82 FR 58039 - Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rules 14.501(a)(4), 14.501(d), and 14.502(b) To Modify the Process IEX Would Follow When a Company Fails To Hold an Annual Meeting of Shareholders, and To Correct Three Nonsubstantive Typographical Errors in Rules 14.502(b) and 14.504(b)
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 235 (December 8, 2017)
Federal Register Volume 82, Issue 235 (December 8, 2017)
| Page Range | 58039-58042 | |
| FR Document | 2017-26447 |
[Federal Register Volume 82, Number 235 (Friday, December 8, 2017)] [Notices] [Pages 58039-58042] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-26447] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82209; File No. SR-IEX-2017-41] Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rules 14.501(a)(4), 14.501(d), and 14.502(b) To Modify the Process IEX Would Follow When a Company Fails To Hold an Annual Meeting of Shareholders, and To Correct Three Nonsubstantive Typographical Errors in Rules 14.502(b) and 14.504(b) December 4, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on November 20, 2017, the Investors Exchange LLC (``IEX'' or the ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Pursuant to the provisions of Section 19(b)(1) under the Securities Exchange Act of 1934 (``Act''),\3\ and Rule 19b-4 thereunder,\4\ Investors Exchange LLC (``IEX'' or ``Exchange'') is filing with the Commission proposed rule change to amend Rules 14.501(a)(4), 14.501(d), and 14.502(b) to modify the process IEX would follow when a company fails to hold an annual meeting of shareholders, and to correct three nonsubstantive typographical errors in Rules 14.502(b) and 14.504(b). 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.\5\ 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. --------------------------------------------------------------------------- \3\ 15 U.S.C. 78s(b)(1). \4\ 17 CFR 240.19b-4. \5\ 17 CFR 240.19b-4(f)(6)(iii). --------------------------------------------------------------------------- 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 [sic] 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.\6\ The Exchange plans to begin listing companies in 2018. --------------------------------------------------------------------------- \6\ See Securities Exchange Act Release No. 78101 (June 17, 2016), 81 FR 41141 (June 23, 2016) (File No. 10-222). --------------------------------------------------------------------------- Each company that would list common stock or voting preferred stock, and their equivalents, on IEX 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.\7\ An annual meeting allows the equity owners of the company the opportunity to elect directors and meet with management to discuss company affairs. Currently, should a company fail to hold its annual meetings as required by Rule 14.408, staff of IEX Regulation (``Staff'') would have no discretion to allow additional time for the company to regain compliance. Rather, Staff would be required by Rule 14.501(d)(1) to issue a Delisting Determination, subjecting the company to immediate suspension and delisting unless the company appeals to the Listings Review Committee.\8\ IEX proposes to amend Rules 14.501(a)(4), 14.501(d), and 14.502(b) 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 requirement.\9\ --------------------------------------------------------------------------- \7\ See Rules 14.408(a) and (b), respectively. Rule 14.407(a)(4)(D) also requires a limited partnership to hold an annual meeting of limited partners if 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. Rule 14.407(a)(4)(F) requires the limited partnership to distribute information statements or proxies when a meeting of limited partners is required. The proposed process described herein would apply in the identical manner to limited partnerships required to hold a meeting as it does to other companies. See also Rules 14.407(a)(4)(D) and (F) (partner meetings and proxy solicitation of limited partnerships). \8\ A listed company may request review of a Staff Delisting Determination by the Listings Review Committee. A timely request for a hearing will stay the suspension and delisting pending the issuance of a written Panel Decision. See Rule 14.502. \9\ The Exchange notes that listed companies and certain limited partnerships are also required to solicit proxies and provide proxy statements for all meetings of shareholders or partners. See Rules 14.408(b) and 14.407(a)(4)(F), respectively. A listed company or limited partnership that has not timely held an annual meeting has not violated the proxy solicitation rule because no meeting has been held. --------------------------------------------------------------------------- IEX notes that the only other rule where a company would be subject to immediate suspension and delisting, besides when it fails to solicit proxies and hold an annual meeting, would be when Staff makes a determination pursuant to the Rule Series 14.100 that the company's continued listing raises a public interest concern. Such a determination would generally be made only following discussion and review of the facts and circumstances with the company. For all other deficiencies under Chapters 14 and 16 of the IEX rules, a listed company is provided with either a fixed compliance period within which to regain compliance,\10\ or given [[Page 58040]] the opportunity to submit a plan to regain compliance, which Staff would review and determine whether to grant the company a limited time to implement.\11\ Generally, a company would be allowed 45 days to submit the plan of compliance \12\ and, upon review of the plan, Staff could grant the company up to 180 days from the date of Staff's initial notification of the company's non-compliance to regain compliance.\13\ If upon review of the company's plan Staff determines that an extension is not warranted, Staff would issue a Delisting Determination,\14\ which triggers the company's right to request review by the Listings Review Committee.\15\ --------------------------------------------------------------------------- \10\ See Rule 14.501(d)(3). \11\ See Rule 14.501(d)(2). \12\ Companies deficient with the filing requirement for periodic reports are provided up to 60 days to submit a plan of compliance. See Rule 14.501(d)(2)(F). Staff can shorten these deadlines where deemed appropriate. \13\ See Rule 14.501(d)(2)(B)(i). \14\ See Rule 14.501(d)(2)(B)(ii). \15\ See Rule 14.502. --------------------------------------------------------------------------- There are a variety of reasons a company may fail to timely hold an annual meeting. In many of these cases, the circumstances that precipitated the delay may arise just before a planned meeting. These can include, for example, situations where a company was required to adjourn and reschedule its annual meeting to allow its shareholders more time to review proxy materials in connection with a shareholder proxy contest. In other cases, a company could be unable to hold an annual meeting because it was delinquent in filing periodic reports and therefore could not include the required financial information in its proxy statement. In that case, under current listing rules, the company could receive an extension of time to regain compliance with the filing requirement. However, if during any such compliance period the company fails to hold an annual meeting of shareholders, Staff would be required to issue a delist determination at that time for both the filing delinquency and the annual meeting deficiency, even if the compliance period for the filing delinquency had not expired.\16\ Under these circumstances, as required by the Listing Rules, Staff would notify the company in writing of the annual meeting deficiency \17\ and the company would be required to publicly disclose such notification.\18\ The annual meeting deficiency would then be considered at the same time and together with the filing delinquency in any subsequent delisting proceeding.\19\ --------------------------------------------------------------------------- \16\ See Rule 14.501(d)(2)(A). \17\ See Rule 14.501(b). \18\ See Rule 14.501(c). \19\ See Rule 14.501(e). --------------------------------------------------------------------------- For these reasons, IEX is proposing to amend Rules 14.501(a)(4), 14.501(d), and 14.502(b) to afford those companies and limited partnerships that fail to hold an annual meeting in accordance with the listing rules an opportunity to submit a plan of compliance for Staff's review.\20\ As proposed, Rule 14.501(d)(2)(G) is entitled ``Annual Meeting'' and specifies the process applicable to deficiencies from the standards of Rules 14.408(a) and 14.407(a)(4)(D), which relate to Annual Meetings and Partner Meetings respectively. Subparagraph (i) provides that the Staff's notice shall provide the Company with 45 calendar days to submit a plan to regain compliance with the listing standard; provided, however, that the Company shall not be provided with an opportunity to submit such a plan if review under the Rule Series 14.500 of a prior Staff Delisting Determination with respect to the Company is already pending. Staff may extend this deadline for up to an additional 15 calendar days upon good cause shown and may request such additional information from the Company as is necessary to make a determination regarding whether to grant such an extension. Subparagraph (ii) provides that the maximum additional time provided by all exceptions granted by Staff is 180 calendar days from the deadline to hold the annual meeting (one year after the end of the Company's fiscal year). In determining whether to grant an exception, and the length of any such exception, Staff will consider, and the Company should address in its plan of compliance, the Company's specific circumstances, including the likelihood that the 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 hold the annual meeting timely, corporate events that may occur within the exception period, the Company's general financial status, and the Company's disclosures to the market. This review will be based on information provided by a variety of sources, which may include the Company, its audit committee, its outside auditors, the staff of the SEC and any other regulatory body. --------------------------------------------------------------------------- \20\ As noted above, the company or limited partnership generally would have 45 days to submit a plan to regain compliance, although Staff could shorten that period where it believes appropriate. --------------------------------------------------------------------------- Additionally, proposed Rule 14.502(b)(1)(F) provides that the Listings Review Committee may grant an exception for a period not to exceed 360 days from the deadline to hold the annual meeting (one year after the end of the Company's fiscal year).\21\ This time frame is consistent with the limit on extensions that Nasdaq provides for its listed companies that fail to timely hold an annual meeting,\22\ and would incorporate any extension of time previously provided by the Staff, and is not cumulative with the 180 calendar day extension that the Staff can provide. IEX believes that the proposed rule change would provide consistency with the administration of other continued listing standards without undermining the requirement that IEX-listed companies hold annual meetings. Specifically, under existing IEX listing rules, a company that becomes deficient with the continued listing standards identified in IEX Rule 14.501(d)(2) and (3) is provided with either an opportunity to submit a plan to regain compliance or a specified cure period (as applicable) after it becomes deficient of up to 180 calendar days. Thereafter, if such company has not regained compliance it will receive a Staff Delisting Determination, but can appeal to the Listings Review Committee which has authority to grant an exception to the continued listing standards for an additional period not to exceed 180 days from the date of the Staff Delisting Determination with respect to the deficiency for which the exception is granted.\23\ --------------------------------------------------------------------------- \21\ It is IEX's understanding that a substantial majority of Nasdaq-listed companies that received delisting notices for failing to solicit proxies and hold their annual meetings regain compliance within a six-month period. See Securities Exchange Act Release No. 77137 (February 12, 2016), 81 FR 8582 (February 19, 2016) (SR- NASDAQ-2015-144). \22\ See Nasdaq Rule 5815(c)(1)(G). \23\ As proposed, the 360 calendar day limit on extensions for annual meeting deficiencies would be several weeks less than the total amount of time that can be granted under current rules for the other continued listing deficiencies. As proposed, for annual meeting deficiencies, the maximum amount of time that can be granted is 360 days from deadline to hold an annual meeting (i.e., one year after the end of the Company's fiscal year end). In contrast, for other continued listing deficiencies that allow for a cure period or opportunity to submit a plan to regain compliance (except for number of market makers) the cure period or compliance plan extension can extend for 180 days, and then the Listings Review Committee can provide an additional 180 calendar days to regain compliance through an appeal. These 180 calendar day measurement periods include the time for Staff notification to the company plus the 15 calendar day appeal deadline and so in total would be greater 360 calendar days from the date of deficiency. See Rules 14.501(d)(2) and (3) and 14.502(b)(1)(A). --------------------------------------------------------------------------- A non-compliant company would have to publicly disclose, under both Commission and IEX rules, that it had [[Page 58041]] received notification of non-compliance with the annual meeting rule.\24\ --------------------------------------------------------------------------- \24\ See Rule 14.501(c) and Supplementary Material .01. See also Item 3.01 of SEC Form 8-K. --------------------------------------------------------------------------- IEX is also proposing to modify Rule 14.501(a)(4) to make clear that a Public Reprimand Letter \25\ is not an available notification type for unresolved deficiencies from the standards of Rules 14.207(c) (obligation to file periodic financial reports), 14.407(a)(4)(D) (partner meetings of limited partnerships), and 14.408(a) (meetings of shareholders). This proposed change is substantially identical to Nasdaq Rule 5810(4). IEX Rule 14.500(b)(5) provides that a ``Public Reprimand Letter'' may be issued by the Staff or a Decision of the Listings Review Committee in cases where the 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 Listings Review Committee determines that delisting is an inappropriate sanction. While the Exchange does not believe that the obligation to file periodic financial reports or hold an annual meeting fall within the coverage of Rule 14.500(b)(5), in view of Nasdaq's amendment to its comparable rule, the Exchange believes that the added clarity is appropriate to avoid any confusion among listed companies on a going forward basis. --------------------------------------------------------------------------- \25\ See Rule 14.500(b)(5). --------------------------------------------------------------------------- In addition, IEX is proposing conforming amendments to Rules 14.501(d)(2)(A)(iii) and 14.501(d)(2)(B) to reflect that listed companies that are deficient with respect to the standards requiring annual meetings of shareholders or partner meetings of limited partners, pursuant to Rules 14.408(a) and 14.407(a)(4)(D) respectively, are included in the deficiencies for which a listed company may submit a Plan of Compliance for Staff review. Finally, IEX is proposing to correct three nonsubstantive typographical errors in Rules 14.502(b) and 14.504 which incorrectly refer to the Listing Review Committee rather than the Listings Review Committee. The Exchange does not propose to charge any fees in connection with the proposed rule change. 2. Statutory Basis IEX believes that the proposed rule change is consistent with Section 6(b) \26\ of the Act in general, and furthers the objectives of Section 6(b)(5) of the Act,\27\ 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; and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \26\ 15 U.S.C. 78f. \27\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- Specifically, the proposed changes are consistent with these requirements because they would provide a more efficient process to address annual meeting deficiencies by permitting staff to grant additional time to a company to comply with the annual meeting requirement in limited situations after Staff review of a compliance plan. The proposed changes, are consistent with the time frames available to Nasdaq companies that fail to hold an annual meeting, as well as the time frames available to IEX listed companies that become noncompliant with other continued listing standards, as described in the Purpose section. Furthermore, as is the case under the current rule, a company notified that it is deficient in the annual meeting requirement is required to publicly disclose such notice and the rules basis for it. IEX will also separately publicly disclose a list of noncompliant companies and the listing standards with which they do not comply. Accordingly, the Exchange believes that the proposed rule would protect investors and the public interest. As described in the Purpose section, there are various reasons why a company may not be able to hold an annual meeting and for which immediate delisting is an inappropriate outcome under the circumstances. In lieu of the current requirement, which would require that Staff send an immediate Delisting Determination in such circumstances, the proposal vests Staff with discretion to determine whether the reason for the deficiency and the plan to regain compliance merit an extension. The listing rules allow Staff such discretion for other deficiencies, and the only case where Staff would be required to send an immediate Delisting Determination is where Staff concludes, after review of the facts and circumstances, that continued listing is contrary to the public interest. IEX believes that it is consistent with the Act to provide Staff with discretion to grant an extension for an annual meeting deficiency based on a plan of compliance, consistent with the process that would be applicable for the majority of deficiencies under existing IEX listing rules. Accordingly, the Exchange believes that the proposal promotes the requirements of the Act by providing Staff with such limited discretion while maintaining Staff authority to initiate delisting of a company when warranted. The Exchange also notes that the proposed rule change is substantially identical to existing Nasdaq rules that were approved by the Commission, with differences only to account for the IEX streamlined delisting appeal structure (compared to the multiple levels of appeal provided for in Nasdaq rules) and terminology.\28\ --------------------------------------------------------------------------- \28\ See Securities Exchange Act Release No. 77137 (February 12, 2016), 81 FR 8582 (February 19, 2016) (SR-NASDAQ-2015-144). --------------------------------------------------------------------------- In its approval of the Nasdaq rule filing adopting comparable rules, the Commission stresses that ``[t]he 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'' as well as the critical importance of annual meetings of shareholders to allow shareholders the ability to exercise their rights to participate in corporate governance matters. The Commission also emphasized that under the Nasdaq proposal, ``Staff retains discretion not to grant an exception from the continued listing requirements to a company that has failed to hold its annual meeting on time'' and that ``[t]he Commission expects Staff to exercise this discretion carefully and discerningly. . . and based on the specified rule factors.'' \29\ In approving the Nasdaq rule filing the Commission thus found that such rule change was reasonably designed to further the goals of Section 6(b)(5) of the Act. As discussed in the Purpose section, the Exchange will retain the same discretion, subject to the same standards, pursuant to proposed Rule 14.501(d)(2)(G). --------------------------------------------------------------------------- \29\ See supra note 28. --------------------------------------------------------------------------- The Exchange believes that the same factors and analysis that led to the Commission's approval of the comparable Nasdaq rule change are applicable to IEX's proposed rule change. Consequently, the Exchange does not believe that the proposed rule change raises any new or novel issues. The Exchange also believes that it is consistent with the protection of investors and the public interest to make clear in IEX rules that a Public Reprimand Letter does not apply to deficiencies from the obligation to file periodic financial reports or the requirement to hold an annual meeting [[Page 58042]] in order to provide transparency that the only cure under Exchange rules is for the company to file the periodic financial report or hold its annual meeting. Finally, the Exchange believes that it is consistent with the protection of investors and the public interest to correct the three nonsubstantive typographical errors in Rules 14.502(b) and 14.504 to avoid any confusion among potential listed companies. 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 change is designed to promote consistent and fair regulation, rather than for any competitive purpose. Moreover, as a new listing exchange, IEX has extremely limited ability to impose any burden on competition. 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 designated this rule filing as non-controversial under Section 19(b)(3)(A) \30\ of the Act and Rule 19b-4(f)(6) \31\ thereunder. 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 for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b- 4(f)(6) thereunder. --------------------------------------------------------------------------- \30\ 15 U.S.C. 78s(b)(3)(A). \31\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) \32\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \32\ 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 Number SR-IEX-2017-41 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-IEX-2017-41. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-IEX-2017-41 and should be submitted on or before December 29, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\33\ --------------------------------------------------------------------------- \33\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-26447 Filed 12-7-17; 8:45 am] BILLING CODE 8011-01-P
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Commission and any person, other than solicit comments on the proposed rule and their equivalents, on IEX must hold
those that may be withheld from the change from interested persons. an annual meeting of shareholders no
public in accordance with the later than one year after the end of the
I. Self-Regulatory Organization’s
provisions of 5 U.S.C. 552, will be company’s fiscal year and solicit proxies
Statement of the Terms of Substance of
available for Web site viewing and for that meeting.7 An annual meeting
the Proposed Rule Change
printing in the Commission’s Public allows the equity owners of the
Reference Room, 100 F Street NE., Pursuant to the provisions of Section company the opportunity to elect
Washington, DC 20549 on official 19(b)(1) under the Securities Exchange directors and meet with management to
business days between the hours of Act of 1934 (‘‘Act’’),3 and Rule 19b–4 discuss company affairs. Currently,
10:00 a.m. and 3:00 p.m. Copies of the thereunder,4 Investors Exchange LLC should a company fail to hold its annual
filing also will be available for (‘‘IEX’’ or ‘‘Exchange’’) is filing with the meetings as required by Rule 14.408,
inspection and copying at the principal Commission proposed rule change to staff of IEX Regulation (‘‘Staff’’) would
office of the Exchange. All comments amend Rules 14.501(a)(4), 14.501(d), have no discretion to allow additional
received will be posted without change. and 14.502(b) to modify the process IEX time for the company to regain
Persons submitting comments are would follow when a company fails to compliance. Rather, Staff would be
cautioned that we do not redact or edit hold an annual meeting of shareholders, required by Rule 14.501(d)(1) to issue a
personal identifying information from and to correct three nonsubstantive Delisting Determination, subjecting the
comment submissions. You should typographical errors in Rules 14.502(b) company to immediate suspension and
submit only information that you wish and 14.504(b). The Exchange has delisting unless the company appeals to
to make available publicly. All designated this proposal as non- the Listings Review Committee.8 IEX
submissions should refer to File controversial and provided the proposes to amend Rules 14.501(a)(4),
Number SR–NYSEAMER–2017–34 and Commission with the notice required by 14.501(d), and 14.502(b) to provide Staff
should be submitted on or before Rule 19b–4(f)(6)(iii) under the Act.5 The with limited discretion to grant a listed
December 29, 2017. text of the proposed rule change is company that failed to hold its annual
available at the Exchange’s Web site at meeting of shareholders an extension of
For the Commission, by the Division of
Trading and Markets, pursuant to delegated www.iextrading.com, at the principal time to comply with the requirement.9
authority.16 office of the Exchange, and at the
Commission’s Public Reference Room. IEX notes that the only other rule
Eduardo A. Aleman, where a company would be subject to
Assistant Secretary. II. Self-Regulatory Organization’s immediate suspension and delisting,
[FR Doc. 2017–26450 Filed 12–7–17; 8:45 am] Statement of the Purpose of, and besides when it fails to solicit proxies
BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule and hold an annual meeting, would be
Change when Staff makes a determination
In its filing with the Commission, the pursuant to the Rule Series 14.100 that
SECURITIES AND EXCHANGE self-regulatory organization included the company’s continued listing raises a
COMMISSION statements concerning the purpose of public interest concern. Such a
and basis for the proposed rule change determination would generally be made
[Release No. 34–82209; File No. SR–IEX– and discussed any comments it received only following discussion and review of
2017–41] on the proposed rule change. The text the facts and circumstances with the
of these statement [sic] may be company. For all other deficiencies
Self-Regulatory Organizations; examined at the places specified in Item under Chapters 14 and 16 of the IEX
Investors Exchange LLC; Notice of IV below. The self-regulatory rules, a listed company is provided with
Filing and Immediate Effectiveness of organization has prepared summaries, either a fixed compliance period within
Proposed Rule Change To Amend set forth in Sections A, B, and C below, which to regain compliance,10 or given
Rules 14.501(a)(4), 14.501(d), and of the most significant aspects of such
14.502(b) To Modify the Process IEX statements. 7 See Rules 14.408(a) and (b), respectively. Rule
Would Follow When a Company Fails 14.407(a)(4)(D) also requires a limited partnership
To Hold an Annual Meeting of A. Self-Regulatory Organization’s to hold an annual meeting of limited partners if
Statement of the Purpose of, and required by statute or regulation in the state in
Shareholders, and To Correct Three which the limited partnership is formed or doing
Nonsubstantive Typographical Errors Statutory Basis for, the Proposed Rule business or by the terms of the partnership’s limited
in Rules 14.502(b) and 14.504(b) Change partnership agreement. Rule 14.407(a)(4)(F) requires
the limited partnership to distribute information
December 4, 2017. 1. Purpose statements or proxies when a meeting of limited
On June 17, 2016, the Commission partners is required. The proposed process
Pursuant to Section 19(b)(1) of the described herein would apply in the identical
Securities Exchange Act of 1934 granted IEX’s application for registration manner to limited partnerships required to hold a
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 as a national securities exchange under meeting as it does to other companies. See also
notice is hereby given that on November Section 6 of the Act including approval Rules 14.407(a)(4)(D) and (F) (partner meetings and
of rules applicable to the qualification, proxy solicitation of limited partnerships).
20, 2017, the Investors Exchange LLC 8 A listed company may request review of a Staff
(‘‘IEX’’ or the ‘‘Exchange’’) filed with the listing and delisting of companies on Delisting Determination by the Listings Review
Securities and Exchange Commission the Exchange.6 The Exchange plans to Committee. A timely request for a hearing will stay
(‘‘Commission’’) the proposed rule begin listing companies in 2018. the suspension and delisting pending the issuance
Each company that would list of a written Panel Decision. See Rule 14.502.
sradovich on DSK3GMQ082PROD with NOTICES
change as described in Items I, II, and 9 The Exchange notes that listed companies and
III, below, which Items have been common stock or voting preferred stock,
certain limited partnerships are also required to
prepared by the Exchange. The 3 15
solicit proxies and provide proxy statements for all
U.S.C. 78s(b)(1). meetings of shareholders or partners. See Rules
Commission is publishing this notice to 4 17 CFR 240.19b–4. 14.408(b) and 14.407(a)(4)(F), respectively. A listed
5 17 CFR 240.19b–4(f)(6)(iii). company or limited partnership that has not timely
16 17 CFR 200.30–3(a)(12). 6 See Securities Exchange Act Release No. 78101 held an annual meeting has not violated the proxy
1 15 U.S.C. 78s(b)(1). solicitation rule because no meeting has been held.
(June 17, 2016), 81 FR 41141 (June 23, 2016) (File
2 17 CFR 240.19b–4. No. 10–222). 10 See Rule 14.501(d)(3).
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received notification of non-compliance acts and practices, to promote just and existing IEX listing rules. Accordingly,
with the annual meeting rule.24 equitable principles of trade, to foster the Exchange believes that the proposal
IEX is also proposing to modify Rule cooperation and coordination with promotes the requirements of the Act by
14.501(a)(4) to make clear that a Public persons engaged in facilitating providing Staff with such limited
Reprimand Letter 25 is not an available transactions in securities, to remove discretion while maintaining Staff
notification type for unresolved impediments to and perfect the authority to initiate delisting of a
deficiencies from the standards of Rules mechanism of a free and open market company when warranted.
14.207(c) (obligation to file periodic and a national market system and, in The Exchange also notes that the
financial reports), 14.407(a)(4)(D) general, to protect investors and the proposed rule change is substantially
(partner meetings of limited public interest; and is not designed to identical to existing Nasdaq rules that
partnerships), and 14.408(a) (meetings permit unfair discrimination between were approved by the Commission, with
of shareholders). This proposed change customers, issuers, brokers, or dealers. differences only to account for the IEX
is substantially identical to Nasdaq Rule Specifically, the proposed changes are streamlined delisting appeal structure
5810(4). IEX Rule 14.500(b)(5) provides consistent with these requirements (compared to the multiple levels of
that a ‘‘Public Reprimand Letter’’ may because they would provide a more appeal provided for in Nasdaq rules)
be issued by the Staff or a Decision of efficient process to address annual and terminology.28
the Listings Review Committee in cases meeting deficiencies by permitting staff In its approval of the Nasdaq rule
where the Company has violated an to grant additional time to a company to filing adopting comparable rules, the
Exchange corporate governance or comply with the annual meeting Commission stresses that ‘‘[t]he
notification listing standard (other than requirement in limited situations after development and enforcement of
one required by Rule 10A–3 of the Act) Staff review of a compliance plan. The meaningful corporate governance listing
and Staff or the Listings Review proposed changes, are consistent with standards for a national securities
Committee determines that delisting is the time frames available to Nasdaq exchange is of substantial importance to
an inappropriate sanction. While the companies that fail to hold an annual financial markets and the investing
Exchange does not believe that the meeting, as well as the time frames public’’ as well as the critical
obligation to file periodic financial available to IEX listed companies that importance of annual meetings of
reports or hold an annual meeting fall become noncompliant with other shareholders to allow shareholders the
within the coverage of Rule 14.500(b)(5), continued listing standards, as ability to exercise their rights to
in view of Nasdaq’s amendment to its described in the Purpose section. participate in corporate governance
comparable rule, the Exchange believes Furthermore, as is the case under the matters. The Commission also
that the added clarity is appropriate to current rule, a company notified that it emphasized that under the Nasdaq
avoid any confusion among listed is deficient in the annual meeting proposal, ‘‘Staff retains discretion not to
companies on a going forward basis. requirement is required to publicly grant an exception from the continued
In addition, IEX is proposing disclose such notice and the rules basis listing requirements to a company that
conforming amendments to Rules for it. IEX will also separately publicly has failed to hold its annual meeting on
14.501(d)(2)(A)(iii) and 14.501(d)(2)(B) disclose a list of noncompliant time’’ and that ‘‘[t]he Commission
to reflect that listed companies that are companies and the listing standards expects Staff to exercise this discretion
deficient with respect to the standards with which they do not comply. carefully and discerningly. . . and
requiring annual meetings of Accordingly, the Exchange believes that based on the specified rule factors.’’ 29
shareholders or partner meetings of the proposed rule would protect In approving the Nasdaq rule filing the
limited partners, pursuant to Rules investors and the public interest. Commission thus found that such rule
As described in the Purpose section, change was reasonably designed to
14.408(a) and 14.407(a)(4)(D)
there are various reasons why a further the goals of Section 6(b)(5) of the
respectively, are included in the
company may not be able to hold an Act. As discussed in the Purpose
deficiencies for which a listed company
annual meeting and for which section, the Exchange will retain the
may submit a Plan of Compliance for
immediate delisting is an inappropriate
Staff review. same discretion, subject to the same
outcome under the circumstances. In
Finally, IEX is proposing to correct standards, pursuant to proposed Rule
lieu of the current requirement, which
three nonsubstantive typographical 14.501(d)(2)(G).
would require that Staff send an The Exchange believes that the same
errors in Rules 14.502(b) and 14.504
immediate Delisting Determination in factors and analysis that led to the
which incorrectly refer to the Listing
such circumstances, the proposal vests Commission’s approval of the
Review Committee rather than the Staff with discretion to determine
Listings Review Committee. comparable Nasdaq rule change are
whether the reason for the deficiency
The Exchange does not propose to applicable to IEX’s proposed rule
and the plan to regain compliance merit
charge any fees in connection with the change. Consequently, the Exchange
an extension. The listing rules allow
proposed rule change. does not believe that the proposed rule
Staff such discretion for other
change raises any new or novel issues.
2. Statutory Basis deficiencies, and the only case where The Exchange also believes that it is
Staff would be required to send an
IEX believes that the proposed rule consistent with the protection of
immediate Delisting Determination is
change is consistent with Section 6(b) 26 investors and the public interest to
where Staff concludes, after review of
of the Act in general, and furthers the make clear in IEX rules that a Public
the facts and circumstances, that
objectives of Section 6(b)(5) of the Act,27 Reprimand Letter does not apply to
sradovich on DSK3GMQ082PROD with NOTICES
continued listing is contrary to the
in particular, in that it is designed to deficiencies from the obligation to file
public interest. IEX believes that it is
prevent fraudulent and manipulative periodic financial reports or the
consistent with the Act to provide Staff
requirement to hold an annual meeting
24 See Rule 14.501(c) and Supplementary Material
with discretion to grant an extension for
.01. See also Item 3.01 of SEC Form 8–K. an annual meeting deficiency based on 28 See Securities Exchange Act Release No. 77137
25 See Rule 14.500(b)(5). a plan of compliance, consistent with (February 12, 2016), 81 FR 8582 (February 19, 2016)
26 15 U.S.C. 78f. the process that would be applicable for (SR–NASDAQ–2015–144).
27 15 U.S.C. 78f(b)(5). the majority of deficiencies under 29 See supra note 28.
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![58042 Federal Register / Vol. 82, No. 235 / Friday, December 8, 2017 / Notices
in order to provide transparency that the change should be approved or For the Commission, by the Division of
only cure under Exchange rules is for disapproved. Trading and Markets, pursuant to delegated
the company to file the periodic authority.33
IV. Solicitation of Comments Eduardo A. Aleman,
financial report or hold its annual
meeting. Interested persons are invited to Assistant Secretary.
Finally, the Exchange believes that it submit written data, views, and [FR Doc. 2017–26447 Filed 12–7–17; 8:45 am]
is consistent with the protection of arguments concerning the foregoing, BILLING CODE 8011–01–P
investors and the public interest to including whether the proposed rule
correct the three nonsubstantive change is consistent with the Act.
typographical errors in Rules 14.502(b) Comments may be submitted by any of SECURITIES AND EXCHANGE
and 14.504 to avoid any confusion the following methods: COMMISSION
among potential listed companies.
Electronic Comments
[Release No. 34–82210; File No. SR–BX–
B. Self-Regulatory Organization’s • Use the Commission’s Internet 2017–052]
Statement on Burden on Competition comment form (http://www.sec.gov/
IEX does not believe that the rules/sro.shtml); or Self-Regulatory Organizations; Nasdaq
proposed rule change will result in any • Send an email to rule-comments@ BX, Inc.; Notice of Filing and
burden on competition that is not sec.gov. Please include File Number SR– Immediate Effectiveness of Proposed
necessary or appropriate in furtherance IEX–2017–41 on the subject line. Rule Change To Amend Rule 4759
of the purposes of the Act. The
Paper Comments December 4, 2017.
proposed rule change is designed to
Pursuant to Section 19(b)(1) of the
promote consistent and fair regulation, • Send paper comments in triplicate
rather than for any competitive purpose. Securities Exchange Act of 1934
to Brent J. Fields, Secretary, Securities
Moreover, as a new listing exchange, (‘‘Act’’),1 and Rule 19b–4 thereunder,2
and Exchange Commission, 100 F Street
IEX has extremely limited ability to notice is hereby given that on November
NE., Washington, DC 20549–1090.
impose any burden on competition. 28, 2017, Nasdaq BX, Inc. (‘‘BX’’ or
All submissions should refer to File ‘‘Exchange’’) filed with the Securities
C. Self-Regulatory Organization’s Number SR–IEX–2017–41. This file and Exchange Commission (‘‘SEC’’ or
Statement on Comments on the number should be included on the ‘‘Commission’’) the proposed rule
Proposed Rule Change Received From subject line if email is used. To help the change as described in Items I and II
Members, Participants, or Others Commission process and review your below, which Items have been prepared
comments more efficiently, please use by the Exchange. The Commission is
Written comments were neither
only one method. The Commission will publishing this notice to solicit
solicited nor received.
post all comments on the Commission’s comments on the proposed rule change
III. Date of Effectiveness of the Internet Web site (http://www.sec.gov/ from interested persons.
Proposed Rule Change and Timing for rules/sro.shtml). Copies of the
Commission Action submission, all subsequent I. Self-Regulatory Organization’s
amendments, all written statements Statement of the Terms of Substance of
The Exchange has designated this rule the Proposed Rule Change
filing as non-controversial under with respect to the proposed rule
Section 19(b)(3)(A) 30 of the Act and change that are filed with the The Exchange proposes to add
Rule 19b–4(f)(6) 31 thereunder. Because Commission, and all written additional detail about the purposes for
the proposed rule change does not: (i) communications relating to the which the Exchange uses securities
Significantly affect the protection of proposed rule change between the information processor data pursuant to
investors or the public interest; (ii) Commission and any person, other than Rule 4759, and to make other technical
impose any significant burden on those that may be withheld from the corrections to that rule.
competition; and (iii) become operative public in accordance with the The text of the proposed rule change
for 30 days from the date on which it provisions of 5 U.S.C. 552, will be is available on the Exchange’s Web site
was filed, or such shorter time as the available for Web site viewing and at http://nasdaqbx.cchwallstreet.com/,
Commission may designate, it has printing in the Commission’s Public at the principal office of the Exchange,
become effective pursuant to Section Reference Room, 100 F Street NE., and at the Commission’s Public
19(b)(3)(A) of the Act and Rule 19b– Washington, DC 20549, on official Reference Room.
4(f)(6) thereunder. business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the II. Self-Regulatory Organization’s
At any time within 60 days of the Statement of the Purpose of, and
filing of the proposed rule change, the filing also will be available for
inspection and copying at the principal Statutory Basis for, the Proposed Rule
Commission summarily may Change
temporarily suspend such rule change if office of the Exchange. All comments
it appears to the Commission that such received will be posted without change. In its filing with the Commission, the
action is necessary or appropriate in the Persons submitting comments are Exchange included statements
public interest, for the protection of cautioned that we do not redact or edit concerning the purpose of and basis for
investors, or otherwise in furtherance of personal identifying information from the proposed rule change and discussed
the purposes of the Act. If the comment submissions. You should any comments it received on the
submit only information that you wish proposed rule change. The text of these
sradovich on DSK3GMQ082PROD with NOTICES
Commission takes such action, the
Commission shall institute proceedings to make available publicly. All statements may be examined at the
under Section 19(b)(2)(B) 32 of the Act to submissions should refer to File places specified in Item IV below. The
determine whether the proposed rule Number SR–IEX–2017–41 and should Exchange has prepared summaries, set
be submitted on or before December 29, forth in sections A, B, and C below, of
30 15 U.S.C. 78s(b)(3)(A). 2017.
31 17 CFR 240.19b–4(f)(6). 1 15 U.S.C. 78s(b)(1).
32 15 U.S.C. 78s(b)(2)(B). 33 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.
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Document Created: 2017-12-08 01:43:31
Document Modified: 2017-12-08 01:43:31
| 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 | 82 FR 58039 |
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