[Federal Register Volume 65, Number 143 (Tuesday, July 25, 2000)]
[Notices]
[Pages 45808-45810]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18741]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43044; International Series Release No. 1228; File No. 
SR-NYSE-00-25]


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

July 17, 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 June 14, 2000, the New York Stock Exchange, Inc. (the 
``Exchange'' or the ``NYSE'') filed with the Securities and Exchange 
Commission the proposed rule change as described in Items I, II, and II 
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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange is proposing to adopt two interpretations under its 
rules to accommodate the trading of Celanese AG (``Celanese''). 
Celanese listed on the NYSE on October 25, 1999.
    Celanese is a stock corporation incorporated under the laws of the 
Federal Republic of Germany with a single class of common stock--
ordinary shares, no par value (``Ordinary Shares'')--that trade on both 
the NYSE and the Frankfurt Stock Exchange, as well as on other 
exchanges around the world. The register for the Ordinary Shares is 
administered by Deutsche Bank AG, Celanese's transfer agent and 
registrar in Germany, and ChaseMellon Shareholder Services, Celanese's 
transfer agent and registrar in the United States. Transactions in the 
Ordinary Shares are cleared through the central clearing systems of 
both countries, The Depository Trust and Clearing Corporation 
(``DTCC'') in the United States and Deutsche Borse Clearing in Germany.
    Although the Celanese Ordinary Shares are issued by a German 
company, they have many characteristics that are similar to shares of 
common stock issued by U.S. companies. For example, while most German 
stocks are in bearer form, Celanese shares are in registered form, the 
same as U.S. shares. However, the form of the stock certificate will 
have certain characteristics more similar to certificated shares of 
common stock of a German company than of a U.S. company. In addition, 
Celanese will pay dividends and call stockholder meetings and conduct 
voting at such meetings generally in accordance with German practices. 
For these reasons, the Exchange proposes to adopt two interpretations 
of its rules to accommodate the listing and trading of Celanese, 
similar to interpretations that the Commission approved in 1998 to

[[Page 45809]]

accommodate the listing and trading of DaimlerChrysler \3\:
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 40597 (October 23, 
1998), 63 FR 58435 (October 30, 1998).
---------------------------------------------------------------------------

    Certificates: The Frankfurt Stock Exchange rules governing stock 
certificates are somewhat different than the Exchange's rules. This 
rule change interprets Paragraph 502 of the Exchange's Listed Company 
Manual (the ``Manual'') to accept the Celanese certificates.
    Proxies: Celanese will solicit proxies in a manner that combines 
characteristics of both the German and U.S. markets. This rule change 
interprets Paragraphs 401.03 and 402 of the Manual to accept Celanese's 
proposed proxy procedures.

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 two 
interpretations under the Exchange's rules to accommodate the listing 
and trading of Celanese. These interpretations pertain to Celanese's 
share certificates and voting procedures. As noted above, they are 
similar to interpretations that the Commission approved in 1998 with 
respect to the listing of the ordinary shares of DaimlerChrysler.\4\
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 Celanese listed before the development work 
could be finalized, the Exchange is requesting this company-specific 
approval, following the DaimlerChrysler model.
---------------------------------------------------------------------------

    The Celanese share certificates conform in most respects to the 
requirements in Paragraph 502 of the Manual. The only exceptions are 
that the vignettes (pictures) are not fully steel engraved and the form 
of endorsement provides for German registry. Otherwise, the printing 
and engraving requirements are met. The Exchange believes that these 
are relatively minor inconsistencies with current requirements.
Voting
    Under German 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. Celanese will modify its 
current practice to accommodate the notice period in the United States. 
In Germany, there already are procedures to distribute preliminary 
agendas and other information to shareholders approximately one month 
before the meeting. Celanese has agreed to prepare and mail stockholder 
meeting materials approximately 45 days prior to its meeting, 
permitting the solicitation of proxies in the United 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 ChaseMellon Shareholder 
Services 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. A 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, in 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, Celanese shareholders can vote in person at a 
shareholders' meeting. Under German 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\
---------------------------------------------------------------------------

    \5\ With respect to dividends, Celanese's record date also will 
be the date of the company's annual meeting (like most German 
companies, Celanese 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 Celanese 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.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b)(5).

---------------------------------------------------------------------------

[[Page 45810]]

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, NW, Washington, DC 20549-0609. 
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 coping in the 
Commission's Public Reference Section, 450 Fifth Street, NW, 
Washington, DC 20549. Copies of such filing will also be available for 
inspection and coping at the principal office of the Exchange. All 
submissions should refer to File No. SR-NYSE-00-25 and should be 
submitted by [insert date 21 days from the date of this publication].

IV. Commissions'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 Celanese 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 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 Celanese (rather than American depositary 
receipts) while maintaining trading standards that are substantially 
equivalent to the NYSE's existing standards.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    The Commission believes that it is reasonable for the NYSE to 
interpret the Manual to accept the Celanese proxy procedures. By 
mailing stockholder meeting materials approximately 45 days prior to 
its annual meeting, Celanese will give shareholders the same type of 
advance notification provided for in the Manual. Moreover, the Celanese 
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 Celanese 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 similar interpretation in 1998 to permit the NYSE to trade 
ordinary shares of DaimlerChrysler, \8\ and the Commission approved a 
similar interpretation earlier this year to permit the NYSE to trade 
ordinary shares of UBS.\9\
---------------------------------------------------------------------------

    \8\ See note 3, supra.
    \9\ See Securities Exchange Act Release No. 42785 (May 15, 
2000), 65 FR 33396 (May 23, 2000).
---------------------------------------------------------------------------

    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. The Exchange notes that these interpretations are the 
same as those made in connection with the trading of ordinary shares of 
DaimlerChrysler, and the Exchange states that DaimlerChrysler shares 
have traded without difficulty on the Exchange since their first 
listing. The Exchange adds that in light of the significant trading 
interest in Celanese, these interpretations will help eliminate 
uncertainty on the part of market participants.
    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. These interpretations are 
substantially similar to the interpretations that permitted the trading 
of DaimlerChrysler, and the Commission finds that granting accelerated 
approval to these changes will eliminate uncertainty about the status 
of Celanese shares.\10\
---------------------------------------------------------------------------

    \10\ The Commission notes, however, that the Exchange has been 
trading ordinary shares of Celanese since October 1999, but did not 
file this proposed rule change until June 2000. The Commission's 
approval of this proposed rule change is not retroactive.
---------------------------------------------------------------------------

    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the Act 
\11\ that the proposed rule change (SR-NYSE-00-25) is hereby approved 
on an accelerated basis.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jonathan G. Katz,
Secretary.
[FR Doc. 00-18741 Filed 7-24-00; 8:45 am]
BILLING CODE 8010-01-M