Document ID: SEC-2010-1815-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Amex LLC
Posted Date: 2010-11-30T05:00Z

[Federal Register: November 30, 2010 (Volume 75, Number 229)]
[Notices]               
[Page 74119-74121]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30no10-143]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63366; File No. SR-NYSEAmex-2010-103]

 
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE 
Amex LLC Company Guide To Adopt Additional Criteria for Listing Special 
Purpose Acquisition Companies (SPACs) That Have Indicated That Their 
Business Plan Is To Engage in a Merger or Acquisition With an 
Unidentified Company or Companies

November 23, 2010.
    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 November 12, 2010, NYSE Amex LLC (``Exchange'' or ``NYSE Amex'') 
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 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\ 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 the NYSE Amex LLC Company Guide (the 
``Guide'') to adopt additional criteria for listing companies that have 
indicated that their business plan is to engage in a merger or 
acquisition with an unidentified company or companies (an ``acquisition 
vehicle'') and to provide transparency to the criteria the Exchange 
will apply in doing so. The text of the proposed rule change is 
available at the Exchange, the Commission's Public Reference Room, and 
http://www.nyse.com.

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 Exchange proposes to amend the Guide to adopt additional 
criteria for listing companies that have indicated that their business 
plan is to engage in a merger or acquisition with an acquisition 
vehicle.\3\ The Exchange has permitted certain of such companies to 
list on the Exchange under Initial Listing Standards 3 or 4, which do 
not require prior operating history, as long as certain protections 
were provided to investors in such companies.\4\ In order to provide 
greater transparency to the listing criteria that would be applicable 
to such companies, the Exchange proposes to adopt new Section 119 of 
the Guide.\5\
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    \3\ Section 101 of the Guide provides the Exchange with broad 
discretionary authority over the initial and continued listing of 
securities in order to maintain the quality of and public confidence 
in its market, to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, and to 
protect investors and the public interest, even though the 
securities meet all enumerated criteria for initial or continued 
listing.
    \4\ As it does with any initial listing, the Exchange will 
evaluate the reputation of the company's management pursuant to 
Section 101 of the Guide in determining whether listing is 
appropriate.
    \5\ New York Stock Exchange LLC (``NYSE'') and The Nasdaq Stock 
Market also have adopted standards for listing acquisition 
companies. See NYSE Listed Company Manual Section 102.06, Nasdaq IM-
5101-2. Except where otherwise noted, the new Section 119 standards 
are the same as Nasdaq's current standards. See infra notes 8 and 9.
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    First, these companies must meet all applicable initial listing 
requirements. Thus, for initial listing, companies seeking to list on 
the Exchange must meet NYSE Amex Initial Listing Standard 3 or 4, which 
require, among other things, a minimum market value of listed 
securities of $50 million or $75 million, respectively.\6\ In addition, 
the Exchange has determined to impose the following additional criteria 
for listing a company whose business plan is to complete an initial 
public offering and

[[Page 74120]]

engage in a subsequent, unidentified merger or acquisition: \7\
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    \6\ See Section 101(c) and (d) of the Guide, which sets forth 
these market capitalization standards as well as other listing 
standards relating to aggregate market value of publicly held 
shares, stock price, distribution and other requirements. Note that 
given the nature of these companies, they will not satisfy the 
initial listing requirements of Initial Listing Standards 1 and 2 
because of the prior operating history requirements of those 
standards. As noted below, these companies will be required to 
satisfy the initial listing requirements following subsequent 
business combinations.
    \7\ These criteria originally were derived from protections the 
Exchange has observed built into recent transactions and Rule 419 
under the Securities Act of 1933, 17 CFR 230.419. See supra n. 3 and 
Securities Exchange Act Release No. 57685 (April 18, 2008), 73 FR 
22191 at n. 8 (April 24, 2008) (SR-NASDAQ-2008-013). Rule 
419(b)(2)(vi), 17 CFR 230.419(b)(2)(vi), permits the registrant to 
receive up to 10 percent of the proceeds remaining after payment of 
underwriting commissions, underwriting expenses and permitted dealer 
allowances, exclusive of interest or dividends, as those proceeds 
are deposited into the escrow or trust account.
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    (a) At least 90% of the gross proceeds from the initial public 
offering and any concurrent sale by the company of equity securities 
must be deposited in a trust account maintained by an independent 
trustee, an escrow account maintained by an ``insured depository 
institution,'' as that term is defined in Section 3(c)(2) of the 
Federal Deposit Insurance Act \8\ or in a separate bank account 
established by a registered broker or dealer (collectively, a ``deposit 
account'').
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    \8\ 12 U.S.C. 1813(c)(2).
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    (b) Within 36 months of the effectiveness of its initial public 
offering registration statement, or such shorter period that the 
company specifies in its registration statement, the company must 
complete one or more business combinations having an aggregate fair 
market value of at least 80% of the value of the deposit account 
(excluding any deferred underwriter's fees and taxes payable on the 
income earned on the deposit account) at the time of the agreement to 
enter into the initial combination.
    (c) Until the company has satisfied the condition in paragraph (b) 
above, each business combination must be approved by a majority of the 
company's independent directors.
    (d) Until the company has satisfied the condition in paragraph (b) 
above, each business combination must be approved by a majority of the 
shares of common stock voting at the meeting at which the combination 
is being considered.
    (e) Until the company has satisfied the condition in paragraph (b) 
above, public shareholders voting against a business combination must 
have the right to convert 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) if the business combination is approved and consummated. A 
company may establish a limit (set no lower than 10% of the shares sold 
in the initial public offering) as to the maximum number of shares with 
respect to which any shareholder, together with any affiliate of such 
shareholder or any person with whom such shareholder is acting as a 
``group'' (as such term is used in Sections 13(d) and 14(d) of the 
Securities Exchange Act of 1934 (the ``Act'') \9\), may exercise such 
conversion rights. For these purposes, ``public shareholder'' would be 
defined to exclude officers and directors of the company, the company's 
sponsor, the founding shareholders of the company, any family member or 
affiliate of any of the foregoing persons, and other concentrated 
holdings of 10% or more.\10\ The Exchange proposes to define ``family 
member'' as a person's spouse, parents, children and siblings, whether 
by blood, marriage or adoption, or anyone residing in such person's 
home.\11\
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    \9\ 15 U.S.C. 78m(d) and 78n(d).
    \10\ Nasdaq currently excludes a beneficial holder of more than 
10% of the total shares outstanding from its definition of ``Public 
Holders'' in Nasdaq's general listing rules. See Nasdaq Rule 
5005(a)(34). However, Nasdaq does not exclude concentrated holders 
from its definition of ``public Shareholder'' in its acquisition 
vehicle rule (IM-5101-2) but has proposed to do so by defining 
public Shareholder to exclude the beneficial holder of more than 10% 
of the total shares outstanding. See Securities Exchange Act Release 
No. 63239 (November 3, 2010), 75 FR 68846 (November 9, 2010) (SR-
NASDAQ-2010-137). The NYSE's acquisition company rule excludes 
concentrated holdings of 10% or more in calculating the number of 
publicly-held shares. See Section 102.06(A) of the NYSE Listed 
Company Manual. Similarly, the Exchange proposes to exclude 
concentrated holdings of 10% or more in calculating the number of 
publicly-held shares in proposed Section 119(e).
    \11\ The Guide does not currently define the term ``family 
member.'' The Exchange proposes to adopt the definition of ``Family 
Member'' used in Nasdaq's Rules. See Nasdaq Rule 5005(a)(17) 
(referencing Nasdaq Rule 5605(a)(2)) and IM- 5101-2.
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    The Exchange will also review such a company in connection with 
each acquisition to assure that it remains appropriate to continue to 
list the company. In that regard, the Exchange will require that the 
company meet the initial listing requirements upon conclusion of the 
transaction \12\ and will conduct a regulatory review of any 
individuals that become newly involved with the company as a result of 
the transaction. If the company does not meet the requirements for 
initial listing following a business combination or does not comply 
with one of the requirements set forth above, the Exchange would 
commence delisting proceedings under Section 1010 to delist the 
company's securities; the company would not be eligible to follow the 
procedures to cure deficiencies outlined in Section 1009 of the 
Guide.\13\
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    \12\ Companies will not be required to pay a new listing fee in 
connection with such a review. However, if there is a change of 
legal entity in connection with the business combination, the 
company will have to pay an original listing fee ($7,500). See 
Section 142(d) of the Guide. If additional shares are issued in the 
transaction, the company will pay initial listing fees on those 
shares. See Section 142(a) of the Guide.
    \13\ This aspect of the proposed rule change is based on Section 
802.01B of the NYSE Listed Company Manual.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\14\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\15\ in particular, in that it is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to remove impediments to and perfect 
the mechanism of a free and open market and a national market system, 
and, in general, to protect investors and the public interest. The 
Exchange believes the proposed rule change is consistent with these 
requirements in that it imposes additional requirements on acquisition 
vehicles, which are designed to protect investors and the public 
interest and prevent fraudulent and manipulative acts and practices on 
the part of acquisition vehicles and their promoters. The Exchange also 
notes that the provision of conversion rights for public shareholders 
that oppose a business combination offers investor protection and is 
consistent with SEC Rule 419.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 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 that is not necessary or appropriate 
in furtherance of the purposes of the Act.

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 foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \16\ and Rule 19b-4(f)(6) \17\ thereunder 
because the proposal does not: (i) Significantly affect the protection 
of investors or the public

[[Page 74121]]

interest; (ii) impose any significant burden on competition; and (iii) 
by its terms, become operative for 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, 
provided that the Exchange has given the Commission notice of its 
intent to file the proposed rule change, along with a brief description 
and text of the proposed rule change, at least five business days prior 
to the date of filing of the proposed rule change, or such shorter time 
as designated by the Commission.\18\
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ The Exchange has satisfied the five-day pre-filing notice 
requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \19\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay period.
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    \19\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiver of the 30-day operative delay 
period is consistent with the protection of investors and the public 
interest. Specifically, the Commission notes that the proposal is 
substantially identical to Nasdaq's listing standards for special 
purpose acquisition companies (``SPACs'') and raises no new or novel 
regulatory issues. The Commission notes that the proposal differs from 
Nasdaq's rules in three respects. First, the proposal's definition of 
``public shareholder'' would exclude any person with concentrated 
holdings of 10% or more. The Commission notes that this proposed 
definition is consistent with the Exchange's current definition.\20\ 
Second, the proposal would include a definition of ``family member.'' 
The Commission notes that while the term ``family member'' is used in 
Nasdaq's SPAC rules, it is not specifically defined in those rules 
because it is defined elsewhere in Nasdaq's rules. The definition of 
``family member'' in the Exchange's proposal, however, is identical to 
the definition of ``family member'' as defined in Nasdaq's rules and 
referenced in Nasdaq's SPAC listing standards.\21\ Finally, the 
proposal would specify that SPACs that do not meet the Exchange's 
initial listing standards following a business combination or that do 
not comply with one of the SPAC listing standards in proposed Section 
119 of the Guide would not be eligible to follow the cure procedures in 
Section 1009 of the Guide, which allows listed companies up to 18 
months to cure certain continued listing standards deficiencies. 
Instead, under the proposal, the Exchange would immediately commence 
delisting proceedings pursuant to Section 1010 of the Guide. The 
Commission notes that this proposal is identical to NYSE's listing 
standards for SPACs and helps to ensure that a SPAC unable to meet 
listing standards will not remain listed for an extended period of 
time.\22\ Accordingly, based on the above, the Commission designates, 
consistent with the protection of investors and public interest, that 
the proposed rule change be operative upon filing.\23\
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    \20\ See Section 102 of the Guide; see also supra note 10.
    \21\ See supra note 11.
    \22\ See supra note 13.
    \23\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the 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.\24\
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    \24\ 15 U.S.C. 78s(b)(3)(C).
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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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEAmex-2010-103 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-NYSEAmex-2010-103. This 
file number should be included on the subject line if e-mail 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 a.m. and 3 p.m. Copies of such 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-
NYSEAmex-2010-103 and should be submitted on or before December 21, 
2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-30087 Filed 11-29-10; 8:45 am]
BILLING CODE 8011-01-P