Document ID: SEC-2013-1174-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT LLC
Posted Date: 2013-06-28T04:00Z

[Federal Register Volume 78, Number 125 (Friday, June 28, 2013)]
[Notices]
[Pages 39036-39038]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-15493]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69836; File No. SR-NYSEMKT-2013-37]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending its Listing 
Standard for Reverse Merger Companies

June 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 June 11, 2013, NYSE MKT LLC (the ``Exchange'' or ``NYSE 
MKT'') 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 101(e) of the Exchange's Company 
Guide 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.

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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NYSE MKT proposes to amend its listing standard for Reverse Merger 
Companies set forth in Section 101(e) of the Exchange's Company Guide 
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 101(e) of the Company Guide defines a Reverse Merger 
Company and establishes initial listing standards for Reverse Merger 
Companies.\4\ Among

[[Page 39037]]

other requirements Section 101(e) 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 immediately 
preceding 12 months 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 101(e) to 
provide that a Reverse Merger Company may list if 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. 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.\6\ The Exchange does not believe that it 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.
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    \4\ For purposes of Section 101(e), 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 119. 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 Exchange 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 notes that Section 101(e) 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 101(e) 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 101(e), 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(b) 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 101(a) 
in addition to all other applicable non-financial listing standard 
requirements, including, without limitation, the requirements of 
Sections 102(a) and 102(b) and the applicable requirements of 
Chapter 8 of the Company Guide.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \7\ of the Securities Exchange Act of 1934 (the 
``Act''),\8\ in general, and furthers the objectives of Section 6(b)(5) 
of the Act,\9\ 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 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78a.
    \9\ 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 not 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) \10\ of the Act and Rule 19b-4(f)(6) thereunder.\11\ 
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, of 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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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6)\12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ 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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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
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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. If the Commission 
takes such action, the

[[Page 39038]]

Commission shall institute proceedings under Section 19(b)(2)(B)\14\ of 
the Act to determine whether the proposed rule change should be 
approved or disapproved.
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    \14\ 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-NYSEMKT-2013-37 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-NYSEMKT-2013-37. 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-NYSEMKT-2013-37 and 
should be submitted on or before July 19, 2013.
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    \15\ 17 CFR 200.30-3(a)(12).

For the Commission, by the Division of Trading and Markets, pursuant 
to delegated authority.\15\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-15493 Filed 6-27-13; 8:45 am]
BILLING CODE 8011-01-P