2021 Employee Plan 

and the 2021 Non-Employee Director 

Plan will take place at the public market 

price for the Applicant’s common stock, 

these transactions will not be 

significantly different than could be 

achieved by any stockholder selling in 

a market transaction. Applicant 

represents that no transactions will be 

conducted pursuant to the requested 

order on days where there are no 

reported market transactions involving 

Applicant’s shares. 

12. Applicant represents that the 

withholding provisions in the 2021 

Employee Plan and the 2021 NonEmployee Director Plan do not raise 

concerns about preferential treatment of 

Applicant’s insiders because each of the 

2021 Employee Plan and the 2021 NonEmployee Director Plan is a bona fide 

compensation plan of the type that is 

common among corporations generally. 

Furthermore, the vesting schedule is 

determined at the time of the initial 

grant of the Restricted Stock. Applicant 

represents that all purchases may be 

made only as permitted by the 2021 

Employee Plan, which was approved by 

both the Board prior to any application 

and by shareholders on July 28, 2021, 

and the 2021 Non-Employee Director 

Plan, which will be approved by the 

Applicant’s stockholders prior to any 

application of the relief. Applicant 

believes that granting the requested 

relief would be consistent with the 

policies underlying the provisions of the 

Act permitting the use of equity 

compensation as well as prior 

exemptive relief granted by the 

Commission under section 23(c) of the 

Act. 

Applicant’s Conditions 

Applicant agrees that the order 

granting the requested relief will be 

subject to the following conditions: 

1. The 2021 Non-Employee Director 

Plan will be authorized by the 

Company’s shareholders.6

2. Each issuance of Restricted Stock to 

Employee Participants and NonEmployee Director Participants will be 

approved by the required majority, as 

defined in section 57(o) of the Act, of 

the Company’s directors on the basis 

that such grant is in the best interests of 

the Company and its shareholders. 

3. The amount of voting securities 

that would result from the exercise of all 

of the Company’s outstanding warrants, 

options, and rights, together with any 

Restricted Stock issued and outstanding 

pursuant to the 2021 Employee Plan, the 

2021 Non-Employee Director Plan and 

any other compensation plans of the 

Company, at the time of issuance shall 

not exceed 25% of the outstanding 

voting securities of the Company, except 

that if the amount of voting securities 

that would result from the exercise of all 

of the Company’s outstanding warrants, 

options, and rights issued to the 

Company’s directors, officers, and 

employees, together with any Restricted 

Stock issued pursuant to the 2021 

Employee Plan, the 2021 Non-Employee 

Director Plan and any other 

compensation plans of the Company, 

would exceed 15% of the outstanding 

voting securities of the Company, then 

the total amount of voting securities that 

would result from the exercise of all 

outstanding warrants, options, and 

rights, together with any Restricted 

Stock issued pursuant to the 2021 

Employee Plan, the 2021 Non-Employee 

Director Plan and any other 

compensation plans of the Company, at 

the time of issuance shall not exceed 

20% of the outstanding voting securities 

of the Company. 

4. The amount of Restricted Stock 

issued and outstanding will not at the 

time of issuance of any Restricted Stock 

exceed 10% of the Company’s 

outstanding voting securities. 

5. The Board will review the 2021 

Employee Plan and the 2021 NonEmployee Director Plan at least 

annually. In addition, the Board will 

review periodically the potential impact 

that the issuance of Restricted Stock 

under the 2021 Employee Plan and the 


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24214 Federal Register / Vol. 87, No. 78 / Friday, April 22, 2022 / Notices 

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

2 17 CFR 240.19b–4. 

3 In sum, an order with a Post Only instruction 

is a non-routable order that will be ranked and 

executed on the MIAX Pearl Equities Book pursuant 

to Exchange Rules 2616 and 2617(a)(4). See 

Exchange Rule 2614(c)(2) for a more detailed 

description of the Post Only instruction. Exchange 

Rule 1901 defines the term ‘‘MIAX Pearl Equities 

Book’’ as ‘‘the electronic book of orders in equity 

securities maintained by the System.’’ 

4 In sum, an order with a time-in-force of RHO is 

designated for execution only during Regular 

Trading Hours, which includes the opening process 

for equity securities. See Exchange Rule 2614(b)(2) 

for a more detailed description of the RHO 

instruction. 

5 In sum, Minimum Execution Quantity is an 

instruction a User may attach to a non-displayed 

order requiring the System to execute the order only 

to the extent that a minimum quantity can be 

satisfied. See Exchange Rule 2614(c)(7) for a more 

detailed description of the Minimum Execution 

Quantity instruction. 

6See, e.g., Cboe BYX Exchange, Inc. (‘‘BYX’’) 

Rules 11.1(a) and 11.23(a)(1), Cboe BZX Exchange, 

Inc. (‘‘BZX’’) Rules 11.1(a) and 11.24(a)(1), Cboe 

EDGA Exchange, Inc. (‘‘EDGA’’) and Cboe EDGX 

Exchange, Inc. (‘‘EDGX’’, collectively with BYX, 

BZX, and EDGA, the ‘‘Cboe Equity Exchanges’’) 

Rules 11.1(a)(1) and 11.7(a)(1) (allowing for the 

entry of Post Only and Minimum Execution 

Quantity order with a time-in-force of Day to be 

entered prior to 9:30 a.m. Eastern Time and not 

participate in their respective opening processes). 

See also e.g., Investors Exchange LLC (‘‘IEX’’) Rules 

11.190(b)(11)(B), 11.190(c)(3), and 11.190(b)(11)(F) 

(allowing for the entry of Minimum Quantity 

Orders with a time-in-force of Day prior to 9:30 a.m. 

Eastern Time and allowing those orders to bypass 

their opening process) and New York Stock 

Exchange LLC (‘‘NYSE’’) Rule 7.18(b)(1), NYSE 

Arca LLC (‘‘NYSE Arca’’) Rule 7.18–E(b)(1), NYSE 

American LLC (‘‘NYSE American’’) 7.18E(b)(1), 

NYSE National LLC (‘‘NYSE National’’) Rule 

7.18(b)(1), and NYSE Chicago LLC (‘‘NYSE 

Chicago’’, collectively with NYSE, NYSE Arca, 

NYSE American, NYSE National, and NYSE 

Chicago, the ‘‘NYSE Equity Exchanges’’) Rule 

7.18(b)(1) (not including ALO orders in the list of 

order types the exchanges would cancel during a 

halt). 

7 In sum, a Limit Order is an order to buy or sell 

a stated amount of a security at a specified price 

or better. See Exchange Rule 2614(a) for a more 

detailed description of Limit Orders. 

8 In sum, Reserve Quantity is an instruction a 

User may attach to an order where a portion of the 

order is displayed (‘‘Displayed Quantity’’) and with 

a portion of the order non-displayed (‘‘Reserve 

Quantity’’). See Exchange Rule 2614(c)(8) for a more 

detailed description of the Reserve Quantity 

instruction. 

9See BZX Rule 11.24(a)(2), BYX Rule 11.23(a)(2), 

and EDGA and EDGX Rules 11.7(a)(2). 

10See Exchange Rule 1901 defines the term 

‘‘Regular Trading Hours’’ as ‘‘the time between 9:30 

a.m. and 4:00 p.m. Eastern Time.’’ 

11 ISOs are defined under Rule 600(b)(38) of 

Regulation NMS. 17 CFR 242.600(b)(38). See 

Exchange Rule 2614(d) for a more detailed 

description of ISOs on MIAX Pearl Equities. 

2021 Non-Employee Director Plan could 

have on the Company’s earnings and 

NAV per share, such review to take 

place prior to any decisions to grant 

Restricted Stock under the 2021 

Employee Plan and the 2021 NonEmployee Director Plan, but in no event 

less frequently than annually. Adequate 

procedures and records will be 

maintained to permit such review. The 

Board will be authorized to take 

appropriate steps to ensure that the 

issuance of Restricted Stock under the 

2021 Employee Plan and the 2021 NonEmployee Director Plan will be in the 

best interests of the Company’s 

shareholders. This authority will 

include the authority to prevent or limit 

the granting of additional Restricted 

Stock under the 2021 Employee Plan 

and the 2021 Non-Employee Director 

Plan. All records maintained pursuant 

to this condition will be subject to 

examination by the Commission and its 

staff. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–08662 Filed 4–21–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94735; File No. SR– 

PEARL–2022–14] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Exchange 

Rule 2600, Hours of Trading and 

Trading Days, and Exchange Rule 

2615, Opening Process for Equity 

Securities 

April 18, 2022. 

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 April 8, 

2022, MIAX PEARL, LLC (‘‘MIAX Pearl’’ 

or ‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III 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 is filing a proposed rule 

change to amend Exchange Rule 2600, 

Hours of Trading and Trading Days, and 

Exchange Rule 2615, Opening Process 

for Equity Securities. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://www.miaxoptions.com/rulefilings/pearl at MIAX PEARL’s principal 

office, 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 

The Exchange allows for the trading 

of equity securities on its equity trading 

platform (referred to herein as ‘‘MIAX 

Pearl Equities’’). The purpose of the 

proposed rule change is to: (i) Accept 

prior to 9:30 a.m. Eastern Time orders 

in equity securities that include a Post 

Only 3 instruction and a time-in-force of 

Regular Hours Only (‘‘RHO’’),4 and 

orders that include a Minimum 

Execution Quantity 5 instruction and a 

time-in-force of RHO; and (ii) accept 

and retain such orders when trading in 

a security is halted. This is similar to 

functionality on other equity 

exchanges.6 Another purpose of the 

proposed rule change is to amend 

Exchange Rule 2615(a)(1) to provide 

additional specificity concerning the 

handling of Limit Orders 7 with a 

Reserve Quantity 8 during the 

Exchange’s opening process. This 

change is based on the rules of other 

equity exchanges.9

Acceptance of Orders Before 9:30 a.m. 

Eastern Time 

Exchange Rule 2600(a) provides for 

the entry of orders starting at 7:30 a.m. 

Eastern Time and that orders entered 

between 7:30 a.m. and 9:30 a.m. Eastern 

Time are not eligible for execution until 

the start of Regular Trading Hours.10

Exchange Rule 2600(a) further provides 

that the Exchange will not accept the 

following orders prior to 9:30 a.m. 

Eastern Time: Orders designated as Post 

Only with a time-in-force of RHO, 

Intermarket Sweep Orders (‘‘ISO’’),11 all 

orders with a time-in-force of 


lotter on DSK11XQN23PROD with NOTICES1