This is in response to your correspondence regarding the effect of a planned business combination between the company and the Target (the “Business Combination”) under Listing
Rule 5635(c) and IM-5635-1 (collectively, the “Rule”). You asked whether grants from the company’s existing equity plans would
require shareholder approval under the Rule after the Business Combination is completed.
In the Business Combination, a holding company (“HoldCo”) will be formed and the company and the Target will each merge into separate newly created subsidiaries of HoldCo. The company’s shareholders will receive one newly issued HoldCo ordinary share for
each company share owned, and the Target’s shareholders will receive a number of Holdco ordinary shares for each Target share owned that would result in the Target shareholders owning X percent of HoldCo. You stated that the company’s President/Chief Executive
Officer will become the Chief Executive Officer of Holdco and that the company’s Chief Financial Officer will become the Chief Financial Officer of HoldCo. Additionally, you stated that the company will be considered the acquirer for accounting purposes under
U.S. GAPP. Upon closing you stated that you expect HoldCo will be listed on the NASDAQ Stock Market, where the company is now listed, and a foreign market, where the Target is now listed.
You indicated that the company currently maintains the Incentive Plan, which is a shareholder approved plan that provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance
shares to service providers of the company and certain related entities, and both the U.S. ESPP and the Offshore ESPP, which allow U.S. and non-U.S. employees, respectively, to purchase the company’s equity. The outstanding awards under each Plan will be assumed
by HoldCo and adjusted by the exchange ratio of 1:1, and therefore, the number of shares subject to such awards and the exercise price will remain the same.
Following our review of the information provided, we have concluded that the Business Combination will be treated as a substitution listing event under
Listing Rule 5250(e)(4). We have reached this conclusion because the company’s shareholders will own substantially more than 50% of the HoldCo’s shares following the Business Combination, and it is supported by the fact that the company’s CEO and CFO will
maintain those roles at HoldCo and by your representation that the company will be considered the acquirer in the transaction under U.S. GAAP. As such, HoldCo may assume the company’s Incentive Plan without any restrictions on future grants or awards to the
eligible participants of HoldCo under the Incentive Plan. Furthermore, since the U.S. ESPP is designed to satisfy the requirements of Section 423, and the Offshore ESPP is a plan that provides non-U.S. employees with the substantially the same benefits as
the U.S. ESPP, HoldCo may assume both the U.S. ESPP and the Offshore ESPP without shareholder approval under the Rule.