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Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Notices Required Minimum Amount is necessary to demonstrate genuine investor interest in the operating company to support an exchange listing, SPACs do not present a similar risk of circumventing the round lot holder requirement through share transfers for no value and that removing this requirement will not impact the protection of investors.27
Given the differences between SPACs and operating companies, including in their structure, and the rights of SPAC
shareholders to convert or redeem their shares upon a business combination for a pro rata portion of the IPO proceeds maintained in a trust account, the Commission believes that it is reasonable and not unfairly discriminatory for the Exchange to exclude SPACs from the requirement to meet the Required Minimum Amount at the time of initial listing of the SPAC.
Specifically, the Commission believes the Exchange has provided a reasonable basis for its proposal to differentiate SPACs from operating companies in terms of the requirement to comply with the Required Minimum Amount upon initial listing given that, in the Exchanges experience, SPACs do not appear to present a similar risk of circumventing the round lot holder requirement through share transfers for no value. As the Exchange states in its proposal, typically the only investors holding shares in a SPAC prior to an IPO are its founders, whereas other round lot holders generally represent new investors, in contrast to the Exchanges experience with operating companies.28
Further, the Exchanges other initial listing requirements will remain applicable to SPACs at the time of their initial listing including, among other things, that round lot holders hold unrestricted shares and that SPACs will continue to meet the minimum number and market value of unrestricted publicly held shares requirements as well as the other listing requirements on the applicable market tier, in addition to the specific listing criteria applicable to SPACs.29 As the Commission stated 27 See
supra note 14 and accompanying text.
28 See supra notes 1213 and accompanying text.
29 For example, SPACs listed on the Nasdaq Capital Market under the Market Value of Listed Securities Standard would be required to have at least 1,000,000 unrestricted publicly held shares, at least 300 round lot holders that hold unrestricted shares, a minimum market value of listed securities of $50 million, a minimum market value of unrestricted publicly held shares of at least $15
million, and at least three registered and active market makers. See Nasdaq Rules 5505ab. See also Nasdaq Rules 5315ef Nasdaq Global Select Market and 5405ab Nasdaq Global Market.
The Commission understands that, although
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when approving the Exchanges amendments to exclude restricted securities from its calculation of a companys publicly held shares, market value of publicly held shares, and round lot holders for purposes of qualifying the companys securities for initial listing, the amendments should allow the Exchange to more accurately determine whether a security has adequate distribution and liquidity and is thus suitable for listing and trading on the Exchange. 30 In addition, all initial listing requirements apply to the combined company upon consummation of a business combination, which would include the Required Minimum Amount. The Commission therefore believes the Exchanges current listing rules will continue to provide appropriate listing standards for SPAC securities, both prior to and after the completion of any business combination. Moreover, investors in SPACs will continue to have the ability to convert or redeem their shares for cash into a pro rata share of the amount in the trust account, pursuant to the provisions of Nasdaq Rules IM51012d and e.
These other listing requirements, taken together, should continue to help ensure that SPACs are listed only if there will be a sufficient market, with adequate depth and liquidity and with sufficient investor interest to support an exchange listing, and will continue to provide investors the redemption feature. The Commission also notes that the Exchanges proposal is consistent with SPAC listing standards on other listing exchanges that do not require round lot holders to hold unrestricted securities of a minimum market value amount.31 For the reasons discussed above, the Commission believes the Exchanges proposal is consistent with the requirements of Section 6b5 of the Act and with the maintenance of fair and orderly markets under the Act.
IV. Conclusion It is therefore ordered, pursuant to Section 19b2 of the Act,32 that the proposed rule change, as modified by Nasdaqs rules provide alternative standards to satisfy in lieu of the market value standards, SPACs typically list under the market value standard given that they have no prior operating history.
30 Required Minimum Amount Approval Order, supra note 7, at 33111. See also supra note 7.
31 See, e.g., New York Stock Exchange LLC
NYSE Listed Company Manual Section 102.06.
The Commission notes that NYSEs initial listing standards for SPACs, which require an aggregate market value of $100 million and market value of publicly-held shares of $80 million, are generally higher than those on Nasdaq. See supra notes 17
and 29. See also NYSE American LLC Company Guide Sections 102 and 119.
32 15 U.S.C. 78sb2.

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Amendment No. 1 SRNASDAQ2020
069, be, and hereby is, approved.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.33
J. Matthew DeLesDernier, Assistant Secretary.
FR Doc. 202102010 Filed 12921; 8:45 am BILLING CODE 801101P

SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meetings 2:00 p.m. on Thursday, February 4, 2021.
PLACE: The meeting will be held via remote means and/or at the Commissions headquarters, 100 F
Street NE, Washington, DC 20549.
STATUS: This meeting will be closed to the public.
MATTERS TO BE CONSIDERED:
Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the closed meeting. Certain staff members who have an interest in the matters also may be present.
In the event that the time, date, or location of this meeting changes, an announcement of the change, along with the new time, date, and/or place of the meeting will be posted on the Commissions website at https
www.sec.gov.
The General Counsel of the Commission, or his designee, has certified that, in his opinion, one or more of the exemptions set forth in 5
U.S.C. 552bc3, 5, 6, 7, 8, 9B
and 10 and 17 CFR 200.402a3, a5, a6, a7, a8, a9ii and a10, permit consideration of the scheduled matters at the closed meeting.
The subject matter of the closed meeting will consist of the following topics:
Institution and settlement of injunctive actions;
Institution and settlement of administrative proceedings;
Resolution of litigation claims; and Other matters relating to examinations and enforcement proceedings.
At times, changes in Commission priorities require alterations in the scheduling of meeting agenda items that may consist of adjudicatory, examination, litigation, or regulatory matters.
CONTACT PERSON FOR MORE INFORMATION:
For further information; please contact Vanessa A. Countryman from the Office of the Secretary at 202 5515400.
TIME AND DATE:

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CFR 200.303a12.

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