Document ID: SEC-2013-1680-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2013-09-30T04:00Z

[Federal Register Volume 78, Number 189 (Monday, September 30, 2013)]
[Notices]
[Pages 59992-59994]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-23685]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70487; File No. SR-NYSE-2013-62]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Its Listing Standard for Reverse Merger Companies Set Forth in 
Section 102.01F of The Exchange's Listed Company Manual to Harmonize 
With Nasdaq Stock Market Rules That Require the Timely Filing of All 
Required Reports for the Most Recent 12-Month Period

September 24, 2013.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on September 16, 2013, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its listing standard for Reverse 
Merger Companies set forth in Section 102.01F of the Exchange's Listed 
Company Manual (the ``Manual'') to harmonize with requirements imposed 
by the Nasdaq Stock Market (``Nasdaq'') and modify in one respect the 
circumstances under which a reverse merger company may be eligible to 
list under the rule. The text of the proposed rule change is available 
on the Exchange's Web site at www.nyse.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

[[Page 59993]]

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 self-regulatory organization 
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 those 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 parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The NYSE proposes to amend its listing standard for Reverse Merger 
Companies set forth in Section 102.01F of the Manual to harmonize with 
requirements imposed by Nasdaq and modify in one respect the 
circumstances under which a Reverse Merger Company may be eligible to 
list under the rule.
    Section 102.01F of the Manual defines a Reverse Merger Company and 
establishes initial listing standards for Reverse Merger Companies.\4\ 
Among other requirements Section 102.01F provides that a Reverse Merger 
Company is eligible to list on the Exchange only if it has timely filed 
with the Securities and Exchange Commission (``Commission'') all 
required reports since the consummation of the Reverse Merger, 
including the filing of at least one annual report containing all 
required audited financial statements for a full fiscal year commencing 
on a date after the date of filing with the Commission of the Form 8-K 
or Form 20-F containing all of the information required by Item 2.01(f) 
of Form 8-K, including all required audited financial statements (the 
``Reverse Merger Form 8-K'').\5\ In contrast, Nasdaq Marketplace Rule 
5110(c) provides that a Reverse Merger Company may list if it has filed 
all required reports since the consummation of the Reverse Merger, 
including the timely filing of all required reports for the prior year, 
from the date of approval, and the filing of at least one annual report 
containing all required audited financial statements for a full fiscal 
year commencing on a date after the date of filing with the Commission 
of the Reverse Merger Form 8-K. The Exchange proposes to harmonize its 
rule with Nasdaq Marketplace Rule 5110(c), and modify Section 102.01F 
to provide that a Reverse Merger Company may list if, as of the date of 
listing, it has filed all required reports since the Reverse Merger, 
including (i) the filing of at least one annual report containing all 
required audited financial statements for a full fiscal year commencing 
on a date after the date of filing with the Commission of the Reverse 
Merger Form 8-K and (ii) the timely filing of all required reports for 
the most recent 12-month period prior to the listing date including at 
least one annual report containing all required audited financial 
statements.\6\ The Exchange believes that investors are sufficiently 
protected if a Reverse Merger Company is current in its filings at the 
time of listing and has demonstrated its ability to timely file its 
reports over a period of 12 months.\7\ The Exchange does not believe 
that a Reverse Merger Company should be ineligible for listing on the 
basis that it had a filing delinquency more than 12 months earlier that 
has subsequently been cured. However, under Section 101.00 of the 
Manual, the Exchange has broad discretion regarding the listing of a 
company, so the Exchange may deny listing or apply additional or more 
stringent criteria based on any event, condition, or circumstance that 
makes the listing of the company inadvisable or unwarranted in the 
opinion of the Exchange. For example, habitually late filers may be 
required to comply with additional criteria as a condition to listing.
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    \4\ For purposes of Section 102.01F, a ``Reverse Merger 
Company'' is a company formed by means of a ``Reverse Mergers.'' A 
``Reverse Merger'' is defined as any transaction whereby an 
operating company becomes an Exchange Act reporting company by 
combining directly or indirectly with a shell company which is an 
Exchange Act reporting company, whether through a reverse merger, 
exchange offer, or otherwise. However, a Reverse Merger does not 
include the acquisition of an operating company by a listed company 
which qualified for initial listing under Section 102.06. In 
determining whether a company is a shell company, the Exchange will 
consider, among other factors: whether the Company is considered a 
``shell company'' as defined in Rule 12b-2 under the Act; what 
percentage of the company's assets are active versus passive; 
whether the company generates revenues, and if so, whether the 
revenues are passively or actively generated; whether the company's 
expenses are reasonably related to the revenues being generated; how 
many employees work in the company's revenue-generating business 
operations; how long the company has been without material business 
operations; and whether the company has publicly announced a plan to 
begin operating activities or generate revenues, including through a 
near-term acquisition or transaction.
    \5\ A Reverse Merger Company must also meet all other applicable 
listing requirements to be eligible for listing.
    \6\ The Exchange believes it is appropriate to impose these 
requirements as of the date of listing rather than the date the 
issuer applies to list on the Exchange, as there is sometimes a 
significant period of time between the date of submission of the 
application and the listing date and an issuer that is compliant 
with these requirements on the application date may no longer be 
compliant as of its listing date. NYSE Regulation staff will 
independently confirm that the issuer is compliant with these 
requirements as a condition to the authorization of the listing.
    \7\ The Exchange notes that Section 102.01F in its current form 
provides for two circumstances in which a Reverse Merger Company may 
list notwithstanding the fact that it has not made all required 
filings on a timely basis for the previous 12 months, provided that 
it is not delinquent in its filing obligations at the time of 
listing. First, a Reverse Merger Company will not be subject to the 
requirements of Section 102.01F if it is listing in connection with 
a firm commitment underwritten public offering where the proceeds to 
the Reverse Merger Company will be at least $40,000,000 and the 
offering is occurring subsequent to or concurrently with the Reverse 
Merger. In addition, a Reverse Merger Company that has filed at 
least four annual reports with the Commission, which each contain 
all required audited financial statements for a full fiscal year 
commencing after filing the Reverse Merger Form 8-K, will not be 
subject to the requirements of Section 102.01F, other than the 
requirement that its common stock has traded for at least one year 
in the U.S. over-the-counter market, on another national securities 
exchange or on a regulated foreign exchange following the 
consummation of the Reverse Merger.. However, such companies will be 
required to (i) comply with the applicable stock price requirement 
of Section 102.01B at the time of each of the filing of the initial 
listing application and the date of the Reverse Merger Company's 
listing and (ii) not be delinquent in their filing obligations with 
the Commission. In either of the cases described in this paragraph, 
the Reverse Merger Company will only need to meet the requirements 
of one of the financial initial listing standards in Section 102.01C 
in addition to all other applicable non-financial listing standard 
requirements, including, without limitation, the requirements of 
Sections 102.01A, 102.01B and 303A of the Manual.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \8\ of the Securities Exchange Act of 1934 (the 
``Act''),\9\ in general, and furthers the objectives of Section 6(b)(5) 
of the Act,\10\ in particular in that it is designed 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. The Exchange believes that 
the proposed amendment is consistent with the investor protection 
objectives of Section 6(b)(5) because any company listing under the 
proposed amended rule will still need to be current in its filings with 
the Commission and will have

[[Page 59994]]

demonstrated its ability to remain timely in its filings for at least 
the previous 12 months. Moreover, the proposed amendment will foster 
cooperation and coordination with persons engaged in regulating 
transactions in securities by harmonizing the Exchange's listing 
requirements in this regard with those of Nasdaq.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78a.
    \10\ 15 U.S.C. 78f(b)(5).
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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. The proposed amendment may 
potentially increase the competition for the listing of Reverse Merger 
Companies, as it will eliminate a discrepancy between the applicable 
listing requirements of the Exchange and those of Nasdaq and therefore 
enable the Exchange to list Reverse Merger Companies that are currently 
qualified to list on Nasdaq but may not be able to list on the 
Exchange.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \15\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSE-2013-62 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2013-62. 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 Web site (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 Web site 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; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSE-2013-62 and should be 
submitted on or before October 21, 2013.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-23685 Filed 9-27-13; 8:45 am]
BILLING CODE 8011-01-P