Document ID: SEC-2021-1661-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market, LLC
Posted Date: 2021-11-26T05:00Z

[Federal Register Volume 86, Number 225 (Friday, November 26, 2021)]
[Notices]
[Pages 67512-67517]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25750]

[[Page 67512]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93622; File No. SR-NASDAQ-2021-092]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Adopt Alternative Initial and Continued Listing Requirements for 
Acquisition Companies Listing on the Nasdaq Global Market

November 19, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 12, 2021, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt alternative initial and continued 
listing requirements for Acquisition Companies listing on the Nasdaq 
Global Market.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    Nasdaq is proposing to adopt alternative initial and continued 
listing requirements for companies whose business plan is to complete 
one or more acquisitions, as described in Listing Rule IM-5101-2 (an 
``Acquisition Company''). As described below, such alternative listing 
requirements do not replace the requirements of Listing Rule IM-5101-2, 
which will continue to apply to all Acquisition Companies.
    An Acquisition Company is a special purpose company formed for the 
purpose of completing an initial public offering and engaging in a 
merger or acquisition (a business combination) with one or more 
unidentified companies within a specific period of time.\3\ The 
securities sold by the Acquisition Companies in its initial public 
offering (``IPO'') are typically units, consisting of one share of 
common stock and one or more warrants (or a fraction of a warrant) to 
purchase common stock, that are separable at some point after the IPO. 
Management generally is granted a percentage of the Acquisition 
Company's equity and may be required to purchase additional shares in a 
private placement at the time of the Acquisition Company's IPO. Due to 
their different structure, Acquisition Companies do not have any prior 
financial history, at the time of their listing, like operating 
companies.
---------------------------------------------------------------------------

    \3\ Pursuant to Listing Rule IM-5101-2 an Acquisition Company is 
required, among other things, to keep at least 90% of the proceeds 
from its IPO in an escrow account and, until the company has 
completed one or more business combinations having an aggregate fair 
market value of at least 80% of the value of the escrow account, 
must meet the requirements for initial listing following each 
business combination. If a shareholder vote on the business 
combination is held, 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 
escrow account (net of taxes payable and amounts distributed to 
management for working capital purposes) if the business combination 
is approved and consummated. If a shareholder vote on the business 
combination is not held, the company must provide all shareholders 
with the opportunity to redeem all their shares for cash equal to 
their pro rata share of the aggregate amount then in the deposit 
account.
---------------------------------------------------------------------------

    Historically, Acquisition Companies chose to list on the Nasdaq 
Capital Market instead of the Nasdaq Global Market, in part, because it 
had lower fees \4\ and lower initial distribution requirements.\5\ 
However, nothing in NASDAQ's rules prohibits an Acquisition Company 
from listing on the Global Market.\6\ More recently, certain 
Acquisition Companies have sought to list on the Nasdaq Global Market. 
In particular, Nasdaq notes that a recent SEC statement about 
accounting treatment by Acquisition Companies \7\ and subsequent and 
more recent accounting comments to Acquisition Companies has resulted 
in some Acquisition Companies adopting different accounting practices 
and, as a result, having insufficient equity to qualify for initial 
listing on the Nasdaq Capital Market. However, these companies could 
list on the Nasdaq Global Market or on competing marketplaces, which 
permit listing without any minimum equity requirement.\8\
---------------------------------------------------------------------------

    \4\ Recently, Nasdaq amended the rules to make the listing fees 
and the timing of paying such fees for Acquisition Companies listing 
on the Nasdaq Capital and Global Markets the same. See Securities 
Exchange Act Release No. 92345 (July 7, 2021), 86 FR 36807 (July 13, 
2021).
    \5\ Listing Rules 5505(a)(2) and 5505(a)(3) require a Company to 
have one million Unrestricted Publicly Held Shares and at least 300 
Round Lot Holders in connection with the initial listing on the 
Nasdaq Capital Market. See also Listing Rules 5505(a) and (b), which 
generally require minimum bid price of at least $4 per share; at 
least three registered and active Market Makers; and Market Value of 
Unrestricted Publicly Held Shares of $15 million, Stockholders' 
equity of at least $4 million, and Market Value of Listed Securities 
of $50 million under the Market Value Standard.
    \6\ Nasdaq Listing Rule 5310(i) provides that an Acquisition 
Company is not eligible to list on the Nasdaq Global Select Market.
    \7\ Staff Statement on Accounting and Reporting Considerations 
for Warrants Issued by Special Purpose Acquisition Companies 
(SPACs), by John Coates, Acting Director of the Division of 
Corporation Finance, and Paul Munter, Acting Chief Accountant (April 
12, 2021), available at: https://www.sec.gov/news/public-statement/accounting-reporting-warrants-issued-spacs.
    \8\ Nasdaq Rule 5405(b)(3) allows a company to list on the 
Nasdaq Global Market with no equity if it has a Market Value of 
Listed Securities of $75 million and a Market Value of Unrestricted 
Publicly Held Shares of $20 million, along with satisfying price, 
unrestricted publicly held shares, round lot holder and market maker 
requirements. See also Section 102.06 of the NYSE Listed Company 
Manual.
---------------------------------------------------------------------------

    Listing Rules 5405 and 5450 require all companies, including 
Acquisition Companies, listing on the Nasdaq Global Market to have at 
least 400 Round Lot Holders for initial listing and 400 Total Holders 
for continued listing, respectively.\9\
---------------------------------------------------------------------------

    \9\ Round Lot Holder means a holder of a Normal Unit of Trading 
of Unrestricted Securities. See Listing Rule 5005(a)(40). ``Round 
Lot'' or ``Normal Unit of Trading'' means 100 shares of a security 
unless, with respect to a particular security, Nasdaq determines 
that a normal unit of trading shall constitute other than 100 
shares. If a normal unit of trading is other than 100 shares, a 
special identifier shall be appended to the Company's Nasdaq symbol. 
See Listing Rule 5005(a)(39). ``Total Holders'' means holders of a 
security that includes both beneficial holders and holders of 
record. See Listing Rule 5005(a)(45).

---------------------------------------------------------------------------

[[Page 67513]]

    Given Nasdaq's long experience listing Acquisition Companies on the 
Nasdaq Capital Market, and to facilitate capital formation, Nasdaq 
proposes to adopt alternative listing requirements that would allow 
Acquisition Companies to initially list their Primary Equity Security 
(other than an ADR) on the Nasdaq Global Market with at least 300 Round 
Lot Holders, and remain listed if they have at least 300 public 
stockholders,\10\ provided that they meet certain additional 
requirements for initial and continued listing described below. These 
proposed requirements would be substantially similar to the NYSE 
listing standards for Acquisition Companies.\11\
---------------------------------------------------------------------------

    \10\ ``Public stockholders'' exclude holders that are directors, 
officers, or their immediate families and holders of other 
concentrated holdings of 10% or more. See also Listing Rule 
5005(a)(36) defining ``Public Holders'' as holders of a security 
that includes both beneficial holders and holders of record, but 
does not include any holder who is, either directly or indirectly, 
an Executive Officer, director, or the beneficial holder of more 
than 10% of the total shares outstanding.
    \11\ Sections 102.06 and 802.01 of the NYSE Listed Company 
Manual. Although these rules provide the NYSE with certain 
discretion in determining the suitability for listing of an 
Acquisition Company, under Listing Rule 5101, Nasdaq has broad 
discretionary authority ``over the initial and continued listing of 
securities in Nasdaq 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.'' Nasdaq 
further notes that while ``Nasdaq has broad discretion under Rule 
5101 to impose additional or more stringent criteria, the Rule does 
not provide a basis for Nasdaq to grant exemptions or exceptions 
from the enumerated criteria for initial or continued listing, which 
may be granted solely pursuant to rules explicitly providing such 
authority.'' Listing Rule IM-5101-1.
---------------------------------------------------------------------------

Initial Listing Requirements
    As proposed, the new, alternative, listing requirements for 
Acquisition Companies, including the distribution requirements would be 
included in Listing Rule 5406. Under the proposal, Acquisition 
Companies would have to have at least 1.1 million Publicly Held Shares 
\12\ and at least 300 Round Lot Holders when listing in conjunction 
with an IPO (rather than 400 Round Lot Holders as is the case 
currently). Acquisition Companies transferring from other exchanges or 
listing in connection with a quotation listing would be allowed to list 
based on the distribution requirements of 1.1 million publicly held 
shares \13\ at the time of initial listing on Nasdaq and
---------------------------------------------------------------------------

    \12\ ``Publicly Held Shares'' means shares not held directly or 
indirectly by an officer, director or any person who is the 
beneficial owner of more than 10 percent of the total shares 
outstanding. See Listing Rule 5005(a)(35).
    \13\ For Acquisition Companies that list at the time of their 
IPOs, the rule will require that the offering be on a firm 
commitment basis. If necessary, Nasdaq will rely on a written 
commitment from the underwriter to represent the anticipated value 
of the Acquisition Company's offering in order to determine an 
Acquisition Company's compliance with certain listing standards, 
including the number of Publicly Held Shares.
---------------------------------------------------------------------------

    (i) 300 Round Lot Holders;
    (ii) 2,200 total stockholders together with average monthly trading 
volume of 100,000 shares (for the most recent six months); or
    (iii) 500 total stockholders together with average monthly trading 
volume of one million shares (for the most recent twelve months).
    To rely on these distribution requirements, Nasdaq proposes to 
adopt market capitalization and the publicly-held shares quantitative 
requirements that are more stringent than the current requirements 
applicable to Acquisition Companies listing on the Nasdaq Global 
Market.\14\
---------------------------------------------------------------------------

    \14\ See footnote 8 above.
---------------------------------------------------------------------------

    Under the proposed rule, an Acquisition Company must have Market 
Value of Listed Securities of at least $100 million and Market Value of 
Publicly Held Shares of at least $80 million at the time of initial 
listing. Nasdaq notes that there are a number of Acquisition Companies 
listed currently on other markets that would have met these revised 
requirements and, in Nasdaq's view, there is no evidence that these 
companies are unfit for exchange trading. The Exchange also notes that 
its revised quantitative requirements would be the same as those of the 
NYSE for Acquisition Companies.\15\
---------------------------------------------------------------------------

    \15\ Nasdaq notes that Acquisition Companies could list on the 
NYSE under Section 102.06 on the basis of an aggregate market value 
of least $100 million and market value of publicly-held shares of at 
least $80 million. Nasdaq's understanding is that the NYSE 
calculates the aggregate market value by multiplying the total 
shares outstanding by the public offering price per share, which is 
also how Nasdaq calculates the Market Value of Listed Securities.
---------------------------------------------------------------------------

    In addition to the proposed requirements described above, Nasdaq 
proposes to require an Acquisition Company to satisfy all additional 
requirements described in Listing Rule IM-5101-2; have at least four 
registered and active Market Makers; and have a closing price or, if 
listing in connection with an IPO, an IPO price of at least $4 per 
share.\16\
---------------------------------------------------------------------------

    \16\ The Market Maker requirement is the same as the requirement 
applicable to an Acquisition Company listing on the Nasdaq Global 
Market under the Market Value Standard. See Listing Rule 5405(b)(3). 
The minimum price requirement is similar to the bid price 
requirement for an Acquisition Company listing on the Nasdaq Global 
Market under the Market Value Standard, but is revised to reflect 
that an Acquisition Company listing in connection with an IPO will 
not have a bid price and to parallel the language used in the NYSE 
rule. See Nasdaq Listing Rule 5405(a) and NYSE Listed Company Manual 
Section 102.06.
---------------------------------------------------------------------------

    Finally, under the proposed rule, if the Acquisition Company lists 
units, the components of the units (other than Primary Equity Security, 
which must satisfy the requirements described above) must satisfy the 
initial listing requirements for the Nasdaq Global Market applicable to 
the component. If a component of a unit is a warrant, it must meet the 
following additional requirements (in addition to the requirements of 
Listing Rule 5410 \17\): \18\
---------------------------------------------------------------------------

    \17\ Among other things, Listing Rule 5410 requires that the 
underlying security must be listed on the Global Market or be a 
Covered Security.
    \18\ Although Section 713.12 of the NYSE Listed Company Manual 
provides the NYSE with certain discretion in reviewing the 
eligibility for listing of warrants, under Listing Rule 5101, Nasdaq 
has broad discretionary authority ``over the initial and continued 
listing of securities in Nasdaq 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.'' Nasdaq further notes that while ``Nasdaq has broad 
discretion under Rule 5101 to impose additional or more stringent 
criteria, the Rule does not provide a basis for Nasdaq to grant 
exemptions or exceptions from the enumerated criteria for initial or 
continued listing, which may be granted solely pursuant to rules 
explicitly providing such authority.'' Listing Rule IM-5101-1.
---------------------------------------------------------------------------

     At least 1,000,000 warrants outstanding;
     At least $4 million aggregate market value;
     Warrants should have a minimum life of one year; and
     The Exchange will not list warrant issues containing 
provisions which give the company the right, at its discretion, to 
reduce the exercise price of the warrants for periods of time, or from 
time to time, during the life of the warrants unless (i) the company 
undertakes to comply with any applicable tender offer regulatory 
provisions under the federal securities laws, including a minimum 
period of 20 business days within which such price reduction will be in 
effect (or such longer period as may be required under the SEC's tender 
offer rules) and (ii) the company promptly gives public notice of the 
reduction in exercise price in a manner consistent with the Exchange's 
immediate release policy set forth in Rules 5250(b)(1) and IM-5250-1. 
The Exchange will apply the requirements in the immediately preceding 
sentence to the taking of any other action which has the same economic 
effect as a reduction in the exercise price of a listed warrant. This 
policy will not preclude the listing of warrant issues for which 
regularly scheduled and specified changes in the

[[Page 67514]]

exercise price have been previously established at the time of issuance 
of the warrants.
Continued Listing Requirements
    Nasdaq also proposes to adopt continued listing standards for 
Acquisition Companies that initially listed under the proposed 
alternative standard and align them with the proposed initial listing 
standards. The requirements of Listing Rule IM-5101-2 also would 
continue to apply to Acquisition Companies that initially listed under 
the proposed alternative standard.
    Under the proposed Rule 5452, until an Acquisition Company has 
satisfied the condition of consummating its business combination 
described in Rule IM-5101-2(b), Nasdaq will promptly initiate 
suspension and delisting procedures if:
     The Acquisition Company's average Market Value of Listed 
Securities is below $50 million or the average Market Value of Publicly 
Held Shares is below $40 million, in each case over 30 consecutive 
trading days. An Acquisition Company will not be eligible to follow the 
procedures outlined in Rule 5810(c)(2) with respect to this criterion, 
and will be subject to the procedures in proposed Rule 5810(c)(1), 
which will provide that Nasdaq Staff will issue a Staff Delisting 
Determination to such Acquisition Company informing the Company that 
its securities are immediately subject to suspension and delisting. 
Nasdaq will notify the Acquisition Company if its average Market Value 
of Listed Securities falls below $75 million or the average Market 
Value of Publicly Held Shares falls below $60 million and will advise 
the Acquisition Company of the delisting standard;
     the Acquisition Company's securities initially listed 
(either common equity securities or units, as the case may be), fall 
below the following distribution criteria:
    (1) At least 300 public stockholders (if a component of a unit is a 
warrant, at least 100 warrant holders);
    (2) at least 1,200 total stockholders and average monthly trading 
volume of 100,000 shares (for most recent 12 months); or
    (3) at least 600,000 Publicly Held Shares; \19\ or
---------------------------------------------------------------------------

    \19\ See footnote 12 above.
---------------------------------------------------------------------------

     the Acquisition Company fails to consummate its business 
combination, required by Rule IM-5101-2(b), within the time period 
specified by its constitutive documents or required by contract, or as 
provided by Rule IM-5101-2(b), whichever is shorter.
    Nasdaq also proposes to adopt Rule IM-5452-1 to explain the 
treatment of Acquisition Company units, and unit components, for 
purposes of the distribution requirements. In the case of Acquisition 
Company securities traded as a unit, such securities will be subject to 
suspension and delisting if any of the component parts do not meet the 
applicable continued listing standards. However, if one or more of the 
components is otherwise qualified for listing, such component(s) may 
remain listed.
    For the purposes of determining whether an individual component 
satisfies the applicable distribution criteria, the units that are 
intact and freely separable into their component parts shall be counted 
toward the total numbers required for continued listing of the 
component. If a component is a warrant, (in addition to the 
distribution requirement of 100 holders) the warrants will be subject 
to the continued listing standards for warrants set forth in Rule 5455.
    Under the proposed rule, if the Acquisition Company lists warrants, 
the warrants must meet the following continued listing requirements (in 
addition to the requirements of Listing Rule 5455): \20\
---------------------------------------------------------------------------

    \20\ Although Section 802.01D of the NYSE Listed Company Manual 
provides the NYSE with certain discretion in the appraisal of the 
suitability for continued listing of warrants, under Listing Rule 
5101, Nasdaq has broad discretionary authority ``over the initial 
and continued listing of securities in Nasdaq 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.'' Nasdaq further notes that while ``Nasdaq has 
broad discretion under Rule 5101 to impose additional or more 
stringent criteria, the Rule does not provide a basis for Nasdaq to 
grant exemptions or exceptions from the enumerated criteria for 
initial or continued listing, which may be granted solely pursuant 
to rules explicitly providing such authority.'' Listing Rule IM-
5101-1.
---------------------------------------------------------------------------

     The number of publicly-held warrants is at least 100,000;
     The number of warrant holders is at least 100; and
     Aggregate market value of warrants outstanding is at least 
$1,000,000.
    Notwithstanding the foregoing, Nasdaq will consider the suspension 
of trading in, or removal from listing of, any individual component or 
unit when, in the opinion of Nasdaq, it appears that the extent of 
public distribution or the aggregate market value of such component or 
unit has become so reduced as to make continued listing on the Exchange 
inadvisable. In its review of the advisability of the continued listing 
of an individual component or unit, Nasdaq will consider the trading 
characteristics of such component or unit and whether it would be in 
the public interest for trading to continue.
    Nasdaq also proposes to amend Rule 5810(c)(1) to align it with the 
proposed rule by providing that if an Acquisition Company, which 
qualified for listing pursuant to the alternative initial listing 
requirements in Rule 5406, fails to comply with the additional 
continued listing requirements in Rule 5452(a)(1), such failure will 
constitute a deficiency that will immediately result in Nasdaq issuing 
a Staff Delisting Determination with regard to the Acquisition 
Company's Primary Equity Security and the securities will be subject to 
immediate suspension and delisting.
    Nasdaq also proposes to amend Rule 5815(a)(1)(B)(ii) to provide 
that notwithstanding the provision that a timely request for a hearing 
shall ordinarily stay the suspension and delisting action pending the 
issuance of a written panel decision, a request made by an Acquisition 
Company (which qualified for listing pursuant to the alternative 
initial listing requirements in proposed Rule 5406) shall not stay the 
suspension of the securities from trading if such company fails to meet 
(i) the continued listing requirement in Rule 5452(a)(1); or (ii) the 
requirements for initial listing immediately following a business 
combination as required by Rule IM-5101-2.\21\ In each case, the 
company's securities will be immediately suspended from trading and 
will remain suspended unless the panel decision, if any, issued after 
the hearing determines to reinstate the securities. If the Acquisition 
Company does not request a hearing, then its securities will remain 
suspended from trading until they are delisted following the deadline 
to request such a hearing.
---------------------------------------------------------------------------

    \21\ IM-5101-2 provides that if an Acquisition Company ``does 
not meet the requirements for initial listing following a business 
combination . . . Nasdaq will issue a Staff Delisting Determination 
under Rule 5810 to delist the Company's securities.'' Rule 5810 
further provides that ``Staff Delisting Determinations . . . unless 
appealed, subject the Company to immediate suspension and 
delisting.''
---------------------------------------------------------------------------

    Nasdaq believes that the proposed modification to the distribution 
requirements for Acquisition Companies is appropriate because of the 
unique characteristics of the Acquisition Company structure. 
Specifically, pending the completion of a business combination, each 
share of an Acquisition Company represents a right to a pro rata share 
of the Acquisition Company's assets held in trust, and, in

[[Page 67515]]

Nasdaq's view, as a result Acquisition Company shares typically have a 
trading price close to their liquidation value. Therefore, Nasdaq 
believes that the liquidity and market efficiency concerns relevant to 
listed operating companies do not arise to the same degree with 
Acquisition Companies, and, in Nasdaq's view, there is less need to 
ensure that there are a large number of shareholders of an Acquisition 
Company, as compared to a typical operating company, to create an 
active market that generates appropriate pricing. Nasdaq also believes 
that the proposed distribution requirements for Acquisition Companies 
are appropriate because the proposed alternative listing requirements 
for Acquisition Companies under Rule 5406 are generally equal to or 
higher than the requirements otherwise applicable to Acquisition 
Companies listing on the Nasdaq Capital Market.\22\ Nasdaq also notes 
that Acquisition Companies have been listing on the NYSE for a number 
of years subject to initial and continued requirements substantially 
identical to those included in this proposal and that the proposed 
amendments will enable Nasdaq to compete more effectively for 
Acquisition Companies listings.
---------------------------------------------------------------------------

    \22\ See footnote 5 above.
---------------------------------------------------------------------------

    Finally, Nasdaq believes that the proposed rule change would not 
affect the status of Nasdaq listed securities under Rule 3a51-1 of the 
Act.\23\
---------------------------------------------------------------------------

    \23\ 17 CFR 240.3a51-1.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\24\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\25\ in particular, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Nasdaq also believes that the proposal to adopt an alternative set 
of listing requirements for Acquisition Companies is designed to 
promote just and equitable principles of trade, and to remove 
impediments to and perfect the mechanism of a free and open market 
because the proposed standards would permit Nasdaq to list securities 
of Acquisition Companies that meet specified criteria, including market 
value, distribution, and price requirements, which should help to 
ensure that the securities have sufficient public float, investor base, 
and liquidity to promote fair and orderly markets. In addition, 
Acquisition Companies would have to meet other existing investor 
protection criteria, such as the escrow account requirement, public 
shareholder approval requirement, public shareholder redemption rights, 
and public shareholder liquidation preferences, which should further 
the ability of investors to protect and monitor their investment 
pending a business combination. Finally, Acquisition Companies that 
list securities on Nasdaq would have to comply with all Nasdaq 
corporate governance requirements applicable to operating companies. 
Nasdaq also notes that Acquisition Companies have been listing on the 
NYSE for a number of years subject to initial and continued 
requirements nearly identical to those included in this proposal and 
that the Commission previously found these initial listing standards to 
be consistent with the requirements of the Act.\26\
---------------------------------------------------------------------------

    \26\ See e.g. Securities Exchange Act Release No. 80199 (March 
10, 2017), 82 FR 13905 (March 15, 2017) (approving SR-NYSE-2016-72) 
and Securities Exchange Act Release No. 81079 (July 5, 2017), 82 FR 
32022 (July 11, 2017) (approving SR-NYSE-2017-11).
---------------------------------------------------------------------------

    The proposal is also designed to protect investors and the public 
interest because, prior to a business combination, an Acquisition 
Company would need to maintain average aggregate market value of listed 
securities of at least $50 million and average market value of publicly 
held shares of at least $40 million, in each case over 30 consecutive 
trading days. Nasdaq would issue a Staff Delisting Determination under 
Rule 5810 to delist the securities of Acquisition Companies that fall 
below such requirements immediately and the Acquisition Companies could 
not use the time period to cure deficiencies afforded to other 
operating companies. In addition, the proposal is designed to protect 
investors and the public interest because securities of Acquisition 
Companies will be immediately suspended from trading, notwithstanding a 
timely request for a hearing, in connection with a Staff Delisting 
Determination under Rule 5810 based on the proposed market value of 
listed securities and market value of publicly held shares 
requirements. In these cases, the company's securities will be 
immediately suspended and will remain suspended unless the panel 
decision, if any, issued after the hearing determines to reinstate the 
securities.
    Nasdaq also believes that the proposed amendments to its rules to 
adopt an alternative set of listing requirements containing lower 
distribution requirements for Acquisition Companies are consistent with 
the protection of investors because, in Nasdaq's view, Acquisition 
Company shares typically have a trading price close to their 
liquidation value. The Exchange's distribution standards are important 
because the existence of a significant number of holders can be an 
indicia of a liquid trading market, which supports an appropriate level 
of price discovery. Because Acquisition Company shares typically trade 
close to their liquidation value, in Nasdaq's view, price discovery is 
less important than it is with operating companies and therefore there 
is a reduced reliance on distribution requirements to assure 
appropriate price discovery. Nasdaq also believes that the proposed 
distribution requirements for Acquisition Companies are consistent with 
the protection of investors because the proposed alternative listing 
requirements for Acquisition Companies under Rule 5406 are generally 
equal to or higher than the requirements otherwise applicable to 
Acquisition Companies listing on the Nasdaq Capital Market.\27\ In 
addition, a number of Acquisition Companies have listed on the NYSE 
subject to identical distribution requirements to those proposed by the 
Exchange and, in Nasdaq's view, there is no evidence that they have 
proven unfit for exchange trading. It is also important to note that 
any Acquisition Company that remains listed on the Nasdaq Global Market 
after completing a business combination will be required to meet the 
initial listing requirement of 400 round lot holders at the time of 
consummation of the transaction.
---------------------------------------------------------------------------

    \27\ See footnote 5 above.
---------------------------------------------------------------------------

    Nasdaq believes that the proposed amendments to require that an 
Acquisition Company, which qualified for listing under the proposed new 
rule, that failed to meet the requirements for initial listing 
immediately following a business combination may not stay the 
suspension of the securities from trading by a timely request for a 
hearing (following the issuance of a Staff Delisting Determination 
under Rule 5810 to delist the securities) is designed to protect 
investors and the public interest because it will help assure that the 
combined company that failed to meet the initial listing requirements 
will not trade on Nasdaq.
    While the proposed alternative set of listing requirements for 
Acquisition Companies is different from the requirements applicable to 
operating companies and contains distribution

[[Page 67516]]

requirements for the listing of Acquisition Companies that would be 
lower than those for other applicants seeking to list on the Nasdaq 
Global Market, Nasdaq does not believe that this difference is unfairly 
discriminatory because market value-based listing standards are largely 
adopted to ensure adequate trading liquidity and, consequently, 
efficient market pricing of a company's securities. As an investment in 
an Acquisition Company prior to its business combination represents a 
right to a pro rata share of the Acquisition Company's assets held in 
trust, Acquisition Company shares typically have a trading price close 
to their liquidation value and, in Nasdaq's view, the liquidity and 
market efficiency concerns relevant to listed operating companies do 
not arise to the same degree. As such, the Exchange does not believe it 
is unfairly discriminatory to apply different distribution requirements 
to Acquisition Companies than to other listing applicants.
    Nasdaq also notes that Acquisition Companies listing under the 
proposed rule will be subject to the existing requirements in Listing 
Rule IM-5101-2 which requires that until the Company completes a 
business combination within 36 months of the effectiveness of its IPO 
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 at the time of the 
agreement to enter into the initial combination) the Acquisition 
Company must notify Nasdaq on the appropriate form about each proposed 
business combination. Following each business combination, the combined 
Company must meet the requirements for initial listing. If the Company 
does not meet the requirements for initial listing immediately 
following a business combination or does not comply with one of the 
requirements in Listing Rule IM-5101-2, Nasdaq will delist the 
Company's securities.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change is 
designed to enable Nasdaq to better compete with the NYSE, given the 
Commission's recent guidance regarding accounting considerations for 
Acquisition Companies, as described above, by adopting an alternative 
set of listing requirements for Acquisition Companies that a greater 
number of these companies will be able to meet at the time of their 
IPOs. As such, it is intended to promote competition for the listing of 
Acquisition Companies.
    Nasdaq also does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act because the proposed rule change 
will be available to all Acquisition Companies listing on Nasdaq and 
all such companies will be able to choose which standards to list 
under.

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

    No written comments were either solicited or received.

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

    Because the foregoing 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 for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \28\ and Rule 19b-
4(f)(6) thereunder.\29\
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78s(b)(3)(A).
    \29\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written 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. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \30\ normally does not become operative for 30 days after the date 
of its filing. However, pursuant to Rule 19b-4(f)(6)(iii),\31\ the 
Commission may 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 so 
that the Exchange can allow Acquisition Companies meeting the proposed 
requirements to immediately list on the Nasdaq Global Market. The 
Exchange states that such waiver would be consistent with the 
protection of investors and the public interest because Acquisition 
Companies are currently allowed to list on another national securities 
exchange subject to initial and continued listing requirements that are 
nearly identical to those included in this proposal.
---------------------------------------------------------------------------

    \30\ 17 CFR 240.19b-4(f)(6).
    \31\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Commission believes that waiver of the 30-day operative delay 
is consistent with the protection of investors and the public interest 
because the proposed rule change is substantially similar to the rules 
of another national securities exchange that were previously approved 
by the Commission.\32\ Therefore, the Commission hereby waives the 
operative delay and designates the proposed rule change operative upon 
filing.\33\
---------------------------------------------------------------------------

    \32\ See supra notes 11 and 26, and accompanying text.
    \33\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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 Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2021-092 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2021-092. 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

[[Page 67517]]

post all comments on the Commission's internet website (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent 
amendments, all written statements with respect to the proposed rule 
change that are filed with the Commission, and all written 
communications relating to the proposed rule change between the 
Commission and any person, other than those that may be withheld from 
the public in accordance with the provisions of 5 U.S.C. 552, will be 
available for website viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE, Washington, DC 20549 on official 
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
the filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change. Persons submitting comments are cautioned that we do 
not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NASDAQ-2021-092, and should be submitted on or before December 17, 
2021.
---------------------------------------------------------------------------

    \34\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\34\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-25750 Filed 11-24-21; 8:45 am]
BILLING CODE 8011-01-P