Exchange Acquisition Company

On Oct. 11, Nasdaq issued listing rules special acquisition companies.

  • Amend IM-5101-2 applicable to companies planning to complete IPO and engage
    in merger, acquisition with unidentified companies within a specific period of time.
  • Four Proposals
  • To reduce number of round-lot holders required for initial listing from 300 to 150.
  • Eliminated continued listing shareholder requirement while subject to IM-5101-2.
  • Require Acquisition Company listed, to keep at least $5mn in net tangible assets.
  • Deadline to demonstrate compliance all initial listing requirements, including 300,
    400, and 450 round-lot shareholder on Nasdaq Capital, Global, and Global Select.
  • Shareholder Requirement
  • Acquisition Companies have difficulty demonstrating compliance, unique nature.
  • Limits number of retail investors interested, encouraged owners to hold shares.
  • Between IPO and consummation of business combination, value of Acquisition
    Company is based primarily on value of the funds held in trust, trades close to.
  • ETFs are similar, listing requirements are lower, only 50 required for continuing.
  • That is why has proposed decreasing initial listing requirement to 150 form 300.
  • Continued Listing Elimination
  • Removed need to meet initial listing standards at time of business combination.
  • Acquisition Company only exists briefly, hard to obtain shareholder information.
  • Penny Stock Exemption
  • For Acquisition Companies to keep exemption at least $5mn net tangible assets.
  • Nasdaq will monitor Acquisition Companies that fail the net tangible assets test.
  • Deadline
  • To specify company must demonstrate that it meets initial listing requirements
    in 30 days following business combination, until now no timetable is included.
  • Effectiveness
  • Upon approval by SEC, comments on aspects to be submitted by Nov. 1, 2017.
  • Nov. 2017 NYSE Parallel Rules
  • On Nov. 2, 2017, NYSE proposed substantial identical rule to amend its manual.
  • Comments on the proposal requested, in 21 days from pending federal register.

Regulators NASDAQ; NYSE
Entity Types B/D; Exch
Reference NYSE: NYSE-2017-053, 11/2/2017; Nasdaq: 82 FR 47269, 10/11/2017; NASDAQ-2017-087, 9/20/2017
Functions Compliance; Financial; Legal; Operations; Trading; Treasury
Countries United States of America
Products Equity; ETFs; Issuance/IPO; Securities
Regions Am
Rule Type Proposed
Rule Date 10/11/2017
Effective Date 11/23/2017
Rule Id 35446
Linked to N/A
Report Issue 11/15/2017
Report Section US Investment

Last substantive update on 11/05/2017