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Frequently Asked Questions
  Staff Interpretation Letter 2009-6  
Identification Number 724
This is in response to your correspondence regarding whether proposed amendments (the “Amendments”) to the Plan would require shareholder approval pursuant to Listing Rule 5635(c) and IM-5635-1 (collectively, the “Rule”).
 
According to the information you provided, the Plan is intended to meet the requirements of Section 423 of the Internal Revenue Code (the “Code”).  Plans that meet the requirements of Section 423 do not require shareholder approval under the Rule. As required by the Code, the Plan was approved by the company’s shareholders subsequent to its adoption.  Pursuant to the Amendments, the company would establish a component of the Plan not intended to meet the requirements of Section 423 (the “Non-423 Component”) to facilitate participation in the Plan by employees located in certain countries outside the United States (“Non-U.S. Employees”), in compliance with local laws and regulations, without running afoul of the Section 423 requirements. Employees residing in the United States and working for the company, a subsidiary, or an affiliate of the company in the United States would not be permitted to participate in the Non-423 Component.
 
Participants in the Non-423 Component would be subject to substantially the same requirements as participants in the Section 423 component. The amount of permissible contributions, the limit on the number of shares a participant may purchase, and the purchase price would be the same for both components. The establishment of the Non-423 Component would not result in the creation of a new plan.  Instead, the Non-423 Component would be a part of the Plan, and the number of shares available under the Plan would not be increased as a result of the establishment of the Non-423 Component. The types of awards available under the Plan would not be expanded by the Amendments.  Further, the Amendments would not generally change the eligibility requirements of the Plan, although participation in the Non-423 Component would be permitted for employees not otherwise eligible to the extent required by local law, and the company’s compensation committee would be permitted to expand eligibility in the Non-423 Component to the non-U.S. employees of entities which are not subsidiaries of the company, but in which the company has an equity or ownership interest.
 
Following our review of the information you provided, we have determined that the Amendments as described herein, including the establishment of the Non-423 Component, would not require shareholder approval under the Rule.  In that regard, we note that the provisions of the Non-423 Component would be substantially the same as those of the Plan. The Non-423 Component would provide the company’s non-U.S. employees with substantially the same benefits as currently provided under the Plan. All shares issued under the Non-423 Component would come from the authorized share reserve of the Plan and would, therefore, not increase the number of shares available under the Plan. Further, the change in the eligibility requirements described above would not materially expand the class of eligible participants.  As such, the Amendments would not result in an increase in the number of shares available for issuance, a material increase in the benefits to participants, a material expansion of the class of eligible participants, or an expansion in the types of awards available. Therefore, the Amendments (including the establishment of the Non-423 Component) would not be material amendments to the Plan and would not require shareholder approval under the Rule.  Please be advised that we are expressing no opinion as to the status of the Plan, or the impact of the Amendments, under the Code.
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 724
material_search_footer*The Publication Date reflects the date of first inclusion in the Reference Library, which was launched on July 31, 2012, or a subsequent update to the material. Material may have been previously available on a different Nasdaq web site.
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