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jbell on DSKJLSW7X2PROD with NOTICES

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Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices
SpinCo AC, be deemed to apply to the aggregate amount in its trust account;
vi in the case of the SpinCo AC, and any additional entities spun off from the SpinCo AC, each of which will also be considered a SpinCo AC, the 36-month period within which a listed AC must consummate its Business Combination under Section 102.06 or such shorter period that the AC specifies in its registration statement will be calculated based on the date of effectiveness of the ACs IPO
registration statement; and vii in the aggregate, through one or more opportunities by the AC and one or more SpinCo ACs, public shareholders will have the ability to convert or redeem shares, or receive amounts upon liquidation, for the full amount of the trust account established by the AC as described in the first paragraph of this Section 102.06
excluding any deferred underwriters fees and taxes payable on the income earned on the trust account.
For the avoidance of doubt, the conditions above will similarly apply to successive spinoffs or similar corporate transactions.
Under Section 102.06, a majority of the ACs independent directors must approve its Business Combination and a majority of the independent directors of the SpinCo AC must approve the SpinCo ACs Business Combination.
The structure allows public shareholders an additional, early redemption opportunity with respect to a portion of their holdings, before the time they would be able to do so in a traditional AC, and public shareholders would maintain the ability to redeem the portion of their investment attributable to each specific acquisition after reviewing all disclosure with respect to that acquisition. All other protections provided under Section 102.06 would continue to apply, with adjustments only to reflect the potential for a spin-off of a new AC that is subject to all of the requirements of Section 102.06. Moreover, the proposed structure would also provide shareholders the opportunity to invest with a sponsor without spreading that investment across the sponsors multiple ACs.
Finally, the Exchange proposes to amend the subsection of Section 802.01B of the Manual setting forth the continued listing criteria applicable to ACs to specify that those criteria are also applicable in their entirety to SpinCo ACs. In addition, the Exchange proposes to add a new subsection to Section 102.06 stating that the applicable continued listing criteria for
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both ACs and SpinCo ACs are set forth in Section 802.01B.
2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6b of the Act,6 in general, and furthers the objectives of Section 6b5
of the Act,7 in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest, by establishing the means through which an AC can complete more than one business combination resulting in separate operating companies.
The Commission has previously concluded that listing an acquisition company that satisfies the requirements of Section 102.06 is consistent with the investor protection goals of the Act.8
The proposed rule change will extend these important investor protections to a new structure that addresses inefficiencies and potential conflicts of interest in the AC market. Specifically, as proposed, a SpinCo AC will be required to satisfy all applicable initial listing requirements, like any other AC
listing on the Exchange. In addition, the provisions of Section 102.06 will apply to the SpinCo AC in the same manner as they apply to any other AC, except the trust account will be contributed to the SpinCo AC by the original AC.
The existing requirements of Section 102.06 with respect to the consummation of a business combination and the related redemption rights will also apply to each of the original AC and the SpinCo AC in the proposed structure in the same manner as they apply to any other AC, except that the 80% test will be applied to the amount retained by the original AC after public shareholders have had an initial, early redemption opportunity and the original AC has contributed a portion of its trust account to the SpinCo AC. The Exchange believes that this proposed difference does not adversely affect shareholders because the shareholders will still have the opportunity to redeem for the entire pro rata share of the trust account prior to completion of the business combination. The primary difference is that the redemption right may be effected through two decisions, one of which is accelerated to allow an earlier redemption than would be 6 15

U.S.C. 78fb.
U.S.C. 78fb5.
8 See Securities Exchange Act Release No. 57785, supra note 3.
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available to the public shareholders of a traditional AC and the other will come at the time of the business combination, just as in a traditional AC.
As with the existing rules, each business combination must be approved by the ACs independent directors, as required by the existing provisions of Section 102.06, and following each business combination, the combined company must satisfy all initial listing requirements, as required by Section 802.01B.
Accordingly, in this manner, the Exchange believes that the proposed rule change satisfies the requirements of Section 6b5 of the Act in that it is designed 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.
B. Self-Regulatory Organizations Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule would be available in a non-discriminatory way to any company satisfying its requirements, as well as all other applicable NYSE listing requirements. In addition, the Exchange faces competition for listings but the proposed rule change does not impose any burden on the competition with other exchanges; any competing exchange could similarly adopt rules to allow listing ACs using such a structure.
C. Self-Regulatory Organizations Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or up to 90 days i as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or ii as to which the self-regulatory organization consents, the Commission will:
A By order approve or disapprove the proposed rule change, or B institute proceedings to determine whether the proposed rule change should be disapproved.

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