This is in response to your correspondence regarding whether a proposed issuance of restricted common stock (the “Stock”) for the benefit of certain of the employees of the company’s subsidiaries in South Africa (the “Subsidiaries”) would require shareholder
approval pursuant to Marketplace Listing Rule 4350(i)(1)(A) (the “Rule”).
According to the information you provided, the Stock would be issued for the benefit of the black employees of the Subsidiaries to ensure that the company’s South African operations comply with South African legislation, specifically, the Broad-Based Black
Empowerment Act (the “Act”) and the Codes of Good Practice (the “Codes”) adopted under the Act. The Act is aimed at the economic empowerment of black people through socio-economic strategies and is intended to address what had been the systematic exclusion
of black South Africans from participation in the economy under the former Apartheid system. The Act addresses the concern that not all South Africans have been meaningfully integrated into the post-Apartheid economy. The Codes provide a framework for measuring
an enterprise’s black economic empowerment. A key element in this measurement is the provision of equity ownership in and control of South African operations to blacks, black-owned business partners, and other qualified entities.
You stated that the Act requires every South African government or public entity to take into account an enterprise’s score when issuing licenses and making procurement decisions. In addition, the Act has encouraged other entities, including private businesses,
to similarly take this score into account in making purchasing decisions. As such, complying with the Codes, including the ownership provisions, both promotes the Act’s goal of enhancing broad-based black economic empowerment and transforming the South African
economy, and enhances a company’s competitive position within South Africa.
You stated that the Stock would be issued to allow the company’s South African operations to satisfy the equity ownership requirements adopted under the Codes and to enhance the company’s competitive position in South Africa by having a status acceptable
to potential customers. The Stock would be issued to a Trust, which would benefit current and future black employees of the Subsidiaries and, to the extent shares are not distributed to those beneficiaries, a non-governmental organization created to further
the education of blacks. You stated that the Stock would not be issued for compensatory purposes. Employees that benefit from the Trust would not see their compensation reduced as a result and would remain eligible for all compensation arrangements, including
stock based compensation, paid to similarly-situated employees at the Subsidiaries. You represented that the issuance would not be treated as compensatory under South African law. The total number of shares of Stock to be issued would equal approximately
one-hundredth of one percent of the company’s outstanding shares.
Following our review of the information you provided, we have determined that the issuance of the Stock will not require shareholder approval under the Rule because it is not an equity compensation arrangement within the intent of the Rule. The issuance
is not a component of a compensation program for employees, but, instead, would take place only as a result of the unique regulatory environment in South Africa. Most importantly, the issuance will allow the company to comply with the Act and the related
socio-economic strategies necessary to address the substantial difficulty caused by Apartheid.