81 FR 69093 - Self-Regulatory Organizations; Stock Clearing Corporation of Philadelphia; Notice of Filing of Proposed Rule Change To Amend the By-Laws of Nasdaq, Inc. To Implement Proxy Access
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 193 (October 5, 2016)
Federal Register Volume 81, Issue 193 (October 5, 2016)
| Page Range | 69093-69100 | |
| FR Document | 2016-24006 |
[Federal Register Volume 81, Number 193 (Wednesday, October 5, 2016)] [Notices] [Pages 69093-69100] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-24006] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78984; File No. SR-SCCP-2016-01] Self-Regulatory Organizations; Stock Clearing Corporation of Philadelphia; Notice of Filing of Proposed Rule Change To Amend the By- Laws of Nasdaq, Inc. To Implement Proxy Access September 29, 2016. 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 September 15, 2016, Stock Clearing Corporation of Philadelphia (``SCCP'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the clearing agency. 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 SCCP is filing this proposed rule change with respect to amendments of the By-Laws (the ``By-Laws'') of its parent corporation, Nasdaq, Inc. (``Nasdaq'' or the ``Company''), to implement proxy access. The proposed amendments will be implemented on a date designated by the Company following approval by the Commission. The text of the proposed rule change is available on SCCP's Web site at http://nasdaqphlx.cchwallstreet.com/nasdaqomxphlx/sccp/, at the principal office of SCCP, 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, SCCP 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. SCCP 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 Background At Nasdaq's 2016 annual meeting held on May 5, 2016, Nasdaq's stockholders considered a stockholder proposal submitted under Rule 14a-8 under the Act.\3\ The proposal, which passed with 73.52% of the votes cast, requested that Nasdaq's Board of Directors (the ``Board'') take steps to implement a ``proxy access'' by-law. Proxy access by-laws allow a stockholder, or group of stockholders, who comply with certain requirements, to nominate candidates for service on a board and have those candidates included in a company's proxy materials. Such provisions allow stockholders to nominate candidates without undertaking the expense of a proxy solicitation. --------------------------------------------------------------------------- \3\ See 17 CFR 240.14a-8, which establishes procedures pursuant to which stockholders of a public company may have their proposals placed alongside management's proposals in the company's proxy materials for presentation to a vote at a meeting of stockholders. --------------------------------------------------------------------------- Following the 2016 annual meeting, the Nominating & Governance Committee (the ``Committee'') of the Board and the Board reviewed the voting results on the stockholder proposal and discussed proxy access generally. The Committee ultimately recommended to the Board, and the Board approved, certain changes to Nasdaq's By-Laws to implement proxy access. Nasdaq now proposes to make these changes by adopting new Section 3.6 of the By-Laws and making certain conforming changes to current Sections 3.1, 3.3 and 3.5 of the By-Laws, all of which are described further below. In developing its proposal, Nasdaq has generally tried to balance the relative weight of arguments for and against proxy access provisions. On the one hand, Nasdaq recognizes the significance of this issue to some investors, who see proxy access as an important accountability mechanism that allows them to participate in board elections through the nomination of stockholder candidates that are [[Page 69094]] presented in a company's proxy statement. On the other hand, Nasdaq's proposed proxy access provision includes certain procedural requirements that ensure, among other things, that the Company and its stockholders will have full and accurate information about nominating stockholders and their nominees and that such stockholders and nominees will comply with applicable laws, regulations and other requirements. Proposed Section 3.6(a) of the By-Laws To respond to feedback from its stockholders, Nasdaq proposes to amend its By-Laws to, as set forth in the first sentence of proposed Section 3.6(a), require the Company to include in its proxy statement, its form proxy and any ballot distributed at the stockholder meeting, the name of, and certain Required Information \4\ about, any person nominated for election (the ``Stockholder Nominee'') to the Board by a stockholder or group of stockholders (the ``Eligible Stockholder'') \5\ that satisfies the requirements set forth in the proxy access provision of Nasdaq's By-Laws.\6\ To utilize this provision, the Eligible Stockholder must expressly elect at the time of providing a required notice to the Company of the proxy access nomination (the ``Notice of Proxy Access Nomination'') to have its nominee included in the Company's proxy materials. Stockholders will be eligible to submit proxy access nominations only at annual meetings of stockholders when the Board solicits proxies with respect to the election of directors. --------------------------------------------------------------------------- \4\ The Required Information is the information provided to Nasdaq's Corporate Secretary about the Stockholder Nominee and the Eligible Stockholder that is required to be disclosed in the Company's proxy statement by the regulations promulgated under the Act, and if the Eligible Stockholder so elects, a written statement, not to exceed 500 words, in support of the Stockholder Nominee(s)' candidacy (the ``Statement''). \5\ As used throughout Nasdaq's By-Laws, the term ``Eligible Stockholder'' includes each member of a stockholder group that submits a proxy access nomination to the extent the context requires. \6\ When the Company includes proxy access nominees in the proxy materials, such individuals will be included in addition to any persons nominated for election to the Board or any committee thereof. --------------------------------------------------------------------------- The next two sentences of Section 3.6(a) provide some additional clarification on the term ``Eligible Stockholder.'' First, in calculating the number of stockholders in a group seeking to qualify as an Eligible Stockholder, two or more of the following types of funds shall be counted as one stockholder: (i) Funds under common management and investment control, (ii) funds under common management and funded primarily by the same employer, or (iii) funds that are a ``group of investment companies'' as such term is defined in Section 12(d)(1)(G)(ii) of the Investment Company Act of 1940, as amended.\7\ Nasdaq views this as a stockholder-friendly provision that will make it easier for such funds to participate in a proxy access nomination since they will not have to comply with the procedural requirements in the proxy access provision multiple times. Second, in the event that the Eligible Stockholder consists of a group of stockholders, any and all requirements and obligations for an individual Eligible Stockholder shall apply to each member of the group, except that the Required Ownership Percentage (discussed further below) shall apply to the ownership of the group in the aggregate. Generally, the applicable requirements and obligations relate to information that each member of the nominating group must provide to Nasdaq about itself, as discussed further below. Nasdaq believes it is reasonable to require each member of the nominating group to provide such information so that both the Company and its stockholders are fully informed about the entire group making the proxy access nomination. --------------------------------------------------------------------------- \7\ See 15 U.S.C. 80a-12(d)(1)(G)(ii), which defines ``group of investment companies'' as any two or more registered investment companies that hold themselves out to investors as related companies for purposes of investment and investor services. --------------------------------------------------------------------------- The final sentence of proposed Section 3.6(a) allows Nasdaq to omit from its proxy materials any information or Statement (or portion thereof) that it, in good faith, believes is untrue in any material respect (or omits to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading) or would violate any applicable law or regulation. This provision allows Nasdaq to comply with Rule 14a-9 under the Act \8\ and to protect its stockholders from information that is materially untrue or that violates any law or regulation. The final sentence of proposed Section 3.6(a) also explicitly allows Nasdaq to solicit against, and include in the proxy statement its own statement relating to, any Stockholder Nominee. This provision merely clarifies that just because Nasdaq must include a proxy access nominee in its proxy materials if the proxy access provisions are satisfied, Nasdaq does not necessarily have to support that nominee. --------------------------------------------------------------------------- \8\ See 17 CFR 240.14a-9, which generally prohibits proxy solicitations that contain any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading. --------------------------------------------------------------------------- Proposed Section 3.6(b) of the By-Laws Proposed Section 3.6(b) of the By-Laws establishes the deadline for a timely Notice of Proxy Access Nomination. Specifically, such a notice must be addressed to, and received by, Nasdaq's Corporate Secretary no earlier than one hundred fifty (150) days and no later than one hundred twenty (120) days before the anniversary of the date that Nasdaq issued its proxy statement for the previous year's annual meeting of stockholders. The Company believes this notice period will provide stockholders an adequate window to submit nominees via proxy access, while also providing the Company adequate time to diligence [sic] a proxy access nominee before including them in the proxy statement for the next annual meeting of stockholders. Proposed Section 3.6(c) of the By-Laws Proposed Section 3.6(c) specifies that the maximum number of Stockholder Nominees nominated by all Eligible Stockholders that will be included in Nasdaq's proxy materials with respect to an annual meeting of stockholders shall not exceed the greater of two and 25% of the total number of directors in office (rounded down to the nearest whole number) as of the last day on which a Notice of Proxy Access Nomination may be delivered pursuant to and in accordance with the proxy access provision of the By-Laws (the ``Final Proxy Access Nomination Date''). In the event that one or more vacancies for any reason occurs after the Final Proxy Access Nomination Date but before the date of the annual meeting and the Board resolves to reduce the size of the Board in connection therewith, the maximum number of Stockholder Nominees included in Nasdaq's proxy materials shall be calculated based on the number of directors in office as so reduced. Any individual nominated by an Eligible Stockholder for inclusion in the proxy materials pursuant to the proxy access provision of the By- Laws whom the Board decides to nominate as a nominee of the Board, and any individual nominated by an Eligible Stockholder for inclusion in the proxy materials pursuant to the proxy access provision but whose nomination is subsequently withdrawn, shall be counted as one of the Stockholder Nominees for purposes of determining when the maximum number of Stockholder Nominees has been reached. [[Page 69095]] Any Eligible Stockholder submitting more than one Stockholder Nominee for inclusion in the proxy materials shall rank such Stockholder Nominees based on the order that the Eligible Stockholder desires such Stockholder Nominees to be selected for inclusion in the proxy statement in the event that the total number of Stockholder Nominees submitted by Eligible Stockholders pursuant to the proxy access provision exceeds the maximum number of nominees allowed. In the event that the number of Stockholder Nominees submitted by Eligible Stockholders exceeds the maximum number of nominees allowed, the highest ranking Stockholder Nominee who meets the requirements of the proxy access provision of the By-Laws from each Eligible Stockholder will be selected for inclusion in the proxy materials until the maximum number is reached, going in order of the amount (largest to smallest) of shares of Nasdaq's outstanding common stock each Eligible Stockholder disclosed as owned in its respective Notice of Proxy Access Nomination submitted to Nasdaq. If the maximum number is not reached after the highest ranking Stockholder Nominee who meets the requirements of the proxy access provision of the By-Laws from each Eligible Stockholder has been selected, this process will continue as many times as necessary, following the same order each time, until the maximum number is reached. Following such determination, if any Stockholder Nominee who satisfies the eligibility requirements thereafter is nominated by the Board, or is not included in the proxy materials or is not submitted for election as a director, in either case, as a result of the Eligible Stockholder becoming ineligible or withdrawing its nomination, the Stockholder Nominee becoming unwilling or unable to serve on the Board or the Eligible Stockholder or the Stockholder Nominee failing to comply with the proxy access provision of the By-Laws, no other nominee or nominees shall be included in the proxy materials or otherwise submitted for director election in substitution thereof. The Company believes it is reasonable to limit the Board seats available to proxy access nominees, to establish procedures for selecting candidates if the nominee limit is exceeded and to exclude further proxy access nominees in the cases set forth above. The limitation on Board seats available to proxy access nominees ensures that proxy access cannot be used to take over the entire Board, which is not the stated purpose of proxy access campaigns. The procedures for selecting candidates if the nominee limit is exceeded establish clear and rational guidelines for an orderly nomination process to avoid the Company having to make arbitrary judgments among candidates. Finally, the exclusion of further proxy access nominees in certain cases will avoid further time and expense to the Company when the proxy access nominee has been nominated by the Board, in which case the goal of the proxy access nomination has been achieved, or in certain cases when the Eligible Stockholder or Stockholder Nominee is at fault. Proposed Section 3.6(d) of the By-Laws Proposed Section 3.6(d) clarifies, for the avoidance of doubt, how ``ownership'' will be defined for purposes of meeting the Required Ownership Percentage (discussed further below). Specifically, an Eligible Stockholder shall be deemed to ``own'' only those outstanding shares of Nasdaq's common stock as to which the stockholder possesses both: (i) The full voting and investment rights pertaining to the shares; and (ii) the full economic interest in (including the opportunity for profit from and risk of loss on) such shares; provided that the number of shares calculated in accordance with clauses (i) and (ii) shall not include any shares:Sold by such stockholder or any of its affiliates in any transaction that has not been settled or closed, including any short sale; borrowed by such stockholder or any of its affiliates for any purposes or purchased by such stockholder or any of its affiliates pursuant to an agreement to resell; or subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such stockholder or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of shares of Nasdaq's outstanding common stock, in any such case which instrument or agreement has, or is intended to have, or if exercised by either party would have, the purpose or effect of: [cir] Reducing in any manner, to any extent or at any time in the future, such stockholder's or its affiliates' full right to vote or direct the voting of any such shares; and/or [cir] hedging, offsetting or altering to any degree any gain or loss realized or realizable from maintaining the full economic ownership of such shares by such stockholder or its affiliates. Further, a stockholder shall ``own'' shares held in the name of a nominee or other intermediary so long as the stockholder retains the right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest in the shares. A stockholder's ownership of shares shall be deemed to continue during any period in which the stockholder has delegated any voting power by means of a proxy, power of attorney or other instrument or arrangement which is revocable at any time by the stockholder. A stockholder's ownership of shares shall be deemed to continue during any period in which the stockholder has loaned such shares provided that the stockholder has the power to recall such loaned shares on three (3) business days' notice, has recalled such loaned shares as of the date of the Notice of Proxy Access Nomination and holds such shares through the date of the annual meeting. The terms ``owned,'' ``owning'' and other variations of the word ``own'' shall have correlative meanings. Whether outstanding shares of Nasdaq's common stock are ``owned'' for these purposes shall be determined by the Board or any committee thereof, in each case, in its sole discretion. For purposes of the proxy access provision of the By-Laws, the term ``affiliate'' or ``affiliates'' shall have the meaning ascribed thereto under the rules and regulations of the Act.\9\ An Eligible Stockholder shall include in its Notice of Proxy Access Nomination the number of shares it is deemed to own for the purposes of the proxy access provision of the By-Laws. --------------------------------------------------------------------------- \9\ Pursuant to Rule 12b-2 under the Act, ``[a]n `affiliate' of, or a person `affiliated' with, a specified person, is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.'' 17 CFR 240.12b-2. Further, ``[t]he term `control' (including the terms `controlling,' `controlled by' and `under common control with') means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.'' 17 CFR 240.12b-2. --------------------------------------------------------------------------- Proposed Section 3.6(e) of the By-Laws The first paragraph of proposed Section 3.6(e) establishes certain requirements for an Eligible Stockholder to make a proxy access nomination. Specifically, an Eligible Stockholder must have owned (defined as discussed above) 3% or more (the ``Required Ownership Percentage'') of Nasdaq's outstanding common stock (the ``Required Shares'') continuously for 3 years (the ``Minimum Holding Period'') as of both the date the Notice of Proxy Access Nomination is received by Nasdaq's Corporate Secretary and the [[Page 69096]] record date for determining the stockholders entitled to vote at the annual meeting and must continue to own the Required Shares through the meeting date. Proposed Section 3.6(e) also sets forth the information that an Eligible Stockholder must provide to Nasdaq's Corporate Secretary in writing within the deadline discussed above in order to make a proxy access nomination. This information includes: One or more written statements from the record holder of the shares (and from each intermediary through which the shares are or have been held during the Minimum Holding Period) verifying that, as of a date within seven calendar days prior to the date the Notice of Proxy Access Nomination is delivered to, or mailed to and received by, Nasdaq's Corporate Secretary, the Eligible Stockholder owns, and has owned continuously for the Minimum Holding Period, the Required Shares, and the Eligible Stockholder's agreement to provide, within five (5) business days after the record date for the annual meeting, written statements from the record holder and intermediaries verifying the Eligible Stockholder's continuous ownership of the Required Shares through the record date; \10\ --------------------------------------------------------------------------- \10\ See proposed Section 3.6(e)(i) of the By-Laws. --------------------------------------------------------------------------- a copy of the Schedule 14N that has been filed with the SEC as required by Rule 14a-18 under the Act; \11\ --------------------------------------------------------------------------- \11\ See proposed Section 3.6(e)(ii) of the By-Laws; see also 17 CFR 240.14n-101 and 17 CFR 240.14a-18, which generally require a Nominating Stockholder to provide notice to the Company of its intent to submit a proxy access nomination on a Schedule 14N and file that notice, including the required disclosure, with the Commission on the date first transmitted to the Company. --------------------------------------------------------------------------- the information, representations and agreements with respect to the Eligible Stockholder that are the same as those that would be required to be set forth in a stockholder's notice of nomination with respect to a ``Proposing Person'' pursuant to Section 3.1(b)(i) and Section 3.1(b)(iii) of the By-Laws; \12\ --------------------------------------------------------------------------- \12\ See proposed Section 3.6(e)(iii) of the By-Laws; see also Sections 3.1(b)(i) and 3.1(b)(iii) of the By-Laws, which constitute part of Nasdaq's ``advance notice'' provision under which a ``Proposing Person'' may, among other things, nominate a person for election to the Board. --------------------------------------------------------------------------- the consent of each Stockholder Nominee to being named in the proxy statement as a nominee and to serving as a director if elected; \13\ --------------------------------------------------------------------------- \13\ See proposed Section 3.6(e)(iv) of the By-Laws. --------------------------------------------------------------------------- a representation that the Eligible Stockholder: [cir] Acquired the Required Shares in the ordinary course of business and not with the intent to change or influence control of Nasdaq, and does not presently have such intent; \14\ --------------------------------------------------------------------------- \14\ See proposed Section 3.6(e)(v)(A) of the By-Laws. --------------------------------------------------------------------------- [cir] presently intends to maintain qualifying ownership of the Required Shares through the date of the annual meeting; \15\ --------------------------------------------------------------------------- \15\ See proposed Section 3.6(e)(v)(B) of the By-Laws. --------------------------------------------------------------------------- [cir] has not nominated and will not nominate for election any individual as a director at the annual meeting, other than its Stockholder Nominee(s); \16\ --------------------------------------------------------------------------- \16\ See proposed Section 3.6(e)(v)(C) of the By-Laws. --------------------------------------------------------------------------- [cir] has not engaged and will not engage in, and has not and will not be a participant in another person's, ``solicitation'' within the meaning of Rule 14a-1(l) under the Act in support of the election of any individual as a director at the annual meeting, other than its Stockholder Nominee(s) or a nominee of the Board; \17\ --------------------------------------------------------------------------- \17\ See proposed Section 3.6(e)(v)(D) of the By-Laws; see also 17 CFR 240.14a-1(l), which defines the related terms ``solicit'' and ``solicitation.'' --------------------------------------------------------------------------- [cir] agrees to comply with all applicable laws and regulations with respect to any solicitation in connection with the meeting or applicable to the filing and use, if any, of soliciting material; \18\ --------------------------------------------------------------------------- \18\ See proposed Section 3.6(e)(v)(E) of the By-Laws. --------------------------------------------------------------------------- [cir] will provide facts, statements and other information in all communications with Nasdaq and its stockholders that are or will be true and correct in all material respects and do not and will not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; \19\ and --------------------------------------------------------------------------- \19\ See proposed Section 3.6(e)(v)(F) of the By-Laws. --------------------------------------------------------------------------- [cir] as to any two or more funds whose shares are aggregated to count as one stockholder for the purpose of constituting an Eligible Stockholder, within five business days after the date of the Notice of Proxy Access Nomination, will provide to Nasdaq documentation reasonably satisfactory to Nasdaq that demonstrates that the funds satisfy the requirements in the By-Laws, which were discussed above, for the funds to qualify as one Eligible Stockholder; \20\ --------------------------------------------------------------------------- \20\ See proposed Section 3.6(e)(v)(G) of the By-Laws. --------------------------------------------------------------------------- a representation as to the Eligible Stockholder's intentions with respect to maintaining qualifying ownership of the Required Shares for at least one year following the annual meeting; \21\ --------------------------------------------------------------------------- \21\ See proposed Section 3.6(e)(vi) of the By-Laws. --------------------------------------------------------------------------- an undertaking that the Eligible Stockholder agrees to: [cir] Assume all liability stemming from any legal or regulatory violation arising out of the Eligible Stockholder's communications with Nasdaq's stockholders or out of the information that the Eligible Stockholder provided to Nasdaq; \22\ --------------------------------------------------------------------------- \22\ See proposed Section 3.6(e)(vii)(A) of the By-Laws. --------------------------------------------------------------------------- [cir] indemnify and hold harmless Nasdaq and each of its directors, officers and employees individually against any liability, loss or damages in connection with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against Nasdaq or any of its directors, officers or employees arising out of any nomination submitted by the Eligible Stockholder pursuant to the proxy access provision; \23\ and --------------------------------------------------------------------------- \23\ See proposed Section 3.6(e)(vii)(B) of the By-Laws. --------------------------------------------------------------------------- [cir] file with the SEC any solicitation or other communication with Nasdaq's stockholders relating to the meeting at which the Stockholder Nominee will be nominated, regardless of whether any such filing is required under Regulation 14A of the Act or whether any exemption from filing is available thereunder; \24\ and --------------------------------------------------------------------------- \24\ See proposed Section 3.6(e)(vii)(C) of the By-Laws; see also 17 CFR 240.14a-1-14b-2, which governs solicitations of proxies. --------------------------------------------------------------------------- in the case of a nomination by a group of stockholders that together is an Eligible Stockholder, the designation by all group members of one group member that is authorized to act on behalf of all such members with respect to the nomination and matters related thereto, including withdrawal of the nomination.\25\ --------------------------------------------------------------------------- \25\ See proposed Section 3.6(e)(viii) of the By-Laws. --------------------------------------------------------------------------- In proposing the Required Ownership Percentage and the Minimum Holding Period, Nasdaq seeks to ensure that the Eligible Stockholder has had a sufficient stake in the Company for a sufficient amount of time and is not pursuing a short-term agenda. In proposing the informational requirements for the Eligible Stockholder, Nasdaq's goal is to gather sufficient information about the Eligible Stockholder for both itself and its stockholders. Among other things, this information will ensure that Nasdaq is able to comply with its disclosure and other requirements under applicable law and that Nasdaq, its Board and its stockholders are able to assess the proxy access nomination adequately. Proposed Section 3.6(f) of the By-Laws Proposed Section 3.6(f) establishes the information the Stockholder Nominee must deliver to Nasdaq's Corporate [[Page 69097]] Secretary within the time period specified for delivering the Notice of Proxy Access Nomination. This information includes: The information required with respect to persons whom a stockholder proposes to nominate for election or reelection as a director by Section 3.1(b)(i) of the By-Laws \26\ including, but not limited to, the signed questionnaire, representation and agreement required by Section 3.1(b)(i)(D) of the By-Laws; \27\ and --------------------------------------------------------------------------- \26\ Section 3.1(b)(i) of the By-Laws describes the information that a proposing stockholder must provide about an individual the stockholder proposes to nominate for election or reelection as a director pursuant to the ``advance notice'' provision of the By- Laws. \27\ Section 3.1(b)(i)(D) of the By-Laws requires a completed and signed questionnaire, representation and agreement, each containing certain information, from each individual proposed to be nominated for election or reelection as a director pursuant to the ``advance notice'' provision of the By-Laws. --------------------------------------------------------------------------- a written representation and agreement that such person: [cir] Will act as a representative of all of Nasdaq's stockholders while serving as a director; and [cir] will provide facts, statements and other information in all communications with Nasdaq and its stockholders that are or will be true and correct in all material respects (and shall not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading). In addition, at the request of Nasdaq, the Stockholder Nominee(s) must submit all completed and signed questionnaires required of Nasdaq's directors and officers. Nasdaq may request such additional information as necessary to (y) permit the Board to determine if each Stockholder Nominee satisfies the requirements of the proxy access provision of the By-Laws or if each Stockholder Nominee is independent under the listing standards of The NASDAQ Stock Market, any applicable rules of the SEC and any publicly disclosed standards used by the Board in determining and disclosing the independence of Nasdaq's directors \28\ and/or (z) permit Nasdaq's Corporate Secretary to determine the classification of such nominee as an Industry, Non-Industry, Issuer or Public Director, if applicable, in order to make the certification referenced in Section 4.13(h)(iii) of the By-Laws.\29\ --------------------------------------------------------------------------- \28\ Currently, the independence of Nasdaq's directors is determined pursuant to the definition of ``Independent Director'' in Listing Rule 5605(a)(2) of The NASDAQ Stock Market, under which certain categories of individuals cannot be deemed independent and with respect to other individuals, the Board must make an affirmative determination that such individual has no relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Other independence standards under the SEC rules and the Listing Rules of The NASDAQ Stock Market apply to members of certain of the Board's committees. As detailed below, the Commission notes that, while additional, more stringent independence standards may be adopted by the Board in the future, as of the date of this Notice no such standards have been adopted by the Board. \29\ Section 4.13(h)(iii) of the By-Laws requires Nasdaq's Corporate Secretary to collect from each nominee for director such information as is reasonably necessary to serve as the basis for a determination of the nominee's classification as an Industry, Non- Industry, Issuer, or Public Director, if applicable, and to certify to the Committee each nominee's classification, if applicable. Detailed definitions of the terms ``Industry Director,'' ``Non- Industry Director,'' ``Issuer Director'' and ``Public Director'' are included in Article I of the By-Laws. --------------------------------------------------------------------------- Like the informational requirements for an Eligible Stockholder, which are set forth above, the informational requirements for the Stockholder Nominee ensure that both Nasdaq and its stockholders will have sufficient information about the Stockholder Nominee. Among other things, this information will ensure that Nasdaq is able to comply with its disclosure and other requirements under applicable law and that Nasdaq, its Board and its stockholders are able to assess the proxy access nomination adequately. Proposed Section 3.6(g) of the By-Laws Pursuant to proposed Section 3.6(g), each Eligible Stockholder or Stockholder Nominee must promptly notify Nasdaq's Corporate Secretary of any information or communications provided by the Eligible Stockholder or Stockholder Nominee to Nasdaq or its stockholders that ceases to be true and correct in all material respects or omits a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading and of the information that is required to correct any such defect. This provision further states that providing any such notification shall not be deemed to cure any defect or, with respect to any defect that Nasdaq determines is material, limit Nasdaq's rights to omit a Stockholder Nominee from its proxy materials. This provision is intended to protect Nasdaq's stockholders by requiring an Eligible Stockholder or Stockholder Nominee to give Nasdaq notice of information previously provided that is materially untrue. Nasdaq may then decide what action to take with respect to such defect, which may include, with respect to a material defect, omitting the relevant Stockholder Nominee from its proxy materials. Proposed Section 3.6(h) of the By-Laws Proposed Section 3.6(h) provides that Nasdaq shall not be required to include a Stockholder Nominee in its proxy materials for any meeting of stockholders under certain circumstances. In these situations, the proxy access nomination shall be disregarded and no vote on such Stockholder Nominee will occur, even if Nasdaq has received proxies in respect of the vote. These circumstances occur when the Stockholder Nominee: Has been nominated by an Eligible Stockholder who has engaged in or is currently engaged in, or has been or is a participant in another person's, ``solicitation'' within the meaning of Rule 14a- 1(l) under the Act in support of the election of any individual as a director at the annual meeting other than its Stockholder Nominee(s) or a nominee of the Board; \30\ --------------------------------------------------------------------------- \30\ See proposed Section 3.6(h)(i) of the By-Laws; see also 17 CFR 240.14a-1(l), which defines the related terms ``solicit'' and ``solicitation.'' --------------------------------------------------------------------------- is not independent under the listing standards of The NASDAQ Stock Market, any applicable rules of the SEC and any publicly disclosed standards used by the Board in determining and disclosing independence of Nasdaq's directors, in each case as determined by the Board in its sole discretion; \31\ --------------------------------------------------------------------------- \31\ See proposed Section 3.6(h)(ii) of the By-Laws; see also footnote 28, supra. The Commission notes that, while additional, more stringent independence standards may be adopted by the Board in the future, as of the date of this Notice no such standards have been adopted by the Board. The Commission further notes that, according to Nasdaq, should the Board decide to adopt additional, more stringent standards than those required under Nasdaq listing standards and any requirements under Commission rules, all director nominees would be evaluated against these standards--not just those shareholder candidates nominated under the provisions of proposed Section 3.6. --------------------------------------------------------------------------- would, if elected as a member of the Board, cause Nasdaq to be in violation of the By-Laws (including but not limited to the compositional requirements of the Board set forth in Section 4.3 of the By-Laws), its Amended and Restated Certificate of Incorporation, the rules and listing standards of The NASDAQ Stock Market, or any applicable state or federal law, rule or regulation; \32\ --------------------------------------------------------------------------- \32\ See proposed Section 3.6(h)(iii) of the By-Laws; see also Section 4.3 of the By-Laws, which provides that the number of Non- Industry Directors on the Board must equal or exceed the number of Industry Directors. In addition, the Board must include at least two Public Directors and may include at least one, but no more than two, Issuer Directors. Finally, the Board shall include no more than one Staff Director, unless the Board consists of ten or more directors, in which case, the Board shall include no more than two Staff Directors. Detailed definitions of the terms ``Non-Industry Director,'' ``Industry Director,'' ``Public Director,'' ``Issuer Director'' and ``Staff Director'' are included in Article I of the By-Laws. --------------------------------------------------------------------------- [[Page 69098]] is or has been, within the past three (3) years, an officer or director of a competitor, as defined for purposes of Section 8 of the Clayton Antitrust Act of 1914; \33\ --------------------------------------------------------------------------- \33\ See proposed Section 3.6(h)(iv) of the By-Laws; see also 15 U.S.C. 19(a)(1), which generally provides that ``[n]o person shall, at the same time, serve as a director or officer in any two corporations'' that are ``competitors'' such that ``the elimination of competition by agreement between them would constitute a violation of any of the antitrust laws.'' --------------------------------------------------------------------------- is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses) or has been convicted in such a criminal proceeding within the past ten (10) years; \34\ --------------------------------------------------------------------------- \34\ See proposed Section 3.6(h)(v) of the By-Laws. --------------------------------------------------------------------------- is subject to any order of the type specified in Rule 506(d) of Regulation D promulgated under the Securities Act of 1933, as amended; \35\ --------------------------------------------------------------------------- \35\ See proposed Section 3.6(h)(vi) of the By-Laws; see also 17 CFR 230.506(d), which generally disqualifies offerings involving certain felons and other bad actors from relying on the ``safe harbor'' in Rule 506 of Regulation D from registration under the Securities Act of 1933, as amended. --------------------------------------------------------------------------- is subject to ``statutory disqualification'' under Section 3(a)(39) of the Act; \36\ --------------------------------------------------------------------------- \36\ See proposed Section 3.6(h)(vii) of the By-Laws; see also 15 U.S.C. 78c(a)(39), which disqualifies certain categories of individuals who generally have engaged in misconduct from membership or participation in, or association with a member of, a self- regulatory organization. --------------------------------------------------------------------------- has, or the applicable Eligible Stockholder has, provided information to Nasdaq in respect of the proxy access nomination that was untrue in any material respect or omitted to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, as determined by the Board or any committee thereof, in each case, in its sole discretion; \37\ or --------------------------------------------------------------------------- \37\ See proposed Section 3.6(h)(viii) of the By-Laws. --------------------------------------------------------------------------- breaches or fails, or the applicable Eligible Stockholder breaches or fails, to comply with its obligations pursuant to the By- Laws, including, but not limited to, the proxy access provisions and any agreement, representation or undertaking required by the proxy access provisions.\38\ --------------------------------------------------------------------------- \38\ See proposed Section 3.6(h)(ix) of the By-Laws. --------------------------------------------------------------------------- Nasdaq believes these provisions will protect the Company and its stockholders by allowing it to exclude certain categories of objectionable Stockholder Nominees from the proxy statement. Proposed Section 3.6(i) of the By-Laws Under proposed Section 3.6(i), the Board or the chairman of the meeting of stockholders shall declare a proxy access nomination invalid, and such nomination shall be disregarded even if proxies in respect of such nomination have been received by the Company, if: The Stockholder Nominee(s) and/or the applicable Eligible Stockholder have breached its or their obligations under the proxy access provision of the By-Laws, as determined by the Board or the chairman of the meeting of stockholders, in each case, in its or his sole discretion; or the Eligible Stockholder (or a qualified representative thereof) does not appear at the meeting of stockholders to present the proxy access nomination. Nasdaq believes this provision protects the Company and its stockholders by providing the Board or the chairman of the stockholder meeting limited authority to disqualify a proxy access nominee when that nominee or the sponsoring stockholder(s) have breached an obligation under the proxy access provision, including the obligation to appear at the stockholder meeting to present the proxy access nomination. Proposed Section 3.6(j) of the By-Laws Proposed Section 3.6(j) states that the following Stockholder Nominees who are included in the Company's proxy materials for a particular annual meeting of stockholders will be ineligible to be a Stockholder Nominee for the next two annual meetings: A Stockholder Nominee who withdraws from or becomes ineligible or unavailable for election at the annual meeting; or a Stockholder Nominee who does not receive at least 25% of the votes cast in favor of such Stockholder Nominee's election. This provision will save the Company and its stockholders the time and expense of analyzing and addressing subsequent proxy access nominations regarding individuals who were included in the proxy materials for a particular annual meeting but ultimately did not stand for election or receive a substantial amount of votes. After the next two annual meetings, these Stockholder Nominees would again be eligible for nomination through the proxy access provisions of the By-Laws. Proposed Section 3.6(k) of the By-Laws In case there are matters involving a proxy access nomination that are open to interpretation, proposed Section 3.6(k) states that the Board (or any other person or body authorized by the Board) shall have exclusive power and authority to interpret the proxy access provisions of the By-Laws and make all determinations deemed necessary or advisable as to any person, facts or circumstances. In addition, all actions, interpretations and determinations of the Board (or any person or body authorized by the Board) with respect to the proxy access provisions shall be final, conclusive and binding on the Company, the stockholders and all other parties. While Nasdaq has attempted to implement a clear, detailed and thorough proxy access provision, there may be matters about future proxy access nominations that are open to interpretation. In these cases, Nasdaq believes it is reasonable and necessary to designate an arbiter to make final decisions on these points and that the Board is best-suited to act as that arbiter. Proposed Section 3.6(l) of the By-Laws Proposed Section 3.6(l) prohibits a stockholder from joining more than one group of stockholders to become an Eligible Stockholder for purposes of submitting a proxy access nomination for each annual meeting of stockholders. Nasdaq analogizes this provision to Article IV, Paragraph C(1) of its Amended and Restated Certificate of Incorporation, under which each holder of Nasdaq's common stock shall be entitled to one vote per share on all matters presented to the stockholders for a vote. Similar to that provision, Nasdaq believes it is reasonable for each share to count only once in submitting a proxy access nomination. Proposed Section 3.6(m) of the By-Laws For the avoidance of doubt, proposed Section 3.6(m) states that the proxy access provisions outlined in Section 3.6 of the By-Laws shall be the exclusive means for stockholders to include nominees in the Company's proxy materials. Stockholders may, of course, continue to propose nominees to the Committee and Board through other means, but the Committee and Board will have final authority to determine whether to include those nominees in the Company's proxy materials. Revisions to Other Sections of the By-Laws Nasdaq also proposes to make conforming changes to Sections 3.1(a), 3.3(a), 3.3(c) and 3.5 of the By-Laws to provide clarifications and prevent confusion. Specifically, current Section 3.1(a) enumerates the methods by which nominations of persons for election to the Board may be made at an annual [[Page 69099]] meeting of stockholders; Nasdaq proposes to add proxy access nominations to the list of methods. Current Section 3.3(a) specifies that, among other things, only such persons who are nominated in accordance with the procedures set forth in Article III of the By-Laws \39\ shall be eligible to be elected at an annual or special meeting of Nasdaq's stockholders to serve as directors; for the avoidance of doubt, Nasdaq proposes to clarify that the reference to Article III includes the proxy access provision in Section 3.6 of the By-Laws with respect to director nominations in connection with annual meetings. Current Section 3.3(c) states, among other things, that compliance with Section 3.1(a)(iii) and (b) \40\ shall be the exclusive means for a stockholder to make a director nomination; Nasdaq proposes to add proxy access as an additional means for a stockholder to make a director nomination. Finally, current Section 3.5 requires Nasdaq's director nominees to submit to Nasdaq's Corporate Secretary a questionnaire, representation and agreement within certain time periods; Nasdaq proposes to clarify that proxy access nominees must submit these materials within the time periods prescribed for delivery of a Notice of Proxy Access Nomination, as described above. --------------------------------------------------------------------------- \39\ Article III of the By-Laws relates to stockholder meetings. \40\ As part of Nasdaq's ``advance notice'' provision, Sections 3.1(a)(iii) and (b) of the By-Laws describe certain procedures that a stockholder must follow to, among other things, nominate a person for election to the Board. --------------------------------------------------------------------------- 2. Statutory Basis SCCP believes that its proposal is consistent with Section 17A(b)(3)(C) of the Act,\41\ in that it assures a fair representation of shareholders and participants in the selection of directors and administration of its affairs. While the proposal relates to the organizational documents of the Company, rather than SCCP, SCCP is indirectly owned by the Company, and therefore, the Company's stockholders have an indirect stake in SCCP. In addition, the participants in SCCP, to the extent any exist, could purchase stock in the Company in the open market, just like any other stockholder. --------------------------------------------------------------------------- \41\ 15 U.S.C. 78q-1(b)(3)(C). --------------------------------------------------------------------------- In response to feedback from its investors, Nasdaq is proposing changes to its By-Laws to implement proxy access. SCCP believes that, by permitting an Eligible Stockholder of Nasdaq that meets the stated requirements to nominate directors and have its nominees included in Nasdaq's annual meeting proxy statement, the proposed rule change strengthens the corporate governance of SCCP's ultimate parent company, which assures a fair representation of shareholders and participants in the selection of directors and administration of its affairs. In drafting its proxy access provision, Nasdaq has attempted to strike an appropriate balance between responding to investor feedback and including certain procedural and informational requirements to again assure a fair representation of shareholders and participants in the selection of directors and administration of its affairs. Specifically, the procedural requirements will achieve this objective by stating clearly and explicitly the procedures stockholders must follow in order to submit a proper proxy access nomination. The informational requirements will achieve this objective by ensuring, among other things, that the Company and its stockholders have full and accurate information about nominating stockholders and their nominees and that such stockholders and nominees comply with applicable laws, regulations and other requirements. Finally, the remaining changes are clarifying in nature, and they assure fair representation by preventing confusion with respect to the operation of the By-Law provisions. B. Self-Regulatory Organization's Statement on Burden on Competition Because the proposed rule change relates to the governance of the Company and not to the operations of SCCP, SCCP 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. 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 Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which SCCP consents, the Commission shall: (a) By order approve or disapprove such proposed rule change, or (b) institute proceedings to determine whether the proposed rule change should be 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-SCCP-2016-01 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549. All submissions should refer to File Number SR-SCCP-2016-01. 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 SCCP. 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-SCCP-2016-01 and should be submitted on or before October 26, 2016. [[Page 69100]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\42\ Robert W. Errett, Deputy Secretary. [FR Doc. 2016-24006 Filed 10-4-16; 8:45 am] BILLING CODE 8011-01-P
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particular, the Commission finds that Amendment No. 2, be, and hereby are, the purpose of and basis for the
the proposed rule changes are consistent approved. proposed rule change and discussed any
with Section 6(b)(1) of the Act, which, For the Commission, by the Division of comments it received on the proposed
among other things, requires a national Trading and Markets, pursuant to delegated rule change. The text of these statements
securities exchange to be so organized authority.18 may be examined at the places specified
and have the capacity to carry out the Robert W. Errett, in Item IV below. SCCP has prepared
purposes of the Act and to enforce Deputy Secretary. summaries, set forth in sections A, B,
compliance by its members with the [FR Doc. 2016–24016 Filed 10–4–16; 8:45 am]
and C below, of the most significant
provisions of the Act, the rule and aspects of such statements.
BILLING CODE 8011–01–P
regulations thereunder, and the rules of
A. Self-Regulatory Organization’s
the exchange.14 The proposed revisions
Statement of the Purpose of, and
to the ICE Certificate are intended to SECURITIES AND EXCHANGE Statutory Basis for, the Proposed Rule
increase ICE’s authorized shares of COMMISSION Change
Common Stock and shares of capital
stock and thus would allow ICE to [Release No. 34–78984; File No. SR–SCCP– 1. Purpose
effectuate the Stock Dividend. The 2016–01]
Background
Exchanges represent that the proposed Self-Regulatory Organizations; Stock
rule changes would not alter the At Nasdaq’s 2016 annual meeting
Clearing Corporation of Philadelphia; held on May 5, 2016, Nasdaq’s
limitations on voting and ownership set Notice of Filing of Proposed Rule
forth in Section V of the ICE Certificate, stockholders considered a stockholder
Change To Amend the By-Laws of proposal submitted under Rule 14a–8
which are designed to ‘‘minimize the Nasdaq, Inc. To Implement Proxy
potential that a person could improperly under the Act.3 The proposal, which
Access passed with 73.52% of the votes cast,
interfere with or restrict the ability of
the Commission, the Exchange, or its September 29, 2016. requested that Nasdaq’s Board of
subsidiaries to effectively carry out their Pursuant to Section 19(b)(1) of the Directors (the ‘‘Board’’) take steps to
regulatory oversight responsibilities Securities Exchange Act of 1934 implement a ‘‘proxy access’’ by-law.
under the Act.’’ 15 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 Proxy access by-laws allow a
In addition, the Commission finds notice is hereby given that on stockholder, or group of stockholders,
that the proposed rule changes are September 15, 2016, Stock Clearing who comply with certain requirements,
consistent with Section 6(b)(5) of the Corporation of Philadelphia (‘‘SCCP’’) to nominate candidates for service on a
Act,16 which requires, among other filed with the Securities and Exchange board and have those candidates
things, that the rules of an exchange be Commission (‘‘Commission’’) the included in a company’s proxy
designed to prevent fraudulent and proposed rule change as described in materials. Such provisions allow
manipulative acts and practices, to Items I, II, and III below, which Items stockholders to nominate candidates
promote just and equitable principles of have been prepared by the clearing without undertaking the expense of a
trade, to foster cooperation and agency. The Commission is publishing proxy solicitation.
coordination with persons engaged in Following the 2016 annual meeting,
this notice to solicit comments on the
regulating, clearing, settling, processing the Nominating & Governance
proposed rule change from interested
information with respect to, and Committee (the ‘‘Committee’’) of the
persons.
facilitating transactions in securities, to Board and the Board reviewed the
remove impediments to and perfect the I. Self-Regulatory Organization’s voting results on the stockholder
mechanism of a free and open market Statement of the Terms of Substance of proposal and discussed proxy access
and a national market system, and, in the Proposed Rule Change generally. The Committee ultimately
general, to protect investors and the SCCP is filing this proposed rule recommended to the Board, and the
public interest. As noted above, the change with respect to amendments of Board approved, certain changes to
proposed rule changes would revise the the By-Laws (the ‘‘By-Laws’’) of its Nasdaq’s By-Laws to implement proxy
ICE Certificate to increase ICE’s parent corporation, Nasdaq, Inc. access. Nasdaq now proposes to make
authorized share capital and thus would (‘‘Nasdaq’’ or the ‘‘Company’’), to these changes by adopting new Section
facilitate ICE’s proposed Stock implement proxy access. The proposed 3.6 of the By-Laws and making certain
Dividend. In addition, the proposed rule amendments will be implemented on a conforming changes to current Sections
changes would correct an erroneous date designated by the Company 3.1, 3.3 and 3.5 of the By-Laws, all of
reference, which may reduce potential following approval by the Commission. which are described further below.
confusion and enhance the clarity of the The text of the proposed rule change is In developing its proposal, Nasdaq
ICE Certificate. available on SCCP’s Web site at http:// has generally tried to balance the
nasdaqphlx.cchwallstreet.com/ relative weight of arguments for and
IV. Conclusion against proxy access provisions. On the
nasdaqomxphlx/sccp/, at the principal
It is therefore ordered, pursuant to office of SCCP, and at the Commission’s one hand, Nasdaq recognizes the
Section 19(b)(2) of the Act,17 that the Public Reference Room. significance of this issue to some
proposed rule changes (SR–NYSE– investors, who see proxy access as an
2016–57; SR–NYSEMKT–2016–80; SR– II. Self-Regulatory Organization’s important accountability mechanism
NYSEArca–2016–119), as modified by Statement of the Purpose of, and that allows them to participate in board
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Statutory Basis for, the Proposed Rule elections through the nomination of
must be filed with the Commission pursuant to Change stockholder candidates that are
Section 19(b)(4) of the Act and Rule 19b–4
thereunder. See 15 U.S.C. 78c(a)(27); 15 U.S.C. In its filing with the Commission,
3 See 17 CFR 240.14a–8, which establishes
78s(b); and 17 CFR 240.19b–4. SCCP included statements concerning
14 15 U.S.C. 78f(b)(1).
procedures pursuant to which stockholders of a
public company may have their proposals placed
15 See supra note 11. 18 17 CFR 200.30–3(a)(12). alongside management’s proposals in the
16 15 U.S.C. 78f(b)(5). 1 15 U.S.C. 78s(b)(1). company’s proxy materials for presentation to a
17 15 U.S.C. 78s(b)(2). 2 17 CFR 240.19b–4. vote at a meeting of stockholders.
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presented in a company’s proxy investment control, (ii) funds under access nominee in its proxy materials if
statement. On the other hand, Nasdaq’s common management and funded the proxy access provisions are
proposed proxy access provision primarily by the same employer, or (iii) satisfied, Nasdaq does not necessarily
includes certain procedural funds that are a ‘‘group of investment have to support that nominee.
requirements that ensure, among other companies’’ as such term is defined in
Proposed Section 3.6(b) of the By-Laws
things, that the Company and its Section 12(d)(1)(G)(ii) of the Investment
stockholders will have full and accurate Company Act of 1940, as amended.7 Proposed Section 3.6(b) of the By-
information about nominating Nasdaq views this as a stockholder- Laws establishes the deadline for a
stockholders and their nominees and friendly provision that will make it timely Notice of Proxy Access
that such stockholders and nominees easier for such funds to participate in a Nomination. Specifically, such a notice
will comply with applicable laws, proxy access nomination since they will must be addressed to, and received by,
regulations and other requirements. not have to comply with the procedural Nasdaq’s Corporate Secretary no earlier
requirements in the proxy access than one hundred fifty (150) days and
Proposed Section 3.6(a) of the By-Laws no later than one hundred twenty (120)
provision multiple times. Second, in the
To respond to feedback from its event that the Eligible Stockholder days before the anniversary of the date
stockholders, Nasdaq proposes to consists of a group of stockholders, any that Nasdaq issued its proxy statement
amend its By-Laws to, as set forth in the and all requirements and obligations for for the previous year’s annual meeting
first sentence of proposed Section 3.6(a), an individual Eligible Stockholder shall of stockholders. The Company believes
require the Company to include in its apply to each member of the group, this notice period will provide
proxy statement, its form proxy and any except that the Required Ownership stockholders an adequate window to
ballot distributed at the stockholder Percentage (discussed further below) submit nominees via proxy access,
meeting, the name of, and certain shall apply to the ownership of the while also providing the Company
Required Information 4 about, any group in the aggregate. Generally, the adequate time to diligence [sic] a proxy
person nominated for election (the applicable requirements and obligations access nominee before including them
‘‘Stockholder Nominee’’) to the Board relate to information that each member in the proxy statement for the next
by a stockholder or group of of the nominating group must provide to annual meeting of stockholders.
stockholders (the ‘‘Eligible Nasdaq about itself, as discussed further Proposed Section 3.6(c) of the By-Laws
Stockholder’’) 5 that satisfies the below. Nasdaq believes it is reasonable
requirements set forth in the proxy to require each member of the Proposed Section 3.6(c) specifies that
access provision of Nasdaq’s By-Laws.6 nominating group to provide such the maximum number of Stockholder
To utilize this provision, the Eligible information so that both the Company Nominees nominated by all Eligible
Stockholder must expressly elect at the and its stockholders are fully informed Stockholders that will be included in
time of providing a required notice to about the entire group making the proxy Nasdaq’s proxy materials with respect to
the Company of the proxy access access nomination. an annual meeting of stockholders shall
nomination (the ‘‘Notice of Proxy The final sentence of proposed not exceed the greater of two and 25%
Access Nomination’’) to have its Section 3.6(a) allows Nasdaq to omit of the total number of directors in office
nominee included in the Company’s from its proxy materials any information (rounded down to the nearest whole
proxy materials. Stockholders will be or Statement (or portion thereof) that it, number) as of the last day on which a
eligible to submit proxy access in good faith, believes is untrue in any Notice of Proxy Access Nomination may
nominations only at annual meetings of material respect (or omits to state a be delivered pursuant to and in
stockholders when the Board solicits material fact necessary in order to make accordance with the proxy access
proxies with respect to the election of the statements made, in light of the provision of the By-Laws (the ‘‘Final
directors. circumstances under which they are Proxy Access Nomination Date’’). In the
The next two sentences of Section made, not misleading) or would violate event that one or more vacancies for any
3.6(a) provide some additional any applicable law or regulation. This reason occurs after the Final Proxy
clarification on the term ‘‘Eligible provision allows Nasdaq to comply with Access Nomination Date but before the
Stockholder.’’ First, in calculating the Rule 14a–9 under the Act 8 and to date of the annual meeting and the
number of stockholders in a group protect its stockholders from Board resolves to reduce the size of the
seeking to qualify as an Eligible information that is materially untrue or Board in connection therewith, the
Stockholder, two or more of the that violates any law or regulation. The maximum number of Stockholder
following types of funds shall be final sentence of proposed Section 3.6(a) Nominees included in Nasdaq’s proxy
counted as one stockholder: (i) Funds also explicitly allows Nasdaq to solicit materials shall be calculated based on
under common management and against, and include in the proxy the number of directors in office as so
statement its own statement relating to, reduced. Any individual nominated by
4 The Required Information is the information
any Stockholder Nominee. This an Eligible Stockholder for inclusion in
provided to Nasdaq’s Corporate Secretary about the
provision merely clarifies that just the proxy materials pursuant to the
Stockholder Nominee and the Eligible Stockholder proxy access provision of the By-Laws
that is required to be disclosed in the Company’s because Nasdaq must include a proxy
proxy statement by the regulations promulgated
whom the Board decides to nominate as
under the Act, and if the Eligible Stockholder so 7 See 15 U.S.C. 80a–12(d)(1)(G)(ii), which defines a nominee of the Board, and any
elects, a written statement, not to exceed 500 words, ‘‘group of investment companies’’ as any two or individual nominated by an Eligible
in support of the Stockholder Nominee(s)’ more registered investment companies that hold Stockholder for inclusion in the proxy
asabaliauskas on DSK3SPTVN1PROD with NOTICES
candidacy (the ‘‘Statement’’). themselves out to investors as related companies for
5 As used throughout Nasdaq’s By-Laws, the term
materials pursuant to the proxy access
purposes of investment and investor services.
‘‘Eligible Stockholder’’ includes each member of a 8 See 17 CFR 240.14a–9, which generally provision but whose nomination is
stockholder group that submits a proxy access prohibits proxy solicitations that contain any subsequently withdrawn, shall be
nomination to the extent the context requires. statement which, at the time and in the light of the counted as one of the Stockholder
6 When the Company includes proxy access circumstances under which it is made, is false or Nominees for purposes of determining
nominees in the proxy materials, such individuals misleading with respect to any material fact, or
will be included in addition to any persons which omits to state any material fact necessary in
when the maximum number of
nominated for election to the Board or any order to make the statements therein not false or Stockholder Nominees has been
committee thereof. misleading. reached.
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Any Eligible Stockholder submitting the nominee limit is exceeded establish or other intermediary so long as the
more than one Stockholder Nominee for clear and rational guidelines for an stockholder retains the right to instruct
inclusion in the proxy materials shall orderly nomination process to avoid the how the shares are voted with respect to
rank such Stockholder Nominees based Company having to make arbitrary the election of directors and possesses
on the order that the Eligible judgments among candidates. Finally, the full economic interest in the shares.
Stockholder desires such Stockholder the exclusion of further proxy access A stockholder’s ownership of shares
Nominees to be selected for inclusion in nominees in certain cases will avoid shall be deemed to continue during any
the proxy statement in the event that the further time and expense to the period in which the stockholder has
total number of Stockholder Nominees Company when the proxy access delegated any voting power by means of
submitted by Eligible Stockholders nominee has been nominated by the a proxy, power of attorney or other
pursuant to the proxy access provision Board, in which case the goal of the instrument or arrangement which is
exceeds the maximum number of proxy access nomination has been revocable at any time by the
nominees allowed. In the event that the achieved, or in certain cases when the stockholder. A stockholder’s ownership
number of Stockholder Nominees Eligible Stockholder or Stockholder of shares shall be deemed to continue
submitted by Eligible Stockholders Nominee is at fault. during any period in which the
exceeds the maximum number of Proposed Section 3.6(d) of the By-Laws stockholder has loaned such shares
nominees allowed, the highest ranking provided that the stockholder has the
Stockholder Nominee who meets the Proposed Section 3.6(d) clarifies, for power to recall such loaned shares on
requirements of the proxy access the avoidance of doubt, how three (3) business days’ notice, has
provision of the By-Laws from each ‘‘ownership’’ will be defined for recalled such loaned shares as of the
Eligible Stockholder will be selected for purposes of meeting the Required date of the Notice of Proxy Access
inclusion in the proxy materials until Ownership Percentage (discussed Nomination and holds such shares
the maximum number is reached, going further below). Specifically, an Eligible through the date of the annual meeting.
in order of the amount (largest to Stockholder shall be deemed to ‘‘own’’ The terms ‘‘owned,’’ ‘‘owning’’ and
smallest) of shares of Nasdaq’s only those outstanding shares of other variations of the word ‘‘own’’ shall
outstanding common stock each Eligible Nasdaq’s common stock as to which the have correlative meanings. Whether
Stockholder disclosed as owned in its stockholder possesses both: (i) The full outstanding shares of Nasdaq’s common
respective Notice of Proxy Access voting and investment rights pertaining stock are ‘‘owned’’ for these purposes
Nomination submitted to Nasdaq. If the to the shares; and (ii) the full economic shall be determined by the Board or any
maximum number is not reached after interest in (including the opportunity committee thereof, in each case, in its
the highest ranking Stockholder for profit from and risk of loss on) such sole discretion. For purposes of the
Nominee who meets the requirements of shares; provided that the number of proxy access provision of the By-Laws,
the proxy access provision of the By- shares calculated in accordance with the term ‘‘affiliate’’ or ‘‘affiliates’’ shall
Laws from each Eligible Stockholder has clauses (i) and (ii) shall not include any have the meaning ascribed thereto
been selected, this process will continue shares: under the rules and regulations of the
as many times as necessary, following • Sold by such stockholder or any of Act.9 An Eligible Stockholder shall
the same order each time, until the its affiliates in any transaction that has include in its Notice of Proxy Access
maximum number is reached. Following not been settled or closed, including any Nomination the number of shares it is
such determination, if any Stockholder short sale; deemed to own for the purposes of the
• borrowed by such stockholder or
Nominee who satisfies the eligibility proxy access provision of the By-Laws.
any of its affiliates for any purposes or
requirements thereafter is nominated by
purchased by such stockholder or any of Proposed Section 3.6(e) of the By-Laws
the Board, or is not included in the
its affiliates pursuant to an agreement to The first paragraph of proposed
proxy materials or is not submitted for
resell; or Section 3.6(e) establishes certain
election as a director, in either case, as • subject to any option, warrant,
a result of the Eligible Stockholder requirements for an Eligible Stockholder
forward contract, swap, contract of sale,
becoming ineligible or withdrawing its to make a proxy access nomination.
other derivative or similar agreement
nomination, the Stockholder Nominee Specifically, an Eligible Stockholder
entered into by such stockholder or any
becoming unwilling or unable to serve must have owned (defined as discussed
of its affiliates, whether any such
on the Board or the Eligible Stockholder above) 3% or more (the ‘‘Required
instrument or agreement is to be settled
or the Stockholder Nominee failing to Ownership Percentage’’) of Nasdaq’s
with shares or with cash based on the
comply with the proxy access provision outstanding common stock (the
notional amount or value of shares of
of the By-Laws, no other nominee or ‘‘Required Shares’’) continuously for 3
Nasdaq’s outstanding common stock, in
nominees shall be included in the proxy years (the ‘‘Minimum Holding Period’’)
any such case which instrument or
materials or otherwise submitted for as of both the date the Notice of Proxy
agreement has, or is intended to have,
director election in substitution thereof. Access Nomination is received by
or if exercised by either party would
The Company believes it is reasonable Nasdaq’s Corporate Secretary and the
have, the purpose or effect of:
to limit the Board seats available to Æ Reducing in any manner, to any 9 Pursuant to Rule 12b–2 under the Act, ‘‘[a]n
proxy access nominees, to establish extent or at any time in the future, such ‘affiliate’ of, or a person ‘affiliated’ with, a specified
procedures for selecting candidates if stockholder’s or its affiliates’ full right person, is a person that directly, or indirectly
the nominee limit is exceeded and to
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to vote or direct the voting of any such through one or more intermediaries, controls, or is
exclude further proxy access nominees controlled by, or is under common control with, the
shares; and/or person specified.’’ 17 CFR 240.12b–2. Further,
in the cases set forth above. The Æ hedging, offsetting or altering to ‘‘[t]he term ‘control’ (including the terms
limitation on Board seats available to any degree any gain or loss realized or ‘controlling,’ ‘controlled by’ and ‘under common
proxy access nominees ensures that realizable from maintaining the full control with’) means the possession, direct or
proxy access cannot be used to take over economic ownership of such shares by indirect, of the power to direct or cause the
direction of the management and policies of a
the entire Board, which is not the stated such stockholder or its affiliates. person, whether through the ownership of voting
purpose of proxy access campaigns. The Further, a stockholder shall ‘‘own’’ securities, by contract, or otherwise.’’ 17 CFR
procedures for selecting candidates if shares held in the name of a nominee 240.12b–2.
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![69098 Federal Register / Vol. 81, No. 193 / Wednesday, October 5, 2016 / Notices
• is or has been, within the past three Proposed Section 3.6(i) of the By-Laws 3.6(k) states that the Board (or any other
(3) years, an officer or director of a Under proposed Section 3.6(i), the person or body authorized by the Board)
competitor, as defined for purposes of Board or the chairman of the meeting of shall have exclusive power and
Section 8 of the Clayton Antitrust Act of stockholders shall declare a proxy authority to interpret the proxy access
1914; 33 access nomination invalid, and such provisions of the By-Laws and make all
• is a named subject of a pending determinations deemed necessary or
nomination shall be disregarded even if
criminal proceeding (excluding traffic advisable as to any person, facts or
proxies in respect of such nomination
violations and other minor offenses) or circumstances. In addition, all actions,
have been received by the Company, if:
interpretations and determinations of
has been convicted in such a criminal • The Stockholder Nominee(s) and/or
proceeding within the past ten (10) the Board (or any person or body
the applicable Eligible Stockholder have
years; 34 authorized by the Board) with respect to
breached its or their obligations under
the proxy access provisions shall be
• is subject to any order of the type the proxy access provision of the By-
final, conclusive and binding on the
specified in Rule 506(d) of Regulation D Laws, as determined by the Board or the
Company, the stockholders and all other
promulgated under the Securities Act of chairman of the meeting of
parties. While Nasdaq has attempted to
1933, as amended; 35 stockholders, in each case, in its or his implement a clear, detailed and
sole discretion; or
• is subject to ‘‘statutory thorough proxy access provision, there
• the Eligible Stockholder (or a may be matters about future proxy
disqualification’’ under Section 3(a)(39)
qualified representative thereof) does access nominations that are open to
of the Act; 36
not appear at the meeting of interpretation. In these cases, Nasdaq
• has, or the applicable Eligible stockholders to present the proxy access
Stockholder has, provided information believes it is reasonable and necessary
nomination. to designate an arbiter to make final
to Nasdaq in respect of the proxy access Nasdaq believes this provision
nomination that was untrue in any decisions on these points and that the
protects the Company and its Board is best-suited to act as that arbiter.
material respect or omitted to state a stockholders by providing the Board or
material fact necessary in order to make the chairman of the stockholder meeting Proposed Section 3.6(l) of the By-Laws
the statements made, in light of the limited authority to disqualify a proxy Proposed Section 3.6(l) prohibits a
circumstances under which they were access nominee when that nominee or stockholder from joining more than one
made, not misleading, as determined by the sponsoring stockholder(s) have group of stockholders to become an
the Board or any committee thereof, in breached an obligation under the proxy Eligible Stockholder for purposes of
each case, in its sole discretion; 37 or access provision, including the submitting a proxy access nomination
• breaches or fails, or the applicable obligation to appear at the stockholder for each annual meeting of stockholders.
Eligible Stockholder breaches or fails, to meeting to present the proxy access Nasdaq analogizes this provision to
comply with its obligations pursuant to nomination. Article IV, Paragraph C(1) of its
the By-Laws, including, but not limited Amended and Restated Certificate of
Proposed Section 3.6(j) of the By-Laws
to, the proxy access provisions and any Incorporation, under which each holder
agreement, representation or Proposed Section 3.6(j) states that the of Nasdaq’s common stock shall be
undertaking required by the proxy following Stockholder Nominees who entitled to one vote per share on all
access provisions.38 are included in the Company’s proxy matters presented to the stockholders
Nasdaq believes these provisions will materials for a particular annual for a vote. Similar to that provision,
protect the Company and its meeting of stockholders will be Nasdaq believes it is reasonable for each
stockholders by allowing it to exclude ineligible to be a Stockholder Nominee share to count only once in submitting
certain categories of objectionable for the next two annual meetings: a proxy access nomination.
Stockholder Nominees from the proxy • A Stockholder Nominee who
withdraws from or becomes ineligible or Proposed Section 3.6(m) of the By-Laws
statement.
unavailable for election at the annual For the avoidance of doubt, proposed
meeting; or Section 3.6(m) states that the proxy
Director,’’ ‘‘Public Director,’’ ‘‘Issuer Director’’ and
‘‘Staff Director’’ are included in Article I of the By- • a Stockholder Nominee who does access provisions outlined in Section
Laws. not receive at least 25% of the votes cast 3.6 of the By-Laws shall be the exclusive
33 See proposed Section 3.6(h)(iv) of the By-Laws; in favor of such Stockholder Nominee’s means for stockholders to include
see also 15 U.S.C. 19(a)(1), which generally election. nominees in the Company’s proxy
provides that ‘‘[n]o person shall, at the same time,
serve as a director or officer in any two
This provision will save the Company materials. Stockholders may, of course,
corporations’’ that are ‘‘competitors’’ such that ‘‘the and its stockholders the time and continue to propose nominees to the
elimination of competition by agreement between expense of analyzing and addressing Committee and Board through other
them would constitute a violation of any of the subsequent proxy access nominations means, but the Committee and Board
antitrust laws.’’
34 See proposed Section 3.6(h)(v) of the By-Laws.
regarding individuals who were will have final authority to determine
35 See proposed Section 3.6(h)(vi) of the By-Laws; included in the proxy materials for a whether to include those nominees in
see also 17 CFR 230.506(d), which generally particular annual meeting but ultimately the Company’s proxy materials.
disqualifies offerings involving certain felons and did not stand for election or receive a
other bad actors from relying on the ‘‘safe harbor’’ substantial amount of votes. After the Revisions to Other Sections of the By-
in Rule 506 of Regulation D from registration under Laws
asabaliauskas on DSK3SPTVN1PROD with NOTICES
the Securities Act of 1933, as amended.
next two annual meetings, these
36 See proposed Section 3.6(h)(vii) of the By- Stockholder Nominees would again be Nasdaq also proposes to make
Laws; see also 15 U.S.C. 78c(a)(39), which eligible for nomination through the conforming changes to Sections 3.1(a),
disqualifies certain categories of individuals who proxy access provisions of the By-Laws. 3.3(a), 3.3(c) and 3.5 of the By-Laws to
generally have engaged in misconduct from provide clarifications and prevent
membership or participation in, or association with Proposed Section 3.6(k) of the By-Laws confusion. Specifically, current Section
a member of, a self-regulatory organization.
37 See proposed Section 3.6(h)(viii) of the By- In case there are matters involving a 3.1(a) enumerates the methods by which
Laws. proxy access nomination that are open nominations of persons for election to
38 See proposed Section 3.6(h)(ix) of the By-Laws. to interpretation, proposed Section the Board may be made at an annual
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![69100 Federal Register / Vol. 81, No. 193 / Wednesday, October 5, 2016 / Notices
For the Commission, by the Division of Director, Public Director, and Member The proposed amendments to the
Trading and Markets, pursuant to delegated Director requirements across OCC’s Certificate of Incorporation are
authority.42 governing documents. The proposed described in more detail below.
Robert W. Errett, amendments and restatement would be OCC proposes clarifying amendments
Deputy Secretary. filed with the Secretary of the State of to Article V of the Certificate of
[FR Doc. 2016–24006 Filed 10–4–16; 8:45 am] Delaware in the form of an Amended Incorporation to state that an individual
BILLING CODE 8011–01–P and Restated Certificate of who serves as an Exchange Director for
Incorporation, which is included in more than one Equity Exchange
Exhibit 5 to the proposed rule change.6 pursuant to the By-Laws shall be
SECURITIES AND EXCHANGE All capitalized terms not defined herein entitled to such number of votes on each
COMMISSION have the same meaning as set forth in proposition submitted to the Board for
the OCC By-Laws and Rules.7 a vote thereon or for written consent
[Release No. 34–78983; File No. SR–OCC–
2016–010] thereto as shall correspond to the
II. Clearing Agency’s Statement of the number of Equity Exchanges
Purpose of, and Statutory Basis for, the represented by him or her. Article III,
Self-Regulatory Organizations; The Proposed Rule Change
Options Clearing Corporation; Notice Section 6 of the By-Laws currently
of Filing and Immediate Effectiveness In its filing with the Commission, provides that an individual may be
of Proposed Rule Change Related to OCC included statements concerning nominated by, elected by, and serve as
Amendments to and the Restatement the purpose of and basis for the an Exchange Director for more than one
of OCC’s Certificate of Incorporation proposed rule change and discussed any Equity Exchange and that each such
comments it received on the proposed individual shall be counted, for all
September 29, 2016. rule change. The text of these statements purposes under the By-Laws (including,
Pursuant to Section 19(b)(1) of the may be examined at the places specified without limitation, for the purpose of
Securities Exchange Act of 1934 in Item IV below. OCC has prepared determining whether a quorum is
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 summaries, set forth in sections (A), (B), present or whether a resolution has been
notice is hereby given that on and (C) below, of the most significant passed by the requisite number of
September 27, 2016, The Options aspects of these statements. directors), as a separate Exchange
Clearing Corporation (‘‘OCC’’) filed with Director for each Equity Exchange that
(A) Clearing Agency’s Statement of the
the Securities and Exchange elected him or her. OCC believes it is
Purpose of, and Statutory Basis for, the
Commission (‘‘Commission’’) the appropriate under Delaware General
Proposed Rule Change
proposed rule change as described in Corporation Law to include these voting
Items I, II, and III below, which Items (1) Purpose rights in its Certificate of Incorporation
have been prepared primarily by OCC. The purpose of this proposed rule (in addition to the By-Laws) in order to
OCC filed the proposed rule change change is to amend and restate OCC’s clarify and reinforce the voting powers
pursuant to Section 19(b)(3)(A)(iii) 3 of Certificate of Incorporation to provide of its Exchange Directors.
the Act and Rule 19b–4(f)(6) 4 more clarity, transparency, and OCC also proposes amendments to
thereunder so that the proposal was consistency regarding OCC’s Article V of its Certificate of
effective upon filing with the Management Director,8 Exchange Incorporation to conform the language
Commission. The Commission is Director, Public Director, and Member regarding Public Directors to existing
publishing this notice to solicit Director requirements, which are being language in the Certificate of
comments on the proposed rule change filed in the form of an Amended and Incorporation used for Member
from interested persons. Restated Certificate of Incorporation.9 Directors. Specifically, the Certificate of
I. Clearing Agency’s Statement of the Incorporation would be amended to
Terms of Substance of the Proposed that the Board shall have one (1) Management state that the number of Public Directors
Rule Change
Director). The Commission approved the proposed shall be such number as shall be fixed
rule change on September 16, 2016. See Securities by or pursuant to the By-Laws, divided
The proposed rule change by OCC Exchange Act Release No. 78862 (September 16,
2016), 81 FR 65415 (September 22, 2016) (SR–OCC– into three classes, as provided therein.
concerns the amendment and 2016–002). OCC believes that it is appropriate from
restatement of OCC’s Certificate of 6 Pending all necessary regulatory filings and a corporate governance perspective to
Incorporation to provide more clarity, approvals for the proposed rule change, OCC will specifically state in the Certificate of
transparency, and consistency regarding file the proposed amendments described herein
Incorporation that OCC’s Public
OCC’s Management Director,5 Exchange along with the amendments to OCC’s Certificate of
Incorporation contained in SR–OCC–2016–002 in Directors are divided into three classes.
the form of an Amended and Restated Certificate of OCC also proposes that the
42 17 CFR 200.30–3(a)(12). Incorporation. The Amended and Restated requirements for Public Director terms
1 15 U.S.C. 78s(b)(1). Certificate of Incorporation must also be filed with
2 17 CFR 240.19b–4. the Secretary of the State of Delaware before
be clarified to state that each class of
3 15 U.S.C. 78s(b)(3)(A)(iii). becoming effective. Public Directors shall be elected for a
4 17 CFR 240.19b–4(f)(6). 7 OCC’s By-Laws and Rules can be found on term which expires at the third annual
5 On July 15, 2016, OCC filed a proposed rule OCC’s public Web site: http://optionsclearing.com/ meeting of stockholders following their
change with the Commission concerning about/publications/bylaws.jsp. election and upon the election and
8 See supra note 5.
modifications and enhancements to OCC’s qualification of their successors, subject
asabaliauskas on DSK3SPTVN1PROD with NOTICES
governance arrangements. See Securities Exchange 9 Under Section 245 of the General Corporation
Act Release No. 78438 (July 28, 2016), 81 FR 51220 Law of the State of Delaware, a corporation may to their earlier death, disqualification,
(August 3, 2016) (SR–OCC–2016–002). As part of integrate into a single instrument all of the resignation, or removal. The proposed
the proposed rule change, OCC proposed provisions of its certificate of incorporation which amendments would more closely align
amendments to its Certificate of Incorporation to are then in effect and operative and may at the same the language for Public Director
remove an explicit requirement that OCC’s Board of time also further amend its certificate of
Directors (‘‘Board’’) have two Management Directors incorporation by adopting a restated certificate of requirements with that currently used to
and instead provide that the number of incorporation. See 8 Del. C. 1953, § 245. The
Management Directors shall be such number as proposed Amended and Restated Certificate of filed with the Secretary of the State of Delaware on
shall be fixed by or pursuant to the By-Laws (which Incorporation would supersede OCC’s current November 3, 1987) and the subsequent amendments
the Board has authorized to be amended to state Restated Certificate of Incorporation (which was thereto.
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Document Created: 2016-10-05 03:28:53
Document Modified: 2016-10-05 03:28:53
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 81 FR 69093 |
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