[Federal Register Volume 65, Number 100 (Tuesday, May 23, 2000)]
[Notices]
[Pages 33396-33398]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-12927]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42785; International Series Release No. 1223; File No. 
SR-NYSE-00-23]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by the New York 
Stock Exchange, Inc., Relating to the Trading of the Ordinary Shares of 
UBS AG

May 15, 2000.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'');\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 15, 2000, the New York Stock Exchange, Inc. (the ``Exchange'' or 
the ``NYSE'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons and to approve the 
proposal on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange is proposing to adopt an interpretation under its 
rules to accommodate the trading of UBS AG (``UBS''). UBS is a stock 
corporation incorporated under the laws of Switzerland with a single 
class of common stock--ordinary shares with a par value of 20 Swiss 
Francs each--that will trade on both the NYSE and the Swiss Exchange, 
as well as on other exchanges around the world.
    UBS will solicit proxies in a manner that combines characteristics 
of both the Swiss and U.S. markets. This rule change interprets 
Paragraphs 401.03 and 402 of the Exchange's Listed Company Manual 
(``Manual'') to accept UBS's proposed proxy procedures.

[[Page 33397]]

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item III below. The Exchange has prepared summaries, set forth in 
Sections A, B and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to provide an 
interpretation under the Exchange's rules to accommodate the listing 
and trading of UBS. This interpretation pertains to UBS's proxy 
solicitation and voting procedures, and is similar to an interpretation 
that the Commission approved in 1998 \3\ with respect to the listing of 
the ordinary shares of DaimlerChrysler.\4\
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    \3\ See Securities Exchange Act Release No. 40597 (October 23, 
1998), 63 FR 58435 (October 30, 1998). That rule change also 
interpreted the Exchange's rules to accommodate the form of 
DaimlerChrysler's share certificates. The Exchange is not requesting 
approval of any interpretations related to UBS's share certificates.
    \4\ The Exchange anticipates developing and filing with the 
Commission such generally applicable rules as are necessary to cover 
matters relating to the trading of ordinary shares of non-U.S. 
companies, thus making company specific rule filings such as this 
one unnecessary. Since UBS is listing before the development work 
can be finalized, however, the Exchange is requesting this company-
specific approval, following the DaimlerChrysler model.
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    Under Swiss law, only stockholders who hold shares on the date of 
the stockholders meeting are entitled to vote. Accordingly, the record 
date for voting at a stockholder meeting is the meeting date. In 
contrast, Exchange rules require 10 days' notice of a record date and 
30 days between record and meeting date. UBS will modify its current 
practice to accommodate the notice periods in the United States. In 
Switzerland, there already are procedures to distribute preliminary 
agendas and other information to shareholders approximately one month 
before the meeting. UBS has agreed to prepare and mail stockholder 
meeting materials approximately 45 days prior to its meeting, 
permitting the solicitation of proxies in the Untied States in the 
currently accepted time frame. The company also has agreed to give the 
Exchange 10 days' notice of the record date.
    The coincidence of the record and meeting date also raises the 
possibility that a selling shareholder could give a proxy and then sell 
the shares, with the buyer also getting a proxy. This could lead to 
double voting. In order to address this, both The Bank of New York as 
transfer agent (the ``Transfer Agent'') and Automatic Data Processing 
(``ADP''), the proxy agent for most member organizations, will 
institute procedures to monitor changes in the shareholder list between 
the date the proxy material is originally mailed out and the date of 
the meeting. These procedures will be designed (i) to cancel the votes 
of persons who submit proxies but sell their shares prior to the 
meeting date, and (ii) to facilitate voting by persons who purchase 
shares after the time the proxy material is mailed out, but before the 
meeting date. The second purpose of the proposed rule change is to 
accept these procedures as being in compliance with NYSE procedures.
    Both the Transfer Agent and ADP will produce shareholder lists on 
the day designated for mailing the proxy material (approximately 30-45 
days prior to the meeting). The Transfer Agent's list will reflect the 
names of registered holders and ADP's list will reflect the names of 
beneficial owners. Prior to the meeting date, the Transfer Agent and 
ADP will each produce a current shareholder list. If holders no longer 
appear on the list, then votes attributed to proxies submitted by them 
will be cancelled. If new holders appear, proxy materials will be 
mailed to them by the Transfer Agent, the case of registered owners, 
and by ADP, in the case of beneficial owners.
    The shareholder lists can be updated periodically up until the date 
of the meeting. If practicable, proxy materials will be mailed to any 
new holders. This will be done on a best efforts basis. Such best 
efforts may include electronic notification and expedited delivery 
service. The proxy materials will describe voting procedures in detail. 
Notices will be included advising of the automatic revocation of the 
proxy if the holder sells stocks prior to the meeting. Finally, as a 
check and balance, the total vote cast in nominee name will not be 
permitted to exceed the total position so held.
    In addition, UBS shareholders can vote in person at a shareholder's 
meeting. Under Swiss law, a shareholder must give the company notice of 
his or her intent to vote in person no later than three business days 
prior to the meeting, and the person must be a record holder on the 
meeting date.\5\
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    \5\ With respect to dividends, UBS's record date also will be 
the date of the company's annual meeting (like most Swiss companies, 
UBS pays dividends annually.) This will make it impossible to trade 
the stock ``ex-dividend'' on the Exchange in the normal course. 
Accordingly, the Exchange will use its existing flexibility under 
Exchange Rules 235 and 257 and Paragraph 703.02 of the Manual to 
trade UBS stock with ``due bills'' for the period that the stock 
normally would trade ex-dividend. This is a process pursuant to 
which the seller will receive the dividend, but is obligated to pay 
the dividend to the buyer of the shares. This process will be 
transparent to investors since due bills net out in the clearing 
process. To avoid any potential confusion as to the ``ex-dividend 
date,'' the Exchange will endeavor to transmit notices to member 
organizations well in advance of the dividend declaration date.
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2. Basis
    The basis under the Exchange Act for this proposed rule change is 
the requirement under Section 6(b)(5) of the Act \6\ that an exchange 
have rules that are designed to prevent fraudulent and manipulative 
acts and practices, to promote just and equitable principles of trade, 
to foster cooperation and coordination with persons engaged in 
regulating, clearing, settling, processing information with respect to, 
and facilitating transactions in securities, 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.
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    \6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Exchange Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from members or other interested 
parties.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W.,

[[Page 33398]]

Washington, D.C. 20549. Copies of the submission, all subsequent 
amendments, all written statements with respect to the proposed rule 
change that are filed with the Commission, and all written 
communications relating to the proposed rule change between the 
Commission and any person, other than those that may be withheld from 
the public in accordance with the provisions of 5 U.S.C. 552, will be 
available for inspection and copying in the Commission's Public 
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549. 
Copies of such filing will also be available for inspection and copying 
at the principal office of the Exchange. All submissions should refer 
to File No. SR-NYSE-00-23 and should be submitted by June 13, 2000.

IV. Commission's Findings and Order Granting Accelerated Approval 
of Proposed Rule Change

    The Commission finds that the NYSE's proposal to interpret the 
Manual to accommodate the listing and trading of UBS shares is 
consistent with the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\7\ Specifically, the 
Commission finds that the proposed rule change is consistent with 
Section 6(b)(5) of the Act \8\ in that it will remove impediments to 
and perfect the mechanism of a free and open market, and will protect 
investors and the public interest, by enabling the NYSE to serve as a 
market for shares of UBS (rather than American depository receipts) 
while maintaining trading standards that are substantially equivalent 
to the NYSE's existing standards.
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    \7\ In approving this rule, the Commission has considered the 
proposed rule's impact on efficiency, competition and capital 
formation. 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that it is reasonable for the NYSE to 
interpret the Manual to accept UBS's proxy procedures. By mailing 
stockholder meeting materials approximately 45 days prior to its annual 
meeting, UBS will give shareholders the same type of advance 
notification provided for in the Manual. Moreover, UBS's proxy 
procedures will cancel proxies for shares sold prior to the meeting, 
and will facilitate voting by persons who purchase shares during the 
month leading up to the meeting. In that way, the Exchange's proxy 
procedures regarding UBS appear to be substantially equivalent to the 
NYSE's existing standards, by permitting the votes cast at the annual 
meeting to accurately reflect the company's shareholders at the time of 
the meeting. Indeed, the Commission approved a substantially similar 
interpretation in 1998 to permit the NYSE to trade ordinary shares of 
DaimlerChrysler.\9\
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    \9\ See note 3, supra.
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    The Commission notes that the Exchange states that it anticipates 
developing and filing generally applicable rules related to the trading 
of ordinary shares of non-U.S. companies, making this type of company-
specific rule filing unnecessary. The Commission supports that goal, 
and concurs that general rules are preferable to a series of company-
specific exemptions.
    The Exchange has requested that the Commission approve the proposed 
rule change prior to the thirtieth day after its publication in the 
Federal Register. According to the Exchange, the trading of UBS shares 
on the Exchange is scheduled to commence on May 16, 2000. The Exchange 
states that in light of the significant trading interest in UBS shares 
and the imminence of its listing date, approving this rule as quickly 
as possible will help eliminate uncertainty on the part of the market 
participants. The Exchange also states that DaimlerChrysler ordinary 
shares have traded without difficulty on the Exchange since their first 
listing.
    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice of filing in the Federal Register. The Commission believes that 
it is necessary to approve the NYSE's proposal on an accelerated basis 
to permit the public to begin to trade the newly issued UBS shares on 
the NYSE without questions about how UBS will conduct proxy voting.
    It is Therefore Ordered, pursuant to Section 19(b)(2) of the Act 
\10\ that the proposed rule change (SR-NYSE-00-23) is hereby approved 
on an accelerated basis.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-12927 Filed 5-22-00; 8:45 am]
BILLING CODE 8010-01-M