Exchange Acquisition Company
On Oct. 11, Nasdaq listing rules on special acquisition entities.
- Amend IM-5101-2 applicable to companies planning to complete IPO and engage
in merger, acquisition with unidentified companies within 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 to demonstrate compliance, unique nature.
- Limited number of retail investors interested, encouraged owners to hold shares.
- Between IPO and consummation of business combination, value of an acquisition
company is based primarily on value of the funds held in trust, or trades close to.
- ETFs are similar, with lower listing requirements, only 50 required for continuing.
- Explained proposal for a reduction in initial listing requirements, to 150 form 300.
- Continued Listing Elimination
- Removal of need to meet initial listing standards at time of business combination.
- Acquisition company only exists briefly, so hard to obtain shareholder information.
- Penny Stock Exemption
- For Acquisition Companies to keep exemption at least $5mn in net tangible assets.
- Nasdaq will monitor Acquisition Companies which fail their net tangible assets test.
- Specified that company must demonstrate that it meets initial listing requirements
in 30 days, following the business combination, until now no timetable is included.
- Upon approval by SEC, comments on aspects are to be submitted by Nov. 1, 2017.
- Nov. 2017 NYSE Parallel Rules
- On Nov. 2, 2017, NYSE proposed a substantially identical rule to amend its manual.
- Comments on the proposal requested due in 21 days from pending federal register.
- Nov. 2017 SEC Nasdaq Filing,
- On Nov. 22, 2017, SEC filed for a longer period for action, ending January 9, 2018.
- Nov. 2017 Nasdaq Federal Register
- On Nov. 28, 2017, SEC published for longer period for action in the federal register.
- Nov. 2017 SEC NYSE Filing
- On Nov. 30, 2017, SEC filed proposed rule, comment 21 days from federal register.
- Dec. 2017 NYSE Federal Register
- On Dec. 6, 2017, NYSE proposal issued in federal register, comment Dec. 27, 2017.
- Jan. 2018 Determine if to Approve
- On Jan. 9, 2018, SEC issued order to determine if to approve, for 21 day comment.
- SEC cited legal and policy issues raised, importance of minimum number of holders.
- Ensure listed companies have sufficient public float, investor base, trading interest.
- Jan. 2018 Federal Register
- On Jan. 16, 2018, SEC order published in federal register, comment by Feb. 6, 2018.
- Jan. 2018 Extension Period
- On Jan. 18, 2018 SEC designated a longer period to take action, until Mar. 6, 2018.
||SEC RF, 1/18/2018; 83 FR 2278, 1/16/2018; SEC RF, 1/9/2018; NYSE: 82 FR 57632, 12/6/2017; SEC RF, 11/30/2017; NYSE-2017-53, 11/2/2017; Nasdaq: 82 FR 56293, 11/28/2017; SEC RF, 11/22/2017; 82 FR 47269, 10/11/2017; NASDAQ-2017-087, 9/20/2017;
||Compliance; Financial; Legal; Operations; Trading; Treasury
||United States of America
||Equity; ETFs; Issuance/IPO; Securities
Last substantive update on 01/21/2018