[Federal Register Volume 66, Number 196 (Wednesday, October 10, 2001)]
[Notices]
[Pages 51713-51715]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-25385]


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SECURITIES AND EXCHANGE COMMISSION

(Release No. 34-44888; File No. SR-NYSE-2001-38)


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

September 28, 2001.
    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 September 27, 2001, the New York Stock Exchange, Inc. (``Exchange'' 
or ``NYSE'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I 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.
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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 NYSE proposes to adopt interpretations of certain rules of the 
Exchange's Listed Company Manual (``Manual'') to accommodate the 
trading of ordinary shares of Deutsche Bank Aktiengesell shaft 
(``Deutsche Bank'').\3\ These interpretations pertain to Deutsche 
Bank's proxy procedures and form of shares.
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    \3\ These interpretations are generally similar to those 
approved by the Commission in respect of trading of ordinary shares 
of DaimlerChrysler AG and Celanese AG, each a stock corporation 
incorporated under laws of the Federal Republic of Germany. See 
Securities Exchange Act Release No. 40597, 63 FR 58435 (October 30, 
1998); Securities Exchange Act Release No. 43044, 65 FR 45808 (July 
25, 2000).
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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
    In 1998, the Exchange facilitated the trading of the ordinary 
shares of DaimlerChrysler AG (``DaimlerChrysler'') by adopting 
interpretations of certain existing rules of the Manual.\4\ The 
Commission approved those interpretations.\5\ In 2000, the Exchange 
facilitated the trading of the ordinary shares of Celanese AG 
(``Celanese'') by adopting interpretations that were substantially 
similar to those made in connection with the trading of the ordinary 
shares of DaimlerChrysler. The Commission also approved those 
interpretations.\6\
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    \4\ Specifically, the Exchange accepted a form of stock 
certificate that complied with requirements of the Frankfurt Stock 
Exchange (``FSE'') notwithstanding its variation from some of the 
requirements in Paras. 501 and 502 of the Manual. The Exchange also 
interpreted Paras. 401.03 and Para. 402 of the Manual to permit 
DaimlerChrysler to solicit proxies in a manner that combined 
characteristics of both German and U.S. markets.
    \5\ See Securities Exchange Act Release No. 40597, 63 FR 58435 
(October 30, 1998).
    \6\ See Securities Exchange Act Release No. 43044, 65 FR 45808 
(July 25, 2000).
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    The Exchange's experience indicates that since their original 
listing on the Exchange, the ordinary shares of each of DaimlerChrysler 
and Celanese have traded on the Exchange without difficulty. The 
Exchange now proposes to adopt similar interpretations to accommodate 
the listing and trading on the Exchange of Deutsche Banks's ordinary 
shares. Because of the developments in German law and business 
practices, as well as evolution of the Exchange's rules, the Exchange 
proposes to adopt an additional interpretation relating to form of 
shares of Deutsche Bank that would allow the Ordinary Shares to be in a 
book-entry only format, provided that the securities

[[Page 51714]]

are ``depository eligible'' as is required by Exchange Rule 227.
    Deutsche Bank is a stock corporation incorporated under the laws of 
the Federal Republic of Germany. Deutsche Bank's share capital consists 
of ordinary shares issued in registered form without par value 
(``Ordinary Shares''). The Ordinary Shares will trade on both the FSE 
and the NYSE under the symbol ``DB.'' The register for the Ordinary 
Shares will be administered by registrar services GmbH, Deutsche Bank's 
transfer agent and registrar in Germany, and by Deutsche Bank AG, the 
company's ``named'' transfer agent and registrar in the United States, 
as well as Mellon Investor Services LLC (``Mellon'' or ``U.S. Transfer 
Agent''), the ``record keeping transfer agent'' in the United States. 
Transactions in the Ordinary Shares will be cleared through the central 
clearing systems of both countries, The Depository Trust Company 
(``DTC'') in the United States and Clearstream Banking AG Frankfurt \7\ 
in Germany.
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    \7\ Clearsteam International is a clearing and settlement 
company that is a product of a merger between Deutsche Borse 
Clearing and Luxemburg's Cedel International, which became effective 
in January 2000. Clearstream Banking AG Frankfurt is a subsidiary of 
Clearsteam International.
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    To facilitate the trading of Ordinary Shares of Deutsche Bank on 
the Exchange, the Exchange proposes to adopt the following 
interpretations of the Exchange's rules:
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, the Exchange's rules require 10 days' notice of a record date 
and 30 days' interval between record and meeting dates. Deutsche Bank 
will 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. Deutsche Bank has agreed to prepare and mail 
shareholder-meeting materials approximately 45 days prior to its 
meeting, permitting the solicitation of proxies in the United States in 
the currently accepted time frame. Deutsche Bank 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. To address the issue 
of possible double voting, both the U.S. 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 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 interpretation is to 
accept these procedures as being in compliance with NYSE procedures.
    Both the U.S. 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 U.S. 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 U.S. 
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 canceled. If new holders appear, proxy 
materials will be mailed to them by the U.S. 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 on a best effort 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 automataic 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, Deutsche Bank shareholders can vote in person at a 
shareholders' meeting. Under Deutsche Bank's Articles of Association, 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. Deutsche Bank 
will solicit proxies in a manner consistent with the Exchange's rules 
applicable to non-U.S. issuers.
Form of Shares
    The Exchange has been advised that it has become a standard market 
practice for German listed stock corporations not make share 
certificates available.\8\ Consistent with this practice, Deutsche 
Bank's shareholders generally have no right to individual shares in 
certificate form.
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    \8\ Under the German Stock Corporation Act (Aktiengesetz), a 
stock corporation is permitted to restrict or exclude the 
shareholders' right to request the issuance of share certificates. 
Such restriction or exclusion must be provided in the stock 
corporation's articles of association. If the articles of 
association provide for such restriction or exclusion, the 
shareholders' rights will be represented by an interest in one or 
more global share certificates representing the entire share capital 
of the stock corporation.
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    The Exchange proposes to adopt an interpretation that would allow 
the Ordinary Shares to be in a book-entry only format, provided that 
the securities are ``depository eligible'' as is required by Exchange 
Rule 227. Investors will be able to hold their interest in the Ordinary 
Shares in ``street name'' or in their own name through a system for 
direct registration of shares (``DRS'') in the United States.
    Under the book-entry only system, the Ordinary Shares are 
represented by one or more global certificates deposited with 
Clearstream Banking AG Frankfurt, the German central depository. No 
individual physical certificates will generally be issued. It is 
expected that U.S. holders of the Ordinary Shares would hold their 
interest in the global certificates in street name through DTC in the 
United States. Investors who choose to hold their interest in the 
Ordinary Shares through DRS will be able to update ownership 
information directly with the U.S. Transfer Agent.
    In the event individual certificates in respect of the Ordinary 
Shares are issued, they will comply with applicable interpretations 
relating to the form of stock certificates developed for 
DaimlerChrysler.\9\
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    \9\ Note that the recent elimination of the Exchange's printing 
and engraving requirements will affect that interpretation. See 
Securities Exchange Act Release No. 44592, 66 FR 39809-01 (August 1, 
2001). The interpretation regarding the form of stock certificate 
developed for Daimler Chrysler permitted vignettes not to be fully 
steel engraved and permitted the form of endorsement to provide for 
German registry. As part of the elimination of the Exchange's 
printing and engraving requirement, vignettes are no longer required 
by the Manual.
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    Based on the foregoing, the Exchange believes that it is 
appropriate to approve ordinary shares of Deutsche Bank for listing and 
trading on the Exchange.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act \10\ in general, and with Section 6(b)(5) in 
particular,\11\ in

[[Page 51715]]

that it is designed to perfect the mechanism of a free and open market 
and a national market system, protect investors and the public interest 
and promote just and equitable principles of trade.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any inappropriate burden on competition.

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

    The Exchange did not receive or solicit any written comments on the 
proposed rule change.

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 copying at the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to the File No. SR-NYSE-2001-38 
and should be submitted by [insert date 21 days from date of 
publication].

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

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange. \12\ In 
particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b(5) of the Act, which requires that the 
rules of an exchange be designed to promote just and equitable 
principles of trade, remove impediments to and perfect the mechanism of 
a free and open market and a national securities system, and protect 
investors and the public interest. \13\ The Commission believes that 
the proposed rule change 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 Deutsche Bank (rather than American depositary receipts) while 
maintaining the standards that are substantially equivalent to the 
NYSE's existing standards.
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    \12\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
    \13\ 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 permit Deutsche Bank shares to be in book-entry 
format only, provided that the securities are ``depository eligible'' 
as required by Exchange Rule 227. The interpretation is necessary to 
accommodate the fact that Deutsche Bank shareholders generally have no 
right to individual shares in certificate form. In the event that 
individual certificates are issued, the Commission believes that it is 
reasonable for the Exchange to interpret the Manual to permit it to 
list shares of Deutsche Bank despite differences from the Manual's 
standards for endorsement.
    The Commission also believes that it is reasonable for the NYSE to 
interpret the Manual to accept Deutsche Bank's proxy procedures. By 
mailing stockholder meeting materials approximately 45 days prior to 
its annual meeting, Deutsche Bank will give shareholders the same type 
of advance notification provided for in the Manual. Moreover, Deutsche 
Bank'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 Deutsche Bank 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.
    The Exchange has requested that the Commission approve the proposed 
rule change prior to the thirtieth day after publication of the 
proposal in the Federal Register. According to the Exchange, the 
trading of Deutsche Bank shares is scheduled to commerce as early as 
October 3, 2001. The Exchange states that approval of the rule change 
by the date will facilitate the maintenance of an orderly market in the 
shares of Deutsche Bank. The Exchange further states that without 
accelerated approval of this proposed rule change, there will be 
uncertainty in the market regarding the form of Deutsche Bank 
certificates and the procedures governing Deutsche Bank proxies.
    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Act, \14\ for approving the proposed rule change prior to the 
thirtieth day after the date of publication of notice thereof 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 Deutsche Bank shares on the 
NYSE without doubts about whether the book-entry only shares are 
acceptable under NYSE rules, and without question about how Deutsche 
Bank will conduct proxy voting.
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    \14\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
\15\ that the proposed rule change (SR-NYSE-2001-38) is hereby approved 
on an accelerated basis.
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    \15\ Id.

    For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-25385 Filed 10-09-01; 8:45 am]
BILLING CODE 8010-01-M