81 FR 91211 - Self-Regulatory Organizations: Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Require Listed Companies To Publicly Disclose Compensation or Other Payments by Third Parties to Any Nominee for Director or Sitting Director in Connection With Their Candidacy for or Service on the Companies' Board of Directors
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 242 (December 16, 2016)
Federal Register Volume 81, Issue 242 (December 16, 2016)
| Page Range | 91211-91215 | |
| FR Document | 2016-30255 |
[Federal Register Volume 81, Number 242 (Friday, December 16, 2016)] [Notices] [Pages 91211-91215] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-30255] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79527; File No. SR-IEX-2016-19] Self-Regulatory Organizations: Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Require Listed Companies To Publicly Disclose Compensation or Other Payments by Third Parties to Any Nominee for Director or Sitting Director in Connection With Their Candidacy for or Service on the Companies' Board of Directors December 12, 2016. Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that on December 5, 2016, the Investors Exchange LLC (``IEX'' or the ``Exchange'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change Pursuant to the provisions of Section 19(b)(1) under the Securities Exchange Act of 1934 (``Act''),\4\ and Rule 19b-4 [[Page 91212]] thereunder,\5\ Investors Exchange LLC (``IEX'' or ``Exchange'') is filing with the Securities and Exchange Commission (``Commission'') a proposed rule change to require listed companies to publicly disclose compensation or other payments by third parties to any nominee for director or sitting director in connection with their candidacy for or service on the companies' Board of Directors. The Exchange has designated this proposal as non-controversial and provided the Commission with the notice required by Rule 19b-4(f)(6)(iii) under the Act.\6\ --------------------------------------------------------------------------- \4\ 15 U.S.C. 78s(b)(1). \5\ 17 CFR 240.19b-4. \6\ 17 CFR 240.19b-4(f)(6)(iii). --------------------------------------------------------------------------- The text of the proposed rule change is available at the Exchange's Web site at www.iextrading.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statement may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On June 17, 2016 the Commission granted IEX's application for registration as a national securities exchange under Section 6 of the Act including approval of rules applicable to the qualification, listing and delisting of companies on the Exchange. The Exchange plans to begin a listing program in 2017 and is proposing additional rules applicable to companies listing on the Exchange in this proposed rule change. IEX rules require listed companies to make public disclosure in several areas. For example, a listed company is required to publicly disclose material information that would reasonably be expected to affect the value of its securities or influence investors' decisions as well as when non-independent directors serve on a committee that generally requires only independent directors, such as for a controlled company or under exceptional and limited circumstances.\7\ A listed company is also required to file required periodic reports with the Commission.\8\ A principal purpose of these disclosure requirements is to protect investors and ensure these investors have necessary information to make informed investment and voting decisions. --------------------------------------------------------------------------- \7\ See Rules 14.207(b)(1), 14.407(c)(2), 14.405(c)(2)(B), 14.405(d)(2)(B) and 14.405(e)(3). \8\ See Rule 14.207(c). --------------------------------------------------------------------------- However, based on press reports and information from market participants, IEX understands there is one area where investors may not have complete or timely information. This is when third parties compensate directors in connection with their candidacy for and/or service on company Board of Directors. This third-party compensation, which may not be publicly disclosed, arises when a shareholder privately offers to compensate nominee directors in connection with those nominees' candidacy or service as directors. These arrangements vary but may include compensating directors based on achieving benchmarks such as an increase in share price over a fixed term.\9\ --------------------------------------------------------------------------- \9\ See, discussion generally in Securities Exchange Act Release No. 78223 (July 1, 2016), 81 FR 44400 (July 7, 2016) (Order Granting Approval of SR-NASDAQ-2016-13). --------------------------------------------------------------------------- IEX believes these undisclosed compensation arrangements potentially raise several concerns, including that they may lead to conflicts of interest among directors and call into question the directors' ability to satisfy their fiduciary duties. These arrangements may also tend to promote a focus on short-term results at the expense of long-term value creation. IEX believes that enhancing transparency around third-party board compensation would help address these concerns and would benefit investors by making available information potentially relevant to investment and voting decisions. IEX further believes that the proposed disclosure would not create meaningful burdens on directors or those making these payments nor on the companies required to make the disclosure.\10\ --------------------------------------------------------------------------- \10\ See, note 9. --------------------------------------------------------------------------- Accordingly, IEX is proposing to adopt Rule 14.207(b)(3) to require listed companies to publicly disclose on or through the companies' Web site or proxy statement or information statement for any shareholders' meeting at which directors are elected (or, if they do not file proxy or information statements, in Form 10-K or Form 20-F),\11\ the material terms of all agreements and arrangements between any director or nominee and any person or entity other than the company (the ``Third Party'') relating to compensation or other payment in connection with that person's candidacy or service as a director.12 13 A company may make this disclosure through its Web site by hyperlinking to another Web site, which must be continuously accessible. If that Web site subsequently becomes inaccessible or that hyperlink inoperable, the company must promptly restore it or make other disclosure in accordance with this proposed rule. --------------------------------------------------------------------------- \11\ This disclosure method is consistent with the method under Rule 14.405(d)(2)(B) for disclosure of the appointment of a non- independent compensation committee member under exceptional and limited circumstances. \12\ The proposal is intended to apply to agreements and arrangements whether or not the right to nominate a director legally belongs to a third party. See Supplementary Material .07 to Rule 14.405 (Independent Director Oversight of Director Nominations). \13\ If the Company provides disclosure in a proxy or information statement, including to satisfy the SEC's proxy disclosure requirements, sufficient to comply with this rule, its obligation to satisfy this rule is fulfilled regardless of the reason for which such disclosure was made. --------------------------------------------------------------------------- Consistent with other exemptions afforded certain types of companies, the Exchange is also proposing to amend Rule 14.407(a)(3) to provide that a foreign private issuer may follow home country practice in lieu of the requirements of the proposed rule. A Foreign Private Issuer may follow its home country practice in lieu of the requirements of Rule 14.207(b)(3) by utilizing the process described in Rule 14.407(a)(3), including but not limited to the requirement to submit to IEX a written statement from an independent counsel in such Company's home country certifying that the Company's practices are not prohibited by the home country's laws. Companies listed at the time this proposed rule becomes effective or initially listed thereafter must disclose all agreements and arrangements in accordance with this proposed rule by no later than the date on which the Company files or furnishes a proxy or information statement subject to Regulation 14A or 14C under the Act in connection with the Company's next shareholders' meeting at which directors are elected (or, if they do not file proxy or information statements, no later than when the Company files next Form 10-K or Form 20-F). Thereafter, a listed company must make this disclosure at least annually until the earlier of the resignation of the director or one year following the termination of [[Page 91213]] the agreement or arrangement.\14\ The proposed rule does not separately require the initial disclosure of newly entered into agreements or arrangements, provided that disclosure is made pursuant to this rule for the next shareholder meeting at which directors are elected. --------------------------------------------------------------------------- \14\ A Company posting the requisite disclosure on or through its Web site must make it publicly available no later than the date on which the Company files a proxy or information statement in connection with a shareholders' meeting at which directors are elected (or, if they do not file proxy or information statements, no later than when the Company files its next Form 10-K or Form 20-F). --------------------------------------------------------------------------- If a Company discovers an agreement or arrangement that should have been disclosed pursuant to subparagraph (A) of the proposed rule but was not, the Company must promptly make the required disclosure in accordance with this proposed rule.\15\ In addition, for agreements and arrangements not required to be disclosed in accordance with subparagraph (A)(ii) of the proposed rule, such as employment with a third party that existed prior to the nominee's candidacy and is otherwise disclosed, but where the director or nominee's remuneration is thereafter materially increased specifically in connection with such person's candidacy or service as a director of the company, only the difference between the new and previous level of compensation or other payment obligation need be disclosed. --------------------------------------------------------------------------- \15\ See infra discussion on remedial disclosure. --------------------------------------------------------------------------- The terms ``compensation'' and ``other payment'' as used in this proposed rule are intended to be construed broadly and apply to agreements and arrangements that provide for non-cash compensation and other payment obligations, such as health insurance premiums or indemnification, made in connection with a person's candidacy or service as a director. Further, at a minimum, the disclosure should identify the parties to and the material terms of the agreement or arrangement relating to compensation. In recognition of circumstances that do not raise the concerns noted above or where such disclosure may be duplicative, the proposed rule would not apply to agreements and arrangements that existed before the nominee's candidacy and the nominee's relationship with the Third Party has been otherwise publicly disclosed, for example, pursuant to Items 402(a)(2) of Regulation S-K or in a director's biographical summary included in periodic reports filed with the Commission. An example of an agreement or arrangement falling under this exception is a director or a nominee for director being employed by a private equity or venture capital firm, or a fund established by such firm, where employees are expected to and routinely serve on the boards of the fund's portfolio companies and their remuneration is not materially affected by such service. If such a director a [sic] nominee's remuneration is materially increased in connection with such person's candidacy or service as a director of the company, only the difference between the new and previous level of compensation needs to be disclosed under the proposed rule. Additionally, the proposed rule would not apply to agreements and arrangements that relate only to reimbursement of expenses incurred in connection with candidacy as a director, whether or not such reimbursement arrangement has been publicly disclosed. Further, Commission Rule 14a-12(c) subjects persons soliciting proxies in opposition to companies' proxy solicitation to certain disclosure requirements of Schedule 14A of the Act. The proposed rule relieves the company from the disclosure requirements of the proposed Rule 14.207(b)(3)(A) where an agreement or arrangement for a director or a nominee has been disclosed under Item 5(b) of Schedule 14A of the Act in the current fiscal year. However, such an agreement or arrangement is subject to the continuous disclosure requirements of the proposed Rule 14.207(b)(3)(B) on an annual basis. Similarly, a Company that provides disclosure in the current fiscal year pursuant to the requirement in Item 5.02(d)(2) of Form 8-K requiring ``a brief description of any arrangement or understanding between the new director and any other persons, naming such persons, pursuant to which such director was selected as a director''--would not have to make a separate disclosure under the proposed Rule 14.207(b)(3)(A). Such disclosure under Commission rules, however, shall not relieve a company of its ongoing obligation under the proposed Rule 14.207(b)(3)(B) to make annual disclosure. In recognition that a company, despite reasonable efforts, may not be able to identify all such agreements and arrangements, the proposed rule provides that a company shall not be deficient with the proposed disclosure requirements if it has undertaken reasonable efforts to identify all such agreements and arrangements, including by asking each director or nominee in a manner designed to allow timely disclosure, and upon discovery of a non-disclosed arrangement, promptly makes the required disclosure by filing a Form 8-K or 6-K, where required by Commission rules, or by issuing a press release. However, such remedial disclosure, regardless of its timing, does not satisfy the ongoing annual disclosure requirements under subparagraph (B). In cases where a company is considered deficient, the company must provide a plan to regain compliance. Consistent with deficiencies from most other rules that allow a company to submit a plan to regain compliance,\16\ IEX proposes to allow companies deficient under the proposed rule 45 calendar days to submit a plan sufficient to satisfy IEX staff that the company has adopted processes and procedures designed to identify and disclose relevant agreements and arrangements in the future. If the company does not do so, it would be issued a Staff Delisting Determination, which the company could appeal to a Hearings Panel pursuant to Rule 14.502. --------------------------------------------------------------------------- \16\ Pursuant to Rule 14.501(c)(2)(A), a company is provided 45 days to submit a plan to regain compliance with Rules 14.408(c) (Quorum), 14.411 (Review of Related Party Transactions, 14.412 (Shareholder Approval), 14.207(c)(3) (Auditor Registration), 14.208(a) (Direct Registration Program), 14.406 (Code of Conduct), 14.407(a)(4)(E) (Quorum of Limited Partnerships), 14.407(a)(4)(G) (Related Party Transactions of Limited Partnerships), and 14.413 (Voting Rights). A company is generally provided 60 days to submit a plan to regain compliance with the requirements to timely file periodic reports contained in Rule 14.207(c)(1). --------------------------------------------------------------------------- 2. Statutory Basis IEX believes that the proposed rule change is consistent with Section 6(b) \17\ of the Act in general, and furthers the objectives of Section 6(b)(5) of the Act,\18\ in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. The proposal accomplishes these objectives by enhancing transparency around third party compensation and payments made in connection with board service. The Exchange believes such disclosure has several benefits: It would provide information to investors to help them make meaningful investing and voting decisions. It would also address potential concerns that undisclosed third party compensation arrangements may lead to conflicts of interest among [[Page 91214]] directors and call into question their ability to satisfy fiduciary duties. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78f. \18\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that it is consistent with the protection of investors and the public interest, and not unfairly discriminatory, to permit foreign private issuers to comply with home country practice in lieu of the requirements of the proposed rule. This approach is consistent with an existing structure for foreign private issuers whereby such companies may follow home country practice in lieu of certain listing rules, subject to an established process which includes disclosure obligations and submission to IEX of a written statement from an independent counsel in such Company's home country certifying that the Company's practices are not prohibited by the home country's laws. Further, the Exchange notes that a substantially identical proposed rule change by the Nasdaq Stock Market LLC (``Nasdaq'') was recently approved by the Commission, pursuant to which the Commission found that the Nasdaq proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.\19\ In particular, the Commission found that the Nasdaq proposed rule change is ``consistent with the requirements of Section 6(b)(5) of the Act, which requires, among other things, that the Exchange's rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest; and not be designed to permit, among other things, unfair discrimination between issuers.'' Accordingly, the Exchange believes that the same considerations apply to this proposed rule change since the proposed changes are substantially identical to the Nasdaq rules. --------------------------------------------------------------------------- \19\ See Securities Exchange Act Release No. 78223 (July 1, 2016), 81 FR 44400 (July 7, 2016). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition IEX does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule to require listed companies to disclose third party compensation and payments in connection with board service is intended to provide meaningful information to investors and to address potential concerns with undisclosed compensation arrangements without creating unnecessary burdens on directors or those making the payments. Further, the proposed rule change is intended to promote transparency and protect investors. To the extent that a competitor marketplace believes that the proposed rule change places it at a competitive disadvantage, it of course may file with the Commission a proposed rule change to adopt the same or similar rule. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act \20\ and Rule 19b-4(f)(6) thereunder.\21\ Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b- 4(f)(6)(iii) thereunder. --------------------------------------------------------------------------- \20\ 15 U.S.C. 78s(b)(3)(A)(iii). \21\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange's intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) \22\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \22\ 15 U.S.C. 78s(b)(2)(B). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File No. SR-IEX-2016-19 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File No. SR-IEX-2016-19. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR-IEX-2016-19, and should be submitted on or before January 6, 2017. --------------------------------------------------------------------------- \23\ 17 CFR 200.30-3(a)(12). [[Page 91215]] --------------------------------------------------------------------------- For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\23\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2016-30255 Filed 12-15-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 242 / Friday, December 16, 2016 / Notices 91211
www.prc.gov, Docket Nos. MC2017–42, gives notice that, pursuant to 39 U.S.C. DATES: Effective date: December 16,
CP2017–67. 3642 and 3632(b)(3), on December 9, 2016.
2016, it filed with the Postal Regulatory FOR FURTHER INFORMATION CONTACT:
Stanley F. Mires,
Commission a Request of the United Elizabeth A. Reed, 202–268–3179.
Attorney, Federal Compliance. States Postal Service to Add Priority
[FR Doc. 2016–30236 Filed 12–15–16; 8:45 am] Mail Contract 268 to Competitive SUPPLEMENTARY INFORMATION: The
BILLING CODE 7710–12–P Product List. Documents are available at United States Postal Service® hereby
www.prc.gov, Docket Nos. MC2017–43, gives notice that, pursuant to 39 U.S.C.
CP2017–68. 3642 and 3632(b)(3), on December 9,
POSTAL SERVICE 2016, it filed with the Postal Regulatory
Stanley F. Mires, Commission a Request of the United
Product Change—Priority Mail and Attorney, Federal Compliance. States Postal Service to Add Priority
First-Class Package Service [FR Doc. 2016–30235 Filed 12–15–16; 8:45 am] Mail & First-Class Package Service
Negotiated Service Agreement BILLING CODE 7710–12–P Contract 40 to Competitive Product List.
AGENCY: Postal ServiceTM. Documents are available at
www.prc.gov, Docket Nos. MC2017–37,
ACTION: Notice.
POSTAL SERVICE CP2017–62.
SUMMARY: The Postal Service gives Stanley F. Mires,
notice of filing a request with the Postal Product Change—First-Class Package
Service Negotiated Service Agreement Attorney, Federal Compliance.
Regulatory Commission to add a [FR Doc. 2016–30231 Filed 12–15–16; 8:45 am]
domestic shipping services contract to AGENCY: Postal ServiceTM. BILLING CODE 7710–12–P
the list of Negotiated Service
ACTION: Notice.
Agreements in the Mail Classification
Schedule’s Competitive Products List. SUMMARY: The Postal Service gives
DATES: Effective date: December 16, notice of filing a request with the Postal SECURITIES AND EXCHANGE
2016. Regulatory Commission to add a COMMISSION
FOR FURTHER INFORMATION CONTACT: domestic shipping services contract to
Elizabeth A. Reed, 202–268–3179. the list of Negotiated Service [Release No. 34–79527; File No. SR–IEX–
Agreements in the Mail Classification 2016–19]
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby Schedule’s Competitive Products List.
Self-Regulatory Organizations:
gives notice that, pursuant to 39 U.S.C. DATES: Effective date: December 16,
Investors Exchange LLC; Notice of
3642 and 3632(b)(3), on December 9, 2016. Filing and Immediate Effectiveness of
2016, it filed with the Postal Regulatory FOR FURTHER INFORMATION CONTACT: Proposed Rule Change To Require
Commission a Request of the United Elizabeth A. Reed, 202–268–3179. Listed Companies To Publicly Disclose
States Postal Service to Add Priority Compensation or Other Payments by
SUPPLEMENTARY INFORMATION: The
Mail & First-Class Package Service Third Parties to Any Nominee for
United States Postal Service® hereby
Contract 38 to Competitive Product List. Director or Sitting Director in
gives notice that, pursuant to 39 U.S.C.
Documents are available at Connection With Their Candidacy for
3642 and 3632(b)(3), on December 9,
www.prc.gov, Docket Nos. MC2017–35, or Service on the Companies’ Board of
2016, it filed with the Postal Regulatory
CP2017–60. Directors
Commission a Request of the United
Stanley F. Mires, States Postal Service to Add First-Class December 12, 2016.
Attorney, Federal Compliance. Package Service Contract 69 to Pursuant to Section 19(b)(1) 1 of the
[FR Doc. 2016–30233 Filed 12–15–16; 8:45 am] Competitive Product List. Documents Securities Exchange Act of 1934 (the
BILLING CODE 7710–12–P are available at www.prc.gov, Docket ‘‘Act’’) 2 and Rule 19b–4 thereunder,3
Nos. MC2017–40, CP2017–65. notice is hereby given that on December
Stanley F. Mires, 5, 2016, the Investors Exchange LLC
POSTAL SERVICE (‘‘IEX’’ or the ‘‘Exchange’’) filed with the
Attorney, Federal Compliance.
[FR Doc. 2016–30238 Filed 12–15–16; 8:45 am] Securities and Exchange Commission
Product Change—Priority Mail
(the ‘‘Commission’’) the proposed rule
Negotiated Service Agreement BILLING CODE 7710–12–P
change as described in Items I and II
AGENCY: Postal ServiceTM. below, which Items have been prepared
ACTION: Notice. POSTAL SERVICE by the self-regulatory organization. The
Commission is publishing this notice to
SUMMARY: The Postal Service gives Product Change—Priority Mail and solicit comments on the proposed rule
notice of filing a request with the Postal First-Class Package Service change from interested persons.
Regulatory Commission to add a Negotiated Service Agreement
I. Self-Regulatory Organization’s
domestic shipping services contract to
AGENCY: Postal ServiceTM. Statement of the Terms of the Substance
the list of Negotiated Service
ACTION: Notice.
of the Proposed Rule Change
Agreements in the Mail Classification
mstockstill on DSK3G9T082PROD with NOTICES
Schedule’s Competitive Products List. Pursuant to the provisions of Section
DATES: Effective date: December 16,
SUMMARY: The Postal Service gives 19(b)(1) under the Securities Exchange
2016. notice of filing a request with the Postal Act of 1934 (‘‘Act’’),4 and Rule 19b–4
Regulatory Commission to add a
FOR FURTHER INFORMATION CONTACT: domestic shipping services contract to 1 15 U.S.C. 78s(b)(1).
Elizabeth A. Reed, 202–268–3179. the list of Negotiated Service 2 15 U.S.C. 78a.
SUPPLEMENTARY INFORMATION: The Agreements in the Mail Classification 3 17 CFR 240.19b–4.
United States Postal Service® hereby Schedule’s Competitive Products List. 4 15 U.S.C. 78s(b)(1).
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![Federal Register / Vol. 81, No. 242 / Friday, December 16, 2016 / Notices 91213
the agreement or arrangement.14 The for director being employed by a private a Form 8–K or 6–K, where required by
proposed rule does not separately equity or venture capital firm, or a fund Commission rules, or by issuing a press
require the initial disclosure of newly established by such firm, where release. However, such remedial
entered into agreements or employees are expected to and routinely disclosure, regardless of its timing, does
arrangements, provided that disclosure serve on the boards of the fund’s not satisfy the ongoing annual
is made pursuant to this rule for the portfolio companies and their disclosure requirements under
next shareholder meeting at which remuneration is not materially affected subparagraph (B).
directors are elected. by such service. If such a director a [sic] In cases where a company is
If a Company discovers an agreement nominee’s remuneration is materially considered deficient, the company must
or arrangement that should have been increased in connection with such provide a plan to regain compliance.
disclosed pursuant to subparagraph (A) person’s candidacy or service as a Consistent with deficiencies from most
of the proposed rule but was not, the director of the company, only the other rules that allow a company to
Company must promptly make the difference between the new and submit a plan to regain compliance,16
required disclosure in accordance with previous level of compensation needs to IEX proposes to allow companies
this proposed rule.15 In addition, for be disclosed under the proposed rule. deficient under the proposed rule 45
agreements and arrangements not Additionally, the proposed rule calendar days to submit a plan sufficient
required to be disclosed in accordance would not apply to agreements and to satisfy IEX staff that the company has
with subparagraph (A)(ii) of the arrangements that relate only to adopted processes and procedures
proposed rule, such as employment reimbursement of expenses incurred in designed to identify and disclose
with a third party that existed prior to connection with candidacy as a director, relevant agreements and arrangements
the nominee’s candidacy and is whether or not such reimbursement in the future. If the company does not
otherwise disclosed, but where the arrangement has been publicly do so, it would be issued a Staff
director or nominee’s remuneration is disclosed. Further, Commission Rule Delisting Determination, which the
thereafter materially increased 14a–12(c) subjects persons soliciting company could appeal to a Hearings
specifically in connection with such proxies in opposition to companies’ Panel pursuant to Rule 14.502.
person’s candidacy or service as a proxy solicitation to certain disclosure
2. Statutory Basis
director of the company, only the requirements of Schedule 14A of the
difference between the new and Act. The proposed rule relieves the IEX believes that the proposed rule
previous level of compensation or other company from the disclosure change is consistent with Section 6(b) 17
payment obligation need be disclosed. requirements of the proposed Rule of the Act in general, and furthers the
The terms ‘‘compensation’’ and ‘‘other 14.207(b)(3)(A) where an agreement or objectives of Section 6(b)(5) of the Act,18
payment’’ as used in this proposed rule arrangement for a director or a nominee in particular, in that it is designed to
are intended to be construed broadly has been disclosed under Item 5(b) of prevent fraudulent and manipulative
and apply to agreements and Schedule 14A of the Act in the current acts and practices, to promote just and
arrangements that provide for non-cash fiscal year. However, such an agreement equitable principles of trade, to foster
compensation and other payment or arrangement is subject to the cooperation and coordination with
obligations, such as health insurance continuous disclosure requirements of persons engaged in facilitating
premiums or indemnification, made in the proposed Rule 14.207(b)(3)(B) on an transactions in securities, to remove
connection with a person’s candidacy or annual basis. Similarly, a Company that impediments to and perfect the
provides disclosure in the current fiscal mechanism of a free and open market
service as a director. Further, at a
year pursuant to the requirement in Item and a national market system and, in
minimum, the disclosure should
5.02(d)(2) of Form 8–K requiring ‘‘a brief general, to protect investors and the
identify the parties to and the material
description of any arrangement or public interest. The proposal
terms of the agreement or arrangement
understanding between the new director accomplishes these objectives by
relating to compensation.
In recognition of circumstances that and any other persons, naming such enhancing transparency around third
do not raise the concerns noted above or persons, pursuant to which such party compensation and payments made
where such disclosure may be director was selected as a director’’— in connection with board service. The
would not have to make a separate Exchange believes such disclosure has
duplicative, the proposed rule would
disclosure under the proposed Rule several benefits: It would provide
not apply to agreements and
14.207(b)(3)(A). Such disclosure under information to investors to help them
arrangements that existed before the
Commission rules, however, shall not make meaningful investing and voting
nominee’s candidacy and the nominee’s
relieve a company of its ongoing decisions. It would also address
relationship with the Third Party has
obligation under the proposed Rule potential concerns that undisclosed
been otherwise publicly disclosed, for
14.207(b)(3)(B) to make annual third party compensation arrangements
example, pursuant to Items 402(a)(2) of
disclosure. may lead to conflicts of interest among
Regulation S–K or in a director’s
biographical summary included in In recognition that a company, despite
reasonable efforts, may not be able to 16 Pursuant to Rule 14.501(c)(2)(A), a company is
periodic reports filed with the provided 45 days to submit a plan to regain
identify all such agreements and
Commission. An example of an compliance with Rules 14.408(c) (Quorum), 14.411
arrangements, the proposed rule (Review of Related Party Transactions, 14.412
agreement or arrangement falling under
provides that a company shall not be (Shareholder Approval), 14.207(c)(3) (Auditor
this exception is a director or a nominee Registration), 14.208(a) (Direct Registration
deficient with the proposed disclosure
Program), 14.406 (Code of Conduct), 14.407(a)(4)(E)
requirements if it has undertaken
mstockstill on DSK3G9T082PROD with NOTICES
14 A Company posting the requisite disclosure on (Quorum of Limited Partnerships), 14.407(a)(4)(G)
or through its Web site must make it publicly reasonable efforts to identify all such (Related Party Transactions of Limited
available no later than the date on which the agreements and arrangements, including Partnerships), and 14.413 (Voting Rights). A
Company files a proxy or information statement in by asking each director or nominee in a company is generally provided 60 days to submit
connection with a shareholders’ meeting at which a plan to regain compliance with the requirements
manner designed to allow timely to timely file periodic reports contained in Rule
directors are elected (or, if they do not file proxy
or information statements, no later than when the disclosure, and upon discovery of a 14.207(c)(1).
Company files its next Form 10–K or Form 20–F). non-disclosed arrangement, promptly 17 15 U.S.C. 78f.
15 See infra discussion on remedial disclosure. makes the required disclosure by filing 18 15 U.S.C. 78f(b)(5).
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![Federal Register / Vol. 81, No. 242 / Friday, December 16, 2016 / Notices 91215
For the Commission, by the Division of FILING DATES: The application was filed orders to purchase Creation Units and
Trading and Markets, pursuant to delegated on June 15, 2016, and amended on all redemption requests will be placed
authority.23 October 7, 2016. by or through an ‘‘Authorized
Eduardo A. Aleman, HEARING OR NOTIFICATION OF HEARING: An Participant’’, which will have signed a
Assistant Secretary. order granting the requested relief will participant agreement with a broker-
[FR Doc. 2016–30255 Filed 12–15–16; 8:45 am] be issued unless the Commission orders dealer registered under the Securities
BILLING CODE 8011–01–P a hearing. Interested persons may Exchange Act of 1943 (‘‘Exchange Act’’)
request a hearing by writing to the (the Initial Distributor, together with
Commission’s Secretary and serving any future distributor, the
SECURITIES AND EXCHANGE applicants with a copy of the request, ‘‘Distributor’’). Shares will be listed and
COMMISSION personally or by mail. Hearing requests traded individually on a national
[Investment Company Act Release No. should be received by the Commission securities exchange, where share prices
32389; 812–14663] by 5:30 p.m. on January 6, 2017, and will be based on the current bid/offer
should be accompanied by proof of market. Any order granting the
Alpha Architect ETF Trust, et al.; service on applicants, in the form of an requested relief would be subject to the
Notice of Application affidavit, or for lawyers, a certificate of terms and conditions stated in the
service. Pursuant to rule 0–5 under the application.
December 12, 2016
Act, hearing requests should state the 2. Each Fund will hold investment
AGENCY: Securities and Exchange
nature of the writer’s interest, any facts positions selected to correspond
Commission (‘‘Commission’’).
bearing upon the desirability of a generally to the performance of an
ACTION: Notice of an application for an hearing on the matter, the reason for the Underlying Index. In the case of self-
order under section 6(c) of the request, and the issues contested. indexing Funds, an affiliated person, as
Investment Company Act of 1940 (the Persons who wish to be notified of a defined in section 2(a)(3) of the Act
‘‘Act’’) for an exemption from sections hearing may request notification by (‘‘Affiliated Person’’), or an affiliated
2(a)(32), 5(a)(1), 22(d), and 22(e) of the writing to the Commission’s Secretary. person of an Affiliated Person (‘‘Second-
Act and rule 22c–1 under the Act, under Tier Affiliate’’), of the Trust or a Fund,
ADDRESSES: Secretary, Securities and
sections 6(c) and 17(b) of the Act for an of the Adviser, of any sub-adviser to or
Exchange Commission, 100 F Street NE.,
exemption from sections 17(a)(1) and promoter of a Fund, or of the Distributor
Washington, DC 20549–1090;
17(a)(2) of the Act, and under section will compile, create, sponsor or
Applicants: Alpha Architect ETF Trust
12(d)(1)(J) for an exemption from maintain the Underlying Index.2
and Empowered Funds, LLC, 213
sections 12(d)(1)(A) and 12(d)(1)(B) of 3. Shares will be purchased and
Foxcroft Road, Broomall, PA 19008;
the Act. The requested order would redeemed in Creation Units and
Quasar Distributors, LLC, 615 East
permit (a) index-based series of certain generally on an in-kind basis. Except
Michigan Street, 4th Floor, Milwaukee,
open-end management investment where the purchase or redemption will
Wisconsin 53202.
companies to issue shares (‘‘Shares’’)
FOR FURTHER INFORMATION CONTACT: include cash under the limited
redeemable in large aggregations only
Emerson S. Davis, Senior Counsel at circumstances specified in the
(‘‘Creation Units’’); (b) secondary market
(202) 551–6868, or Daniele Marchesani, application, purchasers will be required
transactions in Shares to occur at
Assistant Chief Counsel, at (202) 551– to purchase Creation Units by
negotiated market prices rather than at
6821 (Division of Investment depositing specified instruments
net asset value (‘‘NAV’’); (c) certain
Management, Chief Counsel’s Office). (‘‘Deposit Instruments’’), and
Funds to pay redemption proceeds,
SUPPLEMENTARY INFORMATION: The shareholders redeeming their Shares
under certain circumstances, more than
following is a summary of the will receive specified instruments
seven days after the tender of Shares for
application. The complete application (‘‘Redemption Instruments’’). The
redemption; (d) certain affiliated
may be obtained via the Commission’s Deposit Instruments and the
persons of a fund to deposit securities
Web site by searching for the file Redemption Instruments will each
into, and receive securities from, the
number, or for an applicant using the correspond pro rata to the positions in
fund in connection with the purchase
Company name box, at http:// the Fund’s portfolio (including cash
and redemption of Creation Units; and
www.sec.gov/search/search.htm or by positions) except as specified in the
(e) certain registered management
calling (202) 551–8090. application.
investment companies and unit
4. Because Shares will not be
investment trusts outside of the same Summary of the Application individually redeemable, applicants
group of investment companies as the
1. Applicants request an order that request an exemption from section
funds (‘‘Funds of Funds’’) to acquire
would allow funds to operate as index 5(a)(1) and section 2(a)(32) of the Act
Shares of the Funds.
exchange traded funds (‘‘ETFs’’).1 Fund that would permit the Funds to register
APPLICANTS: Alpha Architect ETF Trust Shares will be purchased and redeemed as open-end management investment
(the ‘‘Trust’’), a Delaware statutory trust at their NAV in Creation Units only. All companies and issue Shares that are
registered under the Act as an open-end redeemable in Creation Units only.
management investment company with
1 Applicants request that the order apply to the
5. Applicants also request an
initial series of the Trust and any additional series exemption from section 22(d) of the Act
multiple series, Empowered Funds, LLC of the Trust, and any other open-end management
(the ‘‘Adviser’’), a Pennsylvania limited investment companies or series thereof that may be and rule 22c–1 under the Act as
liability company registered as an created in the future (each, included in the term
mstockstill on DSK3G9T082PROD with NOTICES
‘‘Fund’’), each of which will operate as an ETF and 2 Each self-indexing fund (‘‘Self-Indexing Fund’’)
investment adviser under the will track a specified index comprised of domestic will post on its Web site the identities and
Investment Advisers Act of 1940, and and/or foreign equity securities or domestic and/or quantities of the investment positions that will form
Quasar Distributors, LLC (the ‘‘Initial foreign fixed income securities (each, an the basis for the Fund’s calculation of its NAV at
Distributor’’), a Delaware limited ‘‘Underlying Index’’). Any Fund will (a) be advised the end of the day. Applicants believe that requiring
by the Adviser or an entity controlling, controlled Self-Indexing Funds to maintain full portfolio
liability company and broker-dealer by, or under common control with the Adviser transparency will help address, together with other
registered under the Securities (included in the term ‘‘Adviser’’) and (b) comply protections, conflicts of interest with respect to
Exchange Act of 1934 (‘‘Exchange Act’’). with the terms and conditions of the application. such Funds.
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Document Created: 2018-02-14 09:07:29
Document Modified: 2018-02-14 09:07:29
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 81 FR 91211 |
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