81_FR_8615 81 FR 8582 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Granting Approval of Proposed Rule Change To Amend Rules 5810(4), 5810(c), 5815(c) and 5820(d) To Provide Staff With Limited Discretion To Grant a Listed Company That Failed To Hold Its Annual Meeting of Shareholders an Extension of Time To Comply With the Annual Meeting Requirement

81 FR 8582 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Granting Approval of Proposed Rule Change To Amend Rules 5810(4), 5810(c), 5815(c) and 5820(d) To Provide Staff With Limited Discretion To Grant a Listed Company That Failed To Hold Its Annual Meeting of Shareholders an Extension of Time To Comply With the Annual Meeting Requirement

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 33 (February 19, 2016)

Page Range8582-8585
FR Document2016-03442

Federal Register, Volume 81 Issue 33 (Friday, February 19, 2016)
[Federal Register Volume 81, Number 33 (Friday, February 19, 2016)]
[Notices]
[Pages 8582-8585]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-03442]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77137; File No. SR-NASDAQ-2015-144]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Granting Approval of Proposed Rule Change To Amend Rules 5810(4), 
5810(c), 5815(c) and 5820(d) To Provide Staff With Limited Discretion 
To Grant a Listed Company That Failed To Hold Its Annual Meeting of 
Shareholders an Extension of Time To Comply With the Annual Meeting 
Requirement

February 12, 2016.

I. Introduction

    On December 9, 2015, The NASDAQ Stock Market LLC (``NASDAQ'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) \1\ of the Securities 
Exchange Act of 1934 (``Act''),\2\ and Rule 19b-4 thereunder,\3\ a 
proposed rule change to provide staff of NASDAQ's Listing 
Qualifications Department (``Staff'') with limited discretion to grant 
a listed company, that failed to timely hold its annual meeting of 
shareholders, a certain period of time to comply with the annual 
meeting requirement.\4\ The proposed rule change was published for 
comment in the Federal Register on December 30, 2015.\5\ The Commission 
received no comments on the proposed rule change. This order approves 
the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ As described in more detail below, the total amount of time 
a listed company that fails to hold an annual meeting of 
shareholders can remain listed on the Exchange will not be changing 
under the proposed rule change.
    \5\ See Securities Exchange Act Release No. 76731 (December 22, 
2015), 80 FR 81573 (``Notice'').
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II. Description of the Proposed Rule Change

    Companies listed on the Exchange must comply with various continued 
listing requirements, one of which is to hold an annual meeting no 
later than one year after the end of the company's fiscal year.\6\ 
Currently, if an Exchange-listed company fails to hold its annual 
meeting, Staff has no discretion to allow additional time for the 
company to regain compliance. Instead, Staff is required to issue a 
Delisting Determination, subjecting the company to immediate suspension 
and delisting, unless the company appeals the Delisting Determination 
to the Hearings Panel.\7\ The only other Exchange rules where a listed 
company is subject to immediate suspension and delisting is when a 
company fails to timely solicit proxies and when the Staff determines 
that the company's continued listing raises a public interest 
concern.\8\ For all other deficiencies under the NASDAQ Listing Rules, 
a listed company is provided with either the opportunity to submit a 
plan to regain compliance or given a fixed cure period to regain 
compliance.\9\
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    \6\ Each company listing common stock or voting preferred stock, 
and their equivalents, must hold an annual meeting of shareholders 
no later than one year after the end of the company's fiscal year 
and solicit proxies for that meeting. See Exchange Rules 5620(a) and 
(b), respectively. The proposed rule change will also apply to 
Exchange listed companies that are limited partnerships required to 
hold an annual meeting. A company that is a limited partnership is 
not be required to hold an annual meeting of limited partners unless 
required by statute or regulation in the state in which the limited 
partnership is formed or doing business or by the terms of the 
partnership's limited partnership agreement. See Exchange Rules 
5615(a)(4)(D) and (F); see also Notice, supra note 5, at 81573 n.3.
    \7\ See Exchange Rule 5810(c)(1). A listed company may request 
review of a Staff delisting determination by a Hearings Panel. See 
Exchange Rule 5815. A timely request for a hearing will stay the 
suspension and delisting pending the issuance of a written Panel 
Decision. See Exchange Rule 5815(a)(1)(A).
    \8\ See Exchange Rule 5810(c)(1); see also Notice, supra note 5, 
at 81573.
    \9\ See Exchange Rules 5810(c)(2) and (3); see also Notice, 
supra note 5, at 81573. Generally, a listed company is allowed 45 
calendar days to submit a plan of compliance for certain 
deficiencies set forth in Exchange Rule 5810(c)(2)(i)-(iii). Upon 
review of the plan, Staff may grant the company up to 180 calendar 
days from the date of Staff's initial notification of the company's 
non-compliance to regain compliance. See Exchange Rule 5810(c)(2)(A) 
and (B); see also Exchange Rule 5810(c)(2)(F), which provides a 
company 60 calendar days to submit a plan to regain compliance for 
filing deficiencies. If upon review of the company's plan Staff 
determines that an extension is not warranted, Staff will issue a 
Delisting Determination, which triggers the company's right to 
request review by a Hearings Panel. See Exchange Rule 5815; see also 
Exchange Rule 5810(c)(2)(F).
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    The Exchange asserted in its filing that there are a variety of 
mitigating reasons why a listed company may fail to timely hold an 
annual meeting of shareholders.\10\ For example, the Exchange states 
that it has observed

[[Page 8583]]

cases where a listed company was required to reschedule the annual 
meeting after the meeting's deadline in order to provide its 
shareholders more time to review proxy materials in connection with a 
shareholder proxy contest.\11\ The Exchange also stated that it had 
encountered listed companies that could not hold an annual meeting 
because the company was delinquent in filing periodic reports and, as a 
result, could not include the required financial information in a proxy 
statement.\12\
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    \10\ See Notice, supra note 5, at 81573.
    \11\ See Notice, supra note 5, at 81573-74.
    \12\ See Notice, supra note 5, at 81574. Under the current 
rules, the Exchange states that a listed company could receive an 
extension of time to regain compliance with the periodic filing 
requirement. However, if during any such compliance period the 
company subsequently fails to hold an annual meeting of shareholders 
for any reason, Staff would be required to immediately issue a 
Delisting Determination for both the periodic filing delinquency and 
the annual meeting deficiency, notwithstanding that the extended 
compliance period for the periodic filing delinquency has not 
expired. See Rule 5810(c)(2)(A); see also Notice, supra note 5, at 
81574.
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    Accordingly, the Exchange has proposed to amend Exchange Rules 
5810(4), 5810(c), 5815(c) and 5820(d) to provide listed companies that 
fail to hold a timely annual meeting with the ability to submit a plan 
of compliance for Staff's review.\13\ In its filing, the Exchange 
proposed to amend Exchange Rule 5810(c)(1) by deleting the language 
that a failure of a listed company to timely hold its annual 
shareholders' meeting results in an immediate suspension and delisting. 
The Exchange also proposed to amend Exchange Rule 5810(c)(2)(A)(iii) by 
including references to Exchange Rules 5620(a) (Meeting of 
Shareholders) and 5615(a)(4)(D) (Partner Meetings of Limited 
Partnerships) under the list of deficiencies for which a listed company 
may submit a plan of compliance for Staff review.
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    \13\ See Notice, supra note 5, at 81574.
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    Under proposed Exchange Rule 5810(c)(2)(G), in the case of 
deficiencies from the annual meeting requirements of Exchange Rules 
5620(a) and 5615(a)(4)(D), Staff's notice shall provide the listed 
company with 45 calendar days to submit a plan to regain compliance 
with these provisions; provided, however, that the company shall not be 
provided with an opportunity to submit such a plan if review of a prior 
Staff Delisting Determination with respect to the company is already 
pending.\14\ In determining whether to grant the company an extension 
to comply with the annual meeting requirement, and the length of any 
such extension, Staff will consider certain factors, which should be 
addressed in the company's compliance plan, including the likelihood 
that the listed company would be able to hold an annual meeting within 
the exception period, the company's past compliance history, the 
reasons for the failure to timely hold an annual meeting, corporate 
events that may occur within the exception period, the company's 
general financial status, and the company's disclosures to the 
market.\15\ Under proposed Exchange Rule 5810(c)(2)(G), Staff would be 
limited to grant an extension upon review of the compliance plan, to no 
more than 180 calendar days from the deadline to hold the annual 
meeting. As noted above, the deadline to hold an annual meeting of 
shareholders is one year after the end of the company's fiscal 
year.\16\ The Exchange is also making other conforming changes to the 
provisions in Exchange Rule 5810(c)(2)(B) to make clear that annual 
meeting deficiencies are governed by the new provisions in Exchange 
Rule 5810(c)(2)(G), rather than the plan review provisions that apply 
to other deficiencies.
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    \14\ See proposed Exchange Rule 5810(c)(2)(G)(i). The Exchange 
also proposes that Staff may extend the deadline for up to an 
additional 15 calendar days upon good cause shown and may request 
such additional information from the listed company as is necessary 
to make a determination regarding whether to grant such an 
extension. See id.
    \15\ See proposed Exchange Rule 5810(c)(2)(G)(ii). Under this 
proposal, Staff review on whether to grant additional time to comply 
will be based on information provided by a variety of sources, which 
may include the listed company, its audit committee, its outside 
auditors, the staff of the Commission, and any other regulatory 
body. See id.
    \16\ See proposed Exchange Rule 5810(c)(2)(G)(ii). In its 
filing, the Exchange noted that it has observed that a substantial 
majority of listed companies that received delisting notices for 
failing to hold their annual meetings regain compliance within a six 
month period. See Notice, supra note 5, at 81574 n.15.
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    The Exchange also has proposed to amend, in conjunction with the 
changes described above, Exchange Rules 5815(c) and 5820(d) to limit 
the maximum length of an extension that a NASDAQ Hearings Panel or the 
NASDAQ Listing and Hearing Review Council (``Council''), respectively, 
may grant a listed company for the failure to hold an annual meeting to 
no more than 360 calendar days from the date of non-compliance.\17\ 
Under the Exchange's current rules, when a non-compliant company 
receives a Delisting Determination, it may appeal that determination to 
the Hearings Panel, which can grant an exception from the continuing 
listed standards (which require compliance with the annual meeting 
requirement) for a maximum of 180 calendar days from the date of the 
Delisting Determination,\18\ and the company may further appeal an 
unfavorable Hearings Panel decision to the Council, which can grant an 
exception from the continuing listed standards for a maximum of 360 
calendar days from the date of the Delisting Determination.\19\ 
Therefore, under both the proposed rule change and the current rules, 
the total amount of time that a company could remain listed while not 
in compliance with the annual meeting requirement is 360 calendar 
days.\20\
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    \17\ See proposed Exchange Rules 5810(c)(1)(G) and 5820(d)(5).
    \18\ See Exchange Rule 5815(c)(1)(A). As noted above, an appeal 
to the Hearings Panel results in an automatic stay of the suspension 
and delisting.
    \19\ See Exchange Rule 5820(d)(1).
    \20\ See Notice, supra note 5, at 81574 (Exchange representing 
that the total time that a listed company may be granted to regain 
compliance with the annual meeting requirement is unchanged from the 
current NASDAQ Listing Rules).
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    Furthermore, the Exchange proposes to amend Exchange Rule 5810(4) 
to make clear that a Public Reprimand Letter is not an available 
notification type for unresolved deficiencies from the standards of 
Exchange Rules 5250(c) (Obligation to File Periodic Financial Reports), 
and the annual meeting requirements of Exchange Rules 5615(a)(4)(D), 
and 5620(a).
    Lastly, the Exchange noted in its filing that a listed company that 
submits a plan of compliance and is not subject to the Exchange's all-
inclusive annual listing fee program (``Fee Program'') prior to January 
1, 2018 will be subject to the $5,000 compliance plan review fee, in 
addition to any other fees incurred in the appellate process, whereas a 
company that has opted-in to the Fee Program will not.\21\
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    \21\ See Exchange Rule 5810(c)(2)(A). Effective January 1, 2018, 
all listed companies will be subject to the Fee Program and the 
$5,000 fee will no longer be applicable to any company. See Exchange 
Rule IM-5910-1 and IM-5920-1; see also Notice, supra note 5, at 
81574. In addition, all listed companies, regardless of whether they 
participate in the Fee Program or not, are subject to the $10,000 
fee for each of the review by the Hearing Panel and appeal to the 
Council set forth in Exchange Rules 5815(a)(3) and 5820(a), 
respectively. See Notice, supra note 5, at 81574. Listed companies 
may be subject to these fees at different times depending on if and 
when they regain compliance. See id.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and rules and 
regulations thereunder applicable to a national securities 
exchange.\22\ In particular, the

[[Page 8584]]

Commission finds that the proposal is consistent with Section 6(b)(5) 
of the Act,\23\ which requires, among other things, that the rules of a 
national securities exchange be designed to promote just and equitable 
principles of trade, to remove impediments to and perfect the mechanism 
of a free and open market and a national market system, and, in 
general, to protect investors and the public interest; and are not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \22\ In approving the proposed rule changes, the Commission has 
considered their impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \23\ 15 U.S.C. 78s(b)(4).
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    The development and enforcement of meaningful corporate governance 
listing standards for a national securities exchange is of substantial 
importance to financial markets and the investing public, especially 
given investor expectations regarding the nature of companies that have 
achieved an exchange listing for their securities. In particular, the 
Commission believes that the goal of ensuring that listed companies 
have met their requirement to hold an annual meeting of shareholders 
under the Exchange's Listing Rules is of critical importance to allow 
shareholders the ability to exercise their rights to participate in 
corporate governance matters, such as the election of directors. As a 
publicly listed company, it is at a company's annual meeting that 
shareholders will typically exercise their right to vote on such 
important corporate matters as the election of directors. For these 
same reasons, it is also important that companies that have failed to 
timely hold an annual meeting of shareholders do not remain listed on a 
national securities exchange if such deficiency is not cured in a 
timely manner.
    As discussed above, the Exchange believes that, in some cases, 
there may be mitigating reasons for why a listed company failed to 
fulfill its annual meeting requirement, and for which immediate 
suspension and delisting may not be an appropriate outcome under the 
circumstances.\24\ In these cases, the proposed rule change gives Staff 
discretion to analyze whether the reason for the annual meeting 
deficiency and the plan to regain compliance merit an exception to 
immediate suspension and delisting.\25\ In this regard, the Commission 
notes that under the Exchange's current rules, a listed company 
receiving a Staff Delisting Determination for a failure to hold an 
annual meeting may immediately appeal the determination to a Hearings 
Panel, which generally results in an automatic stay of the suspension 
and delisting pending the issuance of a written Panel Decision.\26\ In 
practice, it is the Commission's understanding from the Exchange that 
listed companies will often appeal a suspension and delisting 
determination for failure to hold an annual meeting in order to receive 
the automatic stay from the Hearings Panel. As such, the proposed rule 
change provides Staff with the ability to analyze particular instances 
of non-compliance with the annual meeting requirement prior to any 
appeal to the Hearings Panel, and if Staff deems it warranted, allow a 
non-compliant company to carry out a compliance plan for a limited time 
that could enable the company to become compliant again without the 
need to appeal to the Hearings Panel (or Council).
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    \24\ See Notice, supra note 5, at 81575.
    \25\ See proposed Exchange Rule 5810(c)(2)(G).
    \26\ See supra note 7. The Commission notes that the proposed 
factors, set forth in proposed Exchange Rule 5810(c)(2)(G)(ii), that 
would be used to determine whether to grant an exception for the 
failure to hold an annual meeting, and the length of any such 
exception, are substantially similar to the factors used by a 
Hearings Panel to determine whether to grant a further stay of a 
Staff Delisting Determination. See Exchange Rule 5815(a)(1)(B).
---------------------------------------------------------------------------

    Importantly, the Commission notes that the maximum time allowed by 
the proposed requirements for a deficient company to remain listed 
while trying to regain compliance with the annual meeting requirement 
(360 calendar days) would be the same as the maximum time allowed by 
the current requirements for a deficient company (that appeals to both 
the Hearings Panel and Council, and is granted the maximum permitted 
extensions of time by those adjudicatory bodies) to remain listed while 
not in compliance with the annual meeting requirement (also 360 
calendar days).\27\ The difference under the proposed rule change is 
that, pursuant to Staff's discretion, the non-compliant company may be 
granted an exception from the continued listed requirements of up to 
180 calendar days from the annual meeting deadline (i.e., the first 
180-days of the overall 360-day time period) in order to potentially 
fulfill a compliance plan and avoid a Delisting Determination.\28\ By 
contrast, under the Exchange's current rules, since there is no 
opportunity for a compliance plan, the full 360-day period is spent 
before the Hearings Panel and the Council, assuming the non-compliant 
company has appealed its Delisting Determination to both the Hearings 
Panel and Council and been granted the maximum allowable exceptions 
from the continued listing requirements by those adjudicatory bodies. 
In the Commission's view, the fact that the current maximum time period 
that a company could remain listed while not in compliance with the 
annual meeting requirement will be unchanged under the proposal 
suggests that the proposal is reasonably designed to continue to afford 
adequate protection to investors with respect to companies that fail to 
hold an annual meeting in the time required under the Exchange rules.
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    \27\ Compare proposed Rules 5815(c)(1)(G) and 5820(d)(5) with 
current rules 5815(c)(1)(A) and 5820(d)(1); see also Notice, supra 
note 5, at 81574 (Exchange representing that the total time that a 
listed company may be granted to regain compliance with the annual 
meeting requirement is unchanged from the current NASDAQ Listing 
Rules).
    \28\ If the non-complaint company is ultimately unsuccessful in 
this regard, however, and is issued a Delisting Determination, the 
Hearings Panel and Council may grant an additional exception only 
out to 360 calendar days from the annual meeting deadline. In other 
words, if a non-compliant company receives the full 180-day 
exception from Staff in order to attempt to carry out a compliance 
plan but does not regain compliance by the end of that 180-day 
period and is therefore issued a Delisting Determination, it would 
only have 180 more days to avail itself of its appeal rights.
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    Moreover, the Commission emphasizes that, under the proposal, Staff 
retains the discretion not to grant an exception from the continued 
listing requirements to a company that has failed to hold its annual 
meeting on time. The Commission expects Staff to exercise this 
discretion carefully and discerningly. Staff's analysis in this regard 
would include consideration of the factors set forth in proposed 
Exchange Rule 5810(c)(2)(G)(ii), which the deficient company also would 
be required to discuss in its compliance plan. The Commission expects 
Staff to carefully scrutinize these factors when conducting its 
analysis, and not to grant an exception from the continued listing 
requirements when Staff believes that such an exception is not 
warranted or it is unlikely the company will be able to hold its annual 
meeting within the time permitted. For example, a listed company that 
demonstrates a history of failures to hold a timely annual meeting 
could, and most likely should, still be subject to immediate suspension 
and delisting.\29\
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    \29\ See proposed Exchange Rule 5810(c)(2)(G)(ii). The 
Commission notes that such a company would have a right to appeal 
the determination to a Hearings Panel, which will generally stay the 
suspension and delisting.
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    Additionally, the Exchange rules will continue to provide Staff 
with the ability to send an immediate Delisting Determination to a 
deficient company when Staff has determined that, after review of the 
facts and circumstances of the deficiency, continued listing raises a

[[Page 8585]]

public interest concern.\30\ Accordingly, the Commission believes the 
proposed rule change will continue to enable the Exchange to 
immediately suspend and delist companies that have failed to hold an 
annual meeting when the circumstances warrant it, but at the same time 
will provide the Exchange with flexibility to address instances in 
which the failure to hold an annual meeting, in the Exchange's 
discretion, counsels in favor of giving the non-compliant company an 
opportunity to regain compliance for a limited time period without 
being subject to immediate suspension and delisting or having to avail 
themselves of the Hearings Panel process to stay the action. The 
Commission believes, therefore, that the proposed rule change is 
designed to protect investors and the public interest, as well as to 
promote just and equitable principles of trade.
---------------------------------------------------------------------------

    \30\ See Exchange Rule 5810(c)(1).
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    The Commission further notes that, as an additional protection of 
investors and the public interest, a listed company that receives 
notification that it is deficient in satisfying the annual meeting 
requirement will continue to be required to publicly disclose that it 
has received notification of non-compliance with the annual meeting 
requirement.\31\ In addition, the Exchange publicly discloses a list of 
companies that are non-compliant with the continued listing standards 
and the listing standards with which they failed to comply.\32\ 
Furthermore, by making it clear in the proposed rules that a Public 
Reprimand Letter does not apply to deficiencies from the requirement to 
hold an annual meeting, the Commission believes that the proposal 
should benefit the public interest and protect investors by helping to 
ensure that deficient companies are subject to suspension and delisting 
for failure to hold an annual meeting and ensures that the only cure 
under the Exchange rules is for the company to hold its annual 
meeting.\33\ Accordingly, for the foregoing reasons, the Commission 
believes that the proposed rule change is reasonably designed to 
further the goals of Section 6(b)(5) of the Act.
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    \31\ See Exchange Rule 5810(b) and IM-5810-1. See also Item 3.01 
of Commission Form 8-K, which requires that a registrant disclose 
any notification from the exchange that maintains its principal 
listing that the registrant does not satisfy a rule or standard for 
continued listing on the exchange.
    \32\ See Exchange List of Non-Compliant Companies, available at 
https://listingcenter.nasdaq.com/NonCompliantCompanyList.aspx.
    \33\ Exchange Rule 5805(j) defines a ``Public Reprimand Letter'' 
as a letter issued by Staff or a written decision of an Adjudicatory 
Body in cases where the listed company has violated an Exchange 
corporate governance or notification listing standard (other than 
one required by Rule 10A-3 of the Act) and Staff or the Adjudicatory 
Body determines that delisting is an inappropriate sanction.
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    The Commission also finds that the proposal is consistent with 
Section 6(b)(4) of the Act,\34\ which requires that the rules of an 
exchange provide for the equitable allocation of reasonable dues, fees, 
and other charges among its members and issuers and other persons using 
its facilities. Specifically, the Commission believes that assessing 
the $5,000 compliance plan review fee for deficiencies from the annual 
meeting requirement on listed companies that have not opted-in to the 
Fee Program is reasonable and equitably allocated because it is the 
same fee that is charged for other deficiencies that allow for the 
submission of a plan of compliance.\35\ Furthermore, the Commission 
believes that assessing different fees between listed companies that 
elect to participate in the Fee Program and those that do not are 
consistent with the approach allowed when the Fee Program was 
adopted.\36\
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    \34\ 15 U.S.C. 78s(b)(5).
    \35\ See proposed Exchange Rule 5810(c)(2)(A)(iii); see also 
supra note 21.
    \36\ See Notice, supra note 5, at 81575.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\37\ that the proposed rule change (SR-NASDAQ-2015-144), be, and hereby 
is, approved.
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    \37\ 15 U.S.C. 78f(b)(2).
    \38\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\38\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-03442 Filed 2-18-16; 8:45 am]
BILLING CODE 8011-01-P



                                                    8582                          Federal Register / Vol. 81, No. 33 / Friday, February 19, 2016 / Notices

                                                    SECURITIES AND EXCHANGE                                 Information Officer, Securities and                   hold an annual meeting no later than
                                                    COMMISSION                                              Exchange Commission, c/o Remi Pavlik-                 one year after the end of the company’s
                                                                                                            Simon, 100 F Street NE., Washington,                  fiscal year.6 Currently, if an Exchange-
                                                    Proposed Collection; Comment                            DC 20549 or send an email to: PRA_                    listed company fails to hold its annual
                                                    Request                                                 Mailbox@sec.gov.                                      meeting, Staff has no discretion to allow
                                                    Upon Written Request Copies Available                     Dated: February 12, 2016.                           additional time for the company to
                                                     From: Securities and Exchange                          Robert W. Errett,                                     regain compliance. Instead, Staff is
                                                     Commission, Office of FOIA Services,                                                                         required to issue a Delisting
                                                                                                            Deputy Secretary.
                                                     100 F Street NE., Washington, DC                                                                             Determination, subjecting the company
                                                                                                            [FR Doc. 2016–03398 Filed 2–18–16; 8:45 am]
                                                     20549–2736.                                                                                                  to immediate suspension and delisting,
                                                                                                            BILLING CODE 8011–01–P
                                                                                                                                                                  unless the company appeals the
                                                    Extension: Industry Guides, SEC File No.                                                                      Delisting Determination to the Hearings
                                                        270–069, OMB Control No. 3235–0069.                                                                       Panel.7 The only other Exchange rules
                                                       Notice is hereby given that, pursuant                SECURITIES AND EXCHANGE
                                                                                                                                                                  where a listed company is subject to
                                                    to the Paperwork Reduction Act of 1995                  COMMISSION
                                                                                                                                                                  immediate suspension and delisting is
                                                    (44 U.S.C. 3501 et seq.), the Securities                [Release No. 34–77137; File No. SR–                   when a company fails to timely solicit
                                                    and Exchange Commission                                 NASDAQ–2015–144]                                      proxies and when the Staff determines
                                                    (‘‘Commission’’) is soliciting comments                                                                       that the company’s continued listing
                                                    on the collection of information                        Self-Regulatory Organizations; The                    raises a public interest concern.8 For all
                                                    summarized below. The Commission                        NASDAQ Stock Market LLC; Order                        other deficiencies under the NASDAQ
                                                    plans to submit this existing collection                Granting Approval of Proposed Rule                    Listing Rules, a listed company is
                                                    of information to the Office of                         Change To Amend Rules 5810(4),                        provided with either the opportunity to
                                                    Management and Budget for extension                     5810(c), 5815(c) and 5820(d) To                       submit a plan to regain compliance or
                                                    and approval.                                           Provide Staff With Limited Discretion                 given a fixed cure period to regain
                                                       Industry Guides are used by                          To Grant a Listed Company That Failed                 compliance.9
                                                    registrants in certain industries as                    To Hold Its Annual Meeting of                            The Exchange asserted in its filing
                                                    disclosure guidelines to be followed in                 Shareholders an Extension of Time To                  that there are a variety of mitigating
                                                    presenting information to investors in                  Comply With the Annual Meeting                        reasons why a listed company may fail
                                                    Securities Act (15 U.S.C. 77a et seq.)                  Requirement                                           to timely hold an annual meeting of
                                                    and Exchange Act (15 U.S.C. 78a et seq.)                                                                      shareholders.10 For example, the
                                                                                                            February 12, 2016.
                                                    registration statements and certain other                                                                     Exchange states that it has observed
                                                    Exchange Act filings. The paperwork                     I. Introduction
                                                    burden from the Industry Guides is                         On December 9, 2015, The NASDAQ                       6 Each company listing common stock or voting

                                                    imposed through the forms that are                                                                            preferred stock, and their equivalents, must hold an
                                                                                                            Stock Market LLC (‘‘NASDAQ’’ or                       annual meeting of shareholders no later than one
                                                    subject to the disclosure requirements in               ‘‘Exchange’’) filed with the Securities               year after the end of the company’s fiscal year and
                                                    the Industry Guides and is reflected in                 and Exchange Commission                               solicit proxies for that meeting. See Exchange Rules
                                                    the analysis of these documents. To                     (‘‘Commission’’), pursuant to Section                 5620(a) and (b), respectively. The proposed rule
                                                    avoid a Paperwork Reduction Act                         19(b)(1) 1 of the Securities Exchange Act
                                                                                                                                                                  change will also apply to Exchange listed
                                                    inventory reflecting duplicative                                                                              companies that are limited partnerships required to
                                                                                                            of 1934 (‘‘Act’’),2 and Rule 19b–4                    hold an annual meeting. A company that is a
                                                    burdens, for administrative convenience                 thereunder,3 a proposed rule change to                limited partnership is not be required to hold an
                                                    the Commission estimates the total                      provide staff of NASDAQ’s Listing                     annual meeting of limited partners unless required
                                                    annual burden imposed by the Industry                   Qualifications Department (‘‘Staff’’)
                                                                                                                                                                  by statute or regulation in the state in which the
                                                    Guides to be one hour.                                                                                        limited partnership is formed or doing business or
                                                                                                            with limited discretion to grant a listed             by the terms of the partnership’s limited
                                                       Written comments are invited on: (a)
                                                                                                            company, that failed to timely hold its               partnership agreement. See Exchange Rules
                                                    Whether this proposed collection of                                                                           5615(a)(4)(D) and (F); see also Notice, supra note 5,
                                                                                                            annual meeting of shareholders, a
                                                    information is necessary for the proper                                                                       at 81573 n.3.
                                                                                                            certain period of time to comply with
                                                    performance of the functions of the                                                                              7 See Exchange Rule 5810(c)(1). A listed company
                                                                                                            the annual meeting requirement.4 The                  may request review of a Staff delisting
                                                    agency, including whether the
                                                                                                            proposed rule change was published for                determination by a Hearings Panel. See Exchange
                                                    information will have practical utility;                                                                      Rule 5815. A timely request for a hearing will stay
                                                                                                            comment in the Federal Register on
                                                    (b) the accuracy of the agency’s estimate                                                                     the suspension and delisting pending the issuance
                                                                                                            December 30, 2015.5 The Commission
                                                    of the burden imposed by the collection                                                                       of a written Panel Decision. See Exchange Rule
                                                                                                            received no comments on the proposed                  5815(a)(1)(A).
                                                    of information; (c) ways to enhance the
                                                                                                            rule change. This order approves the                     8 See Exchange Rule 5810(c)(1); see also Notice,
                                                    quality, utility, and clarity of the
                                                                                                            proposed rule change.                                 supra note 5, at 81573.
                                                    information collected; and (d) ways to                                                                           9 See Exchange Rules 5810(c)(2) and (3); see also
                                                    minimize the burden of the collection of                II. Description of the Proposed Rule                  Notice, supra note 5, at 81573. Generally, a listed
                                                    information on respondents, including                   Change                                                company is allowed 45 calendar days to submit a
                                                    through the use of automated collection                                                                       plan of compliance for certain deficiencies set forth
                                                                                                               Companies listed on the Exchange                   in Exchange Rule 5810(c)(2)(i)–(iii). Upon review of
                                                    techniques or other forms of information                must comply with various continued                    the plan, Staff may grant the company up to 180
                                                    technology. Consideration will be given                 listing requirements, one of which is to              calendar days from the date of Staff’s initial
                                                    to comments and suggestions submitted                                                                         notification of the company’s non-compliance to
                                                                                                                                                                  regain compliance. See Exchange Rule 5810(c)(2)(A)
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                                                    in writing within 60 days of this                         1 15  U.S.C. 78s(b)(1).                             and (B); see also Exchange Rule 5810(c)(2)(F),
                                                    publication.                                              2 15  U.S.C. 78a.                                   which provides a company 60 calendar days to
                                                       An agency may not conduct or                            3 17 CFR 240.19b–4.
                                                                                                                                                                  submit a plan to regain compliance for filing
                                                    sponsor, and a person is not required to                   4 As described in more detail below, the total     deficiencies. If upon review of the company’s plan
                                                    respond to, a collection of information                 amount of time a listed company that fails to hold    Staff determines that an extension is not warranted,
                                                                                                            an annual meeting of shareholders can remain          Staff will issue a Delisting Determination, which
                                                    unless it displays a currently valid                    listed on the Exchange will not be changing under     triggers the company’s right to request review by a
                                                    control number.                                         the proposed rule change.                             Hearings Panel. See Exchange Rule 5815; see also
                                                       Please direct your written comment to                   5 See Securities Exchange Act Release No. 76731    Exchange Rule 5810(c)(2)(F).
                                                    Pamela Dyson, Director/Chief                            (December 22, 2015), 80 FR 81573 (‘‘Notice’’).           10 See Notice, supra note 5, at 81573.




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                                                                                  Federal Register / Vol. 81, No. 33 / Friday, February 19, 2016 / Notices                                                        8583

                                                    cases where a listed company was                        determining whether to grant the                         meeting requirement) for a maximum of
                                                    required to reschedule the annual                       company an extension to comply with                      180 calendar days from the date of the
                                                    meeting after the meeting’s deadline in                 the annual meeting requirement, and                      Delisting Determination,18 and the
                                                    order to provide its shareholders more                  the length of any such extension, Staff                  company may further appeal an
                                                    time to review proxy materials in                       will consider certain factors, which                     unfavorable Hearings Panel decision to
                                                    connection with a shareholder proxy                     should be addressed in the company’s                     the Council, which can grant an
                                                    contest.11 The Exchange also stated that                compliance plan, including the                           exception from the continuing listed
                                                    it had encountered listed companies                     likelihood that the listed company                       standards for a maximum of 360
                                                    that could not hold an annual meeting                   would be able to hold an annual                          calendar days from the date of the
                                                    because the company was delinquent in                   meeting within the exception period,                     Delisting Determination.19 Therefore,
                                                    filing periodic reports and, as a result,               the company’s past compliance history,                   under both the proposed rule change
                                                    could not include the required financial                the reasons for the failure to timely hold               and the current rules, the total amount
                                                    information in a proxy statement.12                     an annual meeting, corporate events that                 of time that a company could remain
                                                       Accordingly, the Exchange has                        may occur within the exception period,                   listed while not in compliance with the
                                                    proposed to amend Exchange Rules                        the company’s general financial status,                  annual meeting requirement is 360
                                                    5810(4), 5810(c), 5815(c) and 5820(d) to                and the company’s disclosures to the                     calendar days.20
                                                    provide listed companies that fail to                   market.15 Under proposed Exchange                           Furthermore, the Exchange proposes
                                                    hold a timely annual meeting with the                   Rule 5810(c)(2)(G), Staff would be                       to amend Exchange Rule 5810(4) to
                                                    ability to submit a plan of compliance                  limited to grant an extension upon                       make clear that a Public Reprimand
                                                    for Staff’s review.13 In its filing, the                review of the compliance plan, to no                     Letter is not an available notification
                                                    Exchange proposed to amend Exchange                     more than 180 calendar days from the                     type for unresolved deficiencies from
                                                    Rule 5810(c)(1) by deleting the language                deadline to hold the annual meeting. As                  the standards of Exchange Rules 5250(c)
                                                    that a failure of a listed company to                   noted above, the deadline to hold an                     (Obligation to File Periodic Financial
                                                    timely hold its annual shareholders’                    annual meeting of shareholders is one                    Reports), and the annual meeting
                                                    meeting results in an immediate                         year after the end of the company’s                      requirements of Exchange Rules
                                                    suspension and delisting. The Exchange                  fiscal year.16 The Exchange is also                      5615(a)(4)(D), and 5620(a).
                                                    also proposed to amend Exchange Rule                    making other conforming changes to the                      Lastly, the Exchange noted in its filing
                                                    5810(c)(2)(A)(iii) by including                         provisions in Exchange Rule                              that a listed company that submits a
                                                    references to Exchange Rules 5620(a)                    5810(c)(2)(B) to make clear that annual                  plan of compliance and is not subject to
                                                    (Meeting of Shareholders) and                           meeting deficiencies are governed by                     the Exchange’s all-inclusive annual
                                                    5615(a)(4)(D) (Partner Meetings of                      the new provisions in Exchange Rule                      listing fee program (‘‘Fee Program’’)
                                                    Limited Partnerships) under the list of                 5810(c)(2)(G), rather than the plan                      prior to January 1, 2018 will be subject
                                                    deficiencies for which a listed company                 review provisions that apply to other                    to the $5,000 compliance plan review
                                                    may submit a plan of compliance for                     deficiencies.                                            fee, in addition to any other fees
                                                                                                               The Exchange also has proposed to                     incurred in the appellate process,
                                                    Staff review.
                                                                                                            amend, in conjunction with the changes                   whereas a company that has opted-in to
                                                       Under proposed Exchange Rule                         described above, Exchange Rules
                                                    5810(c)(2)(G), in the case of deficiencies                                                                       the Fee Program will not.21
                                                                                                            5815(c) and 5820(d) to limit the
                                                    from the annual meeting requirements                    maximum length of an extension that a                    III. Discussion and Commission
                                                    of Exchange Rules 5620(a) and                           NASDAQ Hearings Panel or the                             Findings
                                                    5615(a)(4)(D), Staff’s notice shall                     NASDAQ Listing and Hearing Review
                                                    provide the listed company with 45                                                                                  After careful review, the Commission
                                                                                                            Council (‘‘Council’’), respectively, may                 finds that the proposed rule change is
                                                    calendar days to submit a plan to regain                grant a listed company for the failure to
                                                    compliance with these provisions;                                                                                consistent with the requirements of the
                                                                                                            hold an annual meeting to no more than                   Act and rules and regulations
                                                    provided, however, that the company                     360 calendar days from the date of non-
                                                    shall not be provided with an                                                                                    thereunder applicable to a national
                                                                                                            compliance.17 Under the Exchange’s                       securities exchange.22 In particular, the
                                                    opportunity to submit such a plan if                    current rules, when a non-compliant
                                                    review of a prior Staff Delisting                       company receives a Delisting                                18 See Exchange Rule 5815(c)(1)(A). As noted
                                                    Determination with respect to the                       Determination, it may appeal that                        above, an appeal to the Hearings Panel results in an
                                                    company is already pending.14 In                        determination to the Hearings Panel,                     automatic stay of the suspension and delisting.
                                                                                                            which can grant an exception from the                       19 See Exchange Rule 5820(d)(1).
                                                      11 See  Notice, supra note 5, at 81573–74.                                                                        20 See Notice, supra note 5, at 81574 (Exchange
                                                      12 See
                                                                                                            continuing listed standards (which
                                                              Notice, supra note 5, at 81574. Under the                                                              representing that the total time that a listed
                                                    current rules, the Exchange states that a listed
                                                                                                            require compliance with the annual                       company may be granted to regain compliance with
                                                    company could receive an extension of time to                                                                    the annual meeting requirement is unchanged from
                                                    regain compliance with the periodic filing              is necessary to make a determination regarding           the current NASDAQ Listing Rules).
                                                    requirement. However, if during any such                whether to grant such an extension. See id.                 21 See Exchange Rule 5810(c)(2)(A). Effective
                                                    compliance period the company subsequently fails           15 See proposed Exchange Rule 5810(c)(2)(G)(ii).
                                                                                                                                                                     January 1, 2018, all listed companies will be subject
                                                    to hold an annual meeting of shareholders for any       Under this proposal, Staff review on whether to          to the Fee Program and the $5,000 fee will no longer
                                                    reason, Staff would be required to immediately          grant additional time to comply will be based on         be applicable to any company. See Exchange Rule
                                                    issue a Delisting Determination for both the            information provided by a variety of sources, which      IM–5910–1 and IM–5920–1; see also Notice, supra
                                                    periodic filing delinquency and the annual meeting      may include the listed company, its audit                note 5, at 81574. In addition, all listed companies,
                                                    deficiency, notwithstanding that the extended           committee, its outside auditors, the staff of the        regardless of whether they participate in the Fee
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                                                    compliance period for the periodic filing               Commission, and any other regulatory body. See id.       Program or not, are subject to the $10,000 fee for
                                                    delinquency has not expired. See Rule                      16 See proposed Exchange Rule 5810(c)(2)(G)(ii).      each of the review by the Hearing Panel and appeal
                                                    5810(c)(2)(A); see also Notice, supra note 5, at        In its filing, the Exchange noted that it has observed   to the Council set forth in Exchange Rules
                                                    81574.                                                  that a substantial majority of listed companies that     5815(a)(3) and 5820(a), respectively. See Notice,
                                                       13 See Notice, supra note 5, at 81574.               received delisting notices for failing to hold their     supra note 5, at 81574. Listed companies may be
                                                       14 See proposed Exchange Rule 5810(c)(2)(G)(i).      annual meetings regain compliance within a six           subject to these fees at different times depending on
                                                    The Exchange also proposes that Staff may extend        month period. See Notice, supra note 5, at 81574         if and when they regain compliance. See id.
                                                    the deadline for up to an additional 15 calendar        n.15.                                                       22 In approving the proposed rule changes, the

                                                    days upon good cause shown and may request such            17 See proposed Exchange Rules 5810(c)(1)(G) and      Commission has considered their impact on
                                                    additional information from the listed company as       5820(d)(5).                                                                                         Continued




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                                                    8584                          Federal Register / Vol. 81, No. 33 / Friday, February 19, 2016 / Notices

                                                    Commission finds that the proposal is                   immediately appeal the determination                   under the Exchange’s current rules,
                                                    consistent with Section 6(b)(5) of the                  to a Hearings Panel, which generally                   since there is no opportunity for a
                                                    Act,23 which requires, among other                      results in an automatic stay of the                    compliance plan, the full 360-day
                                                    things, that the rules of a national                    suspension and delisting pending the                   period is spent before the Hearings
                                                    securities exchange be designed to                      issuance of a written Panel Decision.26                Panel and the Council, assuming the
                                                    promote just and equitable principles of                In practice, it is the Commission’s                    non-compliant company has appealed
                                                    trade, to remove impediments to and                     understanding from the Exchange that                   its Delisting Determination to both the
                                                    perfect the mechanism of a free and                     listed companies will often appeal a                   Hearings Panel and Council and been
                                                    open market and a national market                       suspension and delisting determination                 granted the maximum allowable
                                                    system, and, in general, to protect                     for failure to hold an annual meeting in               exceptions from the continued listing
                                                    investors and the public interest; and                  order to receive the automatic stay from               requirements by those adjudicatory
                                                    are not designed to permit unfair                       the Hearings Panel. As such, the                       bodies. In the Commission’s view, the
                                                    discrimination between customers,                       proposed rule change provides Staff                    fact that the current maximum time
                                                    issuers, brokers, or dealers.                           with the ability to analyze particular                 period that a company could remain
                                                       The development and enforcement of                   instances of non-compliance with the                   listed while not in compliance with the
                                                    meaningful corporate governance listing                 annual meeting requirement prior to any                annual meeting requirement will be
                                                    standards for a national securities                     appeal to the Hearings Panel, and if                   unchanged under the proposal suggests
                                                    exchange is of substantial importance to                Staff deems it warranted, allow a non-                 that the proposal is reasonably designed
                                                    financial markets and the investing                     compliant company to carry out a                       to continue to afford adequate
                                                    public, especially given investor                       compliance plan for a limited time that                protection to investors with respect to
                                                    expectations regarding the nature of                    could enable the company to become                     companies that fail to hold an annual
                                                    companies that have achieved an                         compliant again without the need to                    meeting in the time required under the
                                                    exchange listing for their securities. In               appeal to the Hearings Panel (or                       Exchange rules.
                                                    particular, the Commission believes that                Council).                                                 Moreover, the Commission
                                                    the goal of ensuring that listed                           Importantly, the Commission notes                   emphasizes that, under the proposal,
                                                    companies have met their requirement                    that the maximum time allowed by the                   Staff retains the discretion not to grant
                                                    to hold an annual meeting of                            proposed requirements for a deficient                  an exception from the continued listing
                                                    shareholders under the Exchange’s                       company to remain listed while trying                  requirements to a company that has
                                                    Listing Rules is of critical importance to              to regain compliance with the annual                   failed to hold its annual meeting on
                                                    allow shareholders the ability to                       meeting requirement (360 calendar                      time. The Commission expects Staff to
                                                    exercise their rights to participate in                 days) would be the same as the                         exercise this discretion carefully and
                                                    corporate governance matters, such as                   maximum time allowed by the current                    discerningly. Staff’s analysis in this
                                                    the election of directors. As a publicly                requirements for a deficient company                   regard would include consideration of
                                                    listed company, it is at a company’s                    (that appeals to both the Hearings Panel               the factors set forth in proposed
                                                    annual meeting that shareholders will                   and Council, and is granted the                        Exchange Rule 5810(c)(2)(G)(ii), which
                                                    typically exercise their right to vote on               maximum permitted extensions of time                   the deficient company also would be
                                                    such important corporate matters as the                 by those adjudicatory bodies) to remain                required to discuss in its compliance
                                                    election of directors. For these same                   listed while not in compliance with the                plan. The Commission expects Staff to
                                                    reasons, it is also important that                      annual meeting requirement (also 360                   carefully scrutinize these factors when
                                                    companies that have failed to timely                    calendar days).27 The difference under                 conducting its analysis, and not to grant
                                                    hold an annual meeting of shareholders                  the proposed rule change is that,                      an exception from the continued listing
                                                    do not remain listed on a national                      pursuant to Staff’s discretion, the non-               requirements when Staff believes that
                                                    securities exchange if such deficiency is               compliant company may be granted an                    such an exception is not warranted or it
                                                    not cured in a timely manner.                           exception from the continued listed                    is unlikely the company will be able to
                                                       As discussed above, the Exchange                     requirements of up to 180 calendar days                hold its annual meeting within the time
                                                    believes that, in some cases, there may                 from the annual meeting deadline (i.e.,                permitted. For example, a listed
                                                    be mitigating reasons for why a listed                  the first 180-days of the overall 360-day              company that demonstrates a history of
                                                    company failed to fulfill its annual                    time period) in order to potentially                   failures to hold a timely annual meeting
                                                    meeting requirement, and for which                      fulfill a compliance plan and avoid a                  could, and most likely should, still be
                                                    immediate suspension and delisting                      Delisting Determination.28 By contrast,                subject to immediate suspension and
                                                    may not be an appropriate outcome                                                                              delisting.29
                                                    under the circumstances.24 In these
                                                                                                               26 See supra note 7. The Commission notes that         Additionally, the Exchange rules will
                                                                                                            the proposed factors, set forth in proposed            continue to provide Staff with the
                                                    cases, the proposed rule change gives                   Exchange Rule 5810(c)(2)(G)(ii), that would be used
                                                    Staff discretion to analyze whether the                 to determine whether to grant an exception for the
                                                                                                                                                                   ability to send an immediate Delisting
                                                    reason for the annual meeting                           failure to hold an annual meeting, and the length      Determination to a deficient company
                                                    deficiency and the plan to regain                       of any such exception, are substantially similar to    when Staff has determined that, after
                                                                                                            the factors used by a Hearings Panel to determine      review of the facts and circumstances of
                                                    compliance merit an exception to                        whether to grant a further stay of a Staff Delisting
                                                    immediate suspension and delisting.25                   Determination. See Exchange Rule 5815(a)(1)(B).
                                                                                                                                                                   the deficiency, continued listing raises a
                                                                                                               27 Compare proposed Rules 5815(c)(1)(G) and
                                                    In this regard, the Commission notes
                                                                                                            5820(d)(5) with current rules 5815(c)(1)(A) and        deadline. In other words, if a non-compliant
                                                    that under the Exchange’s current rules,                                                                       company receives the full 180-day exception from
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                                                                                                            5820(d)(1); see also Notice, supra note 5, at 81574
                                                    a listed company receiving a Staff                      (Exchange representing that the total time that a      Staff in order to attempt to carry out a compliance
                                                    Delisting Determination for a failure to                listed company may be granted to regain                plan but does not regain compliance by the end of
                                                    hold an annual meeting may                              compliance with the annual meeting requirement is      that 180-day period and is therefore issued a
                                                                                                            unchanged from the current NASDAQ Listing              Delisting Determination, it would only have 180
                                                                                                            Rules).                                                more days to avail itself of its appeal rights.
                                                    efficiency, competition, and capital formation. See        28 If the non-complaint company is ultimately         29 See proposed Exchange Rule 5810(c)(2)(G)(ii).
                                                    15 U.S.C. 78c(f).                                       unsuccessful in this regard, however, and is issued    The Commission notes that such a company would
                                                       23 15 U.S.C. 78s(b)(4).
                                                                                                            a Delisting Determination, the Hearings Panel and      have a right to appeal the determination to a
                                                       24 See Notice, supra note 5, at 81575.
                                                                                                            Council may grant an additional exception only out     Hearings Panel, which will generally stay the
                                                       25 See proposed Exchange Rule 5810(c)(2)(G).         to 360 calendar days from the annual meeting           suspension and delisting.



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                                                                                   Federal Register / Vol. 81, No. 33 / Friday, February 19, 2016 / Notices                                                 8585

                                                    public interest concern.30 Accordingly,                  foregoing reasons, the Commission                     plans to submit this existing collection
                                                    the Commission believes the proposed                     believes that the proposed rule change                of information to the Office of
                                                    rule change will continue to enable the                  is reasonably designed to further the                 Management and Budget for extension
                                                    Exchange to immediately suspend and                      goals of Section 6(b)(5) of the Act.                  and approval.
                                                    delist companies that have failed to                        The Commission also finds that the                    Rule 13e–1 (17 CFR 240.13e–1) under
                                                    hold an annual meeting when the                          proposal is consistent with Section                   the Securities Exchange Act of 1934 (15
                                                    circumstances warrant it, but at the                     6(b)(4) of the Act,34 which requires that             U.S.C. 78 et seq.) makes it unlawful for
                                                    same time will provide the Exchange                      the rules of an exchange provide for the              an issuer who has received notice that
                                                    with flexibility to address instances in                 equitable allocation of reasonable dues,              it is the subject of a tender offer made
                                                    which the failure to hold an annual                      fees, and other charges among its                     under Section 14(d)(1) of the Exchange
                                                    meeting, in the Exchange’s discretion,                   members and issuers and other persons                 Act to purchase any of its equity
                                                    counsels in favor of giving the non-                     using its facilities. Specifically, the               securities during the tender offer, unless
                                                    compliant company an opportunity to                      Commission believes that assessing the                it first files a statement with the
                                                    regain compliance for a limited time                     $5,000 compliance plan review fee for                 Commission containing information
                                                    period without being subject to                          deficiencies from the annual meeting                  required by the rule. This rule is in
                                                    immediate suspension and delisting or                    requirement on listed companies that                  keeping with the Commission’s
                                                    having to avail themselves of the                        have not opted-in to the Fee Program is               statutory responsibility to prescribe
                                                    Hearings Panel process to stay the                       reasonable and equitably allocated                    rules and regulations that are necessary
                                                    action. The Commission believes,                         because it is the same fee that is charged            for the protection of investors. The
                                                    therefore, that the proposed rule change                 for other deficiencies that allow for the             information filed under Rule 13e–1
                                                    is designed to protect investors and the                 submission of a plan of compliance.35                 must be filed with the Commission and
                                                    public interest, as well as to promote                   Furthermore, the Commission believes                  is publicly available. We estimate that it
                                                    just and equitable principles of trade.                  that assessing different fees between                 takes approximately 10 burden hours
                                                       The Commission further notes that, as                 listed companies that elect to participate            per response to provide the information
                                                    an additional protection of investors                    in the Fee Program and those that do not              required under Rule 13e–1 and that the
                                                    and the public interest, a listed                        are consistent with the approach                      information is filed by approximately 10
                                                    company that receives notification that                  allowed when the Fee Program was                      respondents. We estimate that 25% of
                                                    it is deficient in satisfying the annual                 adopted.36                                            the 10 hours per response (2.5 hours) is
                                                    meeting requirement will continue to be                                                                        prepared by the company for a total
                                                                                                             IV. Conclusion
                                                    required to publicly disclose that it has                                                                      annual reporting burden of 25 hours (2.5
                                                    received notification of non-compliance                    It is therefore ordered, pursuant to
                                                                                                             Section 19(b)(2) of the Act 37 that the               hours per response × 10 responses).
                                                    with the annual meeting requirement.31
                                                                                                             proposed rule change (SR–NASDAQ–                         Written comments are invited on: (a)
                                                    In addition, the Exchange publicly
                                                                                                             2015–144), be, and hereby is, approved.               Whether this proposed collection of
                                                    discloses a list of companies that are
                                                                                                                                                                   information is necessary for the proper
                                                    non-compliant with the continued                           For the Commission, by the Division of
                                                                                                                                                                   performance of the functions of the
                                                    listing standards and the listing                        Trading and Markets, pursuant to delegated
                                                                                                             authority.38                                          agency, including whether the
                                                    standards with which they failed to
                                                                                                             Robert W. Errett,                                     information will have practical utility;
                                                    comply.32 Furthermore, by making it
                                                                                                                                                                   (b) the accuracy of the agency’s estimate
                                                    clear in the proposed rules that a Public                Deputy Secretary.
                                                                                                                                                                   of the burden imposed by the collection
                                                    Reprimand Letter does not apply to                       [FR Doc. 2016–03442 Filed 2–18–16; 8:45 am]
                                                                                                                                                                   of information; (c) ways to enhance the
                                                    deficiencies from the requirement to                     BILLING CODE 8011–01–P
                                                                                                                                                                   quality, utility, and clarity of the
                                                    hold an annual meeting, the
                                                                                                                                                                   information collected; and (d) ways to
                                                    Commission believes that the proposal
                                                                                                                                                                   minimize the burden of the collection of
                                                    should benefit the public interest and                   SECURITIES AND EXCHANGE
                                                                                                                                                                   information on respondents, including
                                                    protect investors by helping to ensure                   COMMISSION
                                                                                                                                                                   through the use of automated collection
                                                    that deficient companies are subject to
                                                                                                             Proposed Collection; Comment                          techniques or other forms of information
                                                    suspension and delisting for failure to
                                                                                                             Request                                               technology. Consideration will be given
                                                    hold an annual meeting and ensures
                                                                                                                                                                   to comments and suggestions submitted
                                                    that the only cure under the Exchange                       Upon Written Request Copies                        in writing within 60 days of this
                                                    rules is for the company to hold its                     Available From: Securities and                        publication.
                                                    annual meeting.33 Accordingly, for the                   Exchange Commission, Office of FOIA                      An agency may not conduct or
                                                                                                             Services, 100 F Street NE., Washington,               sponsor, and a person is not required to
                                                      30 See  Exchange Rule 5810(c)(1).
                                                      31 See
                                                                                                             DC 20549–2736.                                        respond to, a collection of information
                                                              Exchange Rule 5810(b) and IM–5810–1.              Extension: Rule 13e–1, SEC File No.
                                                    See also Item 3.01 of Commission Form 8–K, which                                                               unless it displays a currently valid
                                                    requires that a registrant disclose any notification     270–255, OMB Control No. 3235–0305.                   control number.
                                                    from the exchange that maintains its principal              Notice is hereby given that, pursuant
                                                    listing that the registrant does not satisfy a rule or   to the Paperwork Reduction Act of 1995                   Please direct your written comment to
                                                    standard for continued listing on the exchange.          (44 U.S.C. 3501 et seq.), the Securities              Pamela Dyson, Director/Chief
                                                       32 See Exchange List of Non-Compliant
                                                                                                             and Exchange Commission                               Information Officer, Securities and
                                                    Companies, available at https://                                                                               Exchange Commission, c/o Remi Pavlik-
                                                    listingcenter.nasdaq.com/                                (‘‘Commission’’) is soliciting comments
asabaliauskas on DSK5VPTVN1PROD with NOTICES




                                                    NonCompliantCompanyList.aspx.                            on the collection of information                      Simon, 100 F Street NE., Washington,
                                                       33 Exchange Rule 5805(j) defines a ‘‘Public
                                                                                                             summarized below. The Commission                      DC 20549 or send an email to: PRA_
                                                    Reprimand Letter’’ as a letter issued by Staff or a                                                            Mailbox@sec.gov.
                                                    written decision of an Adjudicatory Body in cases
                                                    where the listed company has violated an Exchange
                                                                                                               34 15 U.S.C. 78s(b)(5).                               Dated: February 12, 2016.
                                                                                                               35 See proposed Exchange Rule 5810(c)(2)(A)(iii);
                                                    corporate governance or notification listing                                                                   Robert W. Errett,
                                                    standard (other than one required by Rule 10A–3          see also supra note 21.
                                                                                                               36 See Notice, supra note 5, at 81575.              Deputy Secretary.
                                                    of the Act) and Staff or the Adjudicatory Body
                                                    determines that delisting is an inappropriate              37 15 U.S.C. 78f(b)(2).                             [FR Doc. 2016–03399 Filed 2–18–16; 8:45 am]
                                                    sanction.                                                  38 17 CFR 200.30–3(a)(12).                          BILLING CODE 8011–01–P




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Document Created: 2018-02-02 14:32:10
Document Modified: 2018-02-02 14:32:10
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation81 FR 8582 

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