[Federal Register Volume 67, Number 59 (Wednesday, March 27, 2002)]
[Notices]
[Pages 14756-14758]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-7296]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45602; File No. SR-NYSE-2001-40]


Self-Regulatory Organizations; Notice of Filing of a Proposed 
Rule Change and Amendment No. 1 and Amendment No. 2 Thereto by the New 
York Stock Exchange, Inc. Regarding Method of Delivery of Annual 
Reports and Proxy Materials

March 20, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on October 11, 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, II, and III below, which items have been prepared by the NYSE. 
The Exchange submitted Amendment No. 1 to the proposed rule change on 
January 15, 2002.\3\ The Exchange submitted Amendment No. 2 to the 
proposed rule change on March 5, 2002.\4\ The Commission is publishing 
this notice to solicit comments on the proposed rule change, as 
amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, NYSE made technical changes to its rule 
text. See letter to Nancy Sanow, Assistant Director, Division of 
Market Regulation (``Division''), Commission, from Darla C. Stuckey, 
Corporate Secretary, NYSE, dated January 11, 2002 (``Amendment No. 
1'').
    \4\ In Amendment No. 2, NYSE made additional minor technical 
changes to its rule text. See letter to Nancy Sanow, Assistant 
Director, Division, Commission, from Darla C. Stuckey, Corporate 
Secretary, NYSE, dated March 4, 2002 (``Amendment No. 2'').

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[[Page 14757]]

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

    The Exchange proposes to amend Sections 203.01, 204.04, 402.04, and 
402.10 of the Exchange's Listed Company Manual (``Manual'') in respect 
of method of delivery of annual reports and proxy materials. The 
proposed amendment will specify that annual reports and proxy materials 
should be distributed in such format and by such methods as are 
permitted or required by applicable law and regulations. Below is the 
text of the proposed rule change. Proposed new language is italicized; 
deletions are in brackets.

Listed Company Manual

203.00 Annual and Interim Reporting Requirements
* * * * *
203.01 Annual Report Requirement
    The Exchange requires that companies publish at least once a year 
and distribute to shareholders an annual report containing financial 
statements of the company and its consolidated subsidiaries prepared in 
conformity with generally accepted accounting principles. The company 
must distribute its annual report to its shareholders not later than 
120 days (225 days for Non-US issuers) after the close of each fiscal 
year. Notwithstanding the foregoing, domestic issuers must make this 
distribution at least fifteen days in advance of the annual meeting. 
(Non-US issuers are encouraged to do so when possible.) When the annual 
report is [mailed] distributed to shareholders, two copies should be 
sent to the Exchange together with advice as to the date of [mailing] 
distribution to shareholders.
    Companies may satisfy the annual distribution requirement either by 
distributing an annual report to shareholders, or by distributing to 
shareholders the Form 10-K (or Form 20-F for Non-US issuers) filed with 
the SEC, with an indication that it is distributed in lieu of a 
separate annual report. When the annual report (or Form 10-K or Form 
20-F) is distributed [mailed] to shareholders, two copies should be 
sent to the Exchange, together with advice as to the date of 
distribution [mailing] to shareholders. Distribution shall be in such 
format and by such means as permitted or required by applicable law and 
regulation (including any interpretations thereof by the SEC). ([s]See, 
for example, [materials referenced in Listed Company Manual section 
402.04(B)] the following interpretations by the SEC: Release No. 34-
36345; File No. S7-31-95; Release No. 34-37182, File No. S7-13-96; and 
Release No. 34-42728, File No. S7-11-00. [by electronic means 
(including by posting on the company's web site) will be effective only 
as to beneficial holders who have given their prior consent to 
receiving the report in that form. Such consent must be in writing, 
which may be in the form of electronic mail.]
* * * * *
    (A) through (D)--No change.
    (E) Occasional Delay in Issuance of Statements.
* * * * *
    So far as the [three months time limit of the listing agreement] 
120 day (225 day) time limit stated in the first paragraph of this 
Section 203.01 is concerned, the Exchange, while ready to extend such 
time limit on the basis of necessity, does not feel free to do so on 
the basis of convenience. For example it cannot consent to a delay in 
the issuance of the statements just to make possible their simultaneous 
distribution [mailing] with the proxy material.
* * * * *
204.00 Notices by the Company to the Exchange
* * * * *
204.04 Annual Report
    The Exchange requires that two copies of the company's annual 
report be provided to the Exchange when it is [mailed] distributed to 
shareholders. These reports should be accompanied by notice to the 
Exchange as to the date [mailed] distributed to shareholders.
* * * * *
402.00 Proxies
* * * * *
402.04 Proxy Solicitation Required
* * * * *
    (B) Proxy materials shall be in such format and shall be 
distributed by such means as are permitted or required by applicable 
law and regulation (including any interpretations thereof by the SEC). 
[Electronic Delivery of Proxy Materials. As permitted by applicable 
state and federal law (including any interpretations thereof by the 
SEC) a company may arrange for the delivery of its proxy material by 
electronic means (including by posting on company's web site with an 
electronic mail notice to the beneficial owner of its availability on 
the web site) to beneficial owners who have given prior written consent 
to such a delivery. Such consent may be in the form of electronic mail. 
Such arrangements should be made in coordination with any 
intermediaries that are record holders of the securities. Proxies may 
also be delivered by electronic means by beneficial owners as permitted 
by applicable state and federal law (including any interpretation 
thereof by the SEC) and if appropriate arrangements have been made with 
any intermediaries that are record holders of the securities.] (See, 
for example, the following interpretations by the SEC: Release No. 34-
36345; File No. S7-31-95; Release No. 34-37182, File No. S7-13-96; and 
Release [Nos. 33-7856,] No. 34-42728, File No. S7-11-00). Companies 
should also note the NYSE Rules (451 and 465) applicable to members and 
member organizations regarding the furnishing of annual reports and 
proxy materials to account holders.
* * * * *
402.10 Charges by Member Organizations for Distributing Material
* * * * *
    (A) through (B) No change.
    (C) Charges for Interim Report Distributions [Mailings].
* * * * *
``Householding'' of Reports
    Rules 451 and 465 require member organizations to transmit issuer-
supplied annual reports, interim reports, proxy statements and other 
material to beneficial owners. Member organizations are not required to 
transmit more than one annual report, interim report, proxy statement 
or other material to beneficial owners with more than one account 
(including trust accounts). In addition, member organizations may 
eliminate multiple transmissions or reports, statements or other 
materials to beneficial owners having the same address, provided they 
comply with applicable SEC rules with respect thereto (see SEC Rule 
14b-1 under the Securities Exchange Act of 1934). [that (i) at least 
one such report or statement is transmitted to a beneficial owner at 
that address; and (ii) any beneficial owner having that address, to 
whom a report is not sent, has agreed thereto in writing.]

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 NYSE 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 IV below. The NYSE has

[[Page 14758]]

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 1999, the Exchange filed amendments to Section 203 of the Manual 
clarifying that listed companies were permitted to make electronic 
delivery of annual reports to beneficial holders, as long as beneficial 
holders had given prior written consent to such delivery. The 
Commission approved the rule change in March 2000.\5\
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    \5\ See Securities Exchange Act Release No. 42574 (March 24, 
2000), 65 FR 17326 (March 31, 2000).
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    Last year, the Exchange filed an amendment to Section 402.04 of the 
Manual extending the same electronic delivery option to delivery of 
proxies and proxy material, subject to the same affirmative written 
assent from beneficial holders.\6\ Responding to comments from the 
Commission staff, the Exchange modified the proposed amendment to 
specify that companies arranging for the electronic delivery of proxy 
materials must do so as permitted by and in compliance with applicable 
state and federal law, including any applicable interpretation by the 
Commission.\7\ The amended rule change was approved by the Commission 
in March 2001.\8\
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    \6\ File No. SR-NYSE-2000-21.
    \7\ Applicable Commission interpretations, which are cited in 
Section 402.04, as amended, include October 1995 Release Use of 
Electronic Media for Delivery Purposes; May 1996 Release Use of 
Electronic Media by Broker-Dealers, Transfer Agents and Investment 
Advisers for Delivery of Information; and April 2000 Release 
Delivery of Proxy Statements and Information to Households. (Release 
No. 34-36345, File No. S7-31-95; Release No. 34-37182, File No. S7-
13-96; Release No. 34-42728, File No. S7-11-00.)
    \8\ Securities Exchange Act Release No. 44133, 66 FR 18134 
(April 5, 2001).
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    Thereafter, the Exchange received comments from listed companies 
maintaining that the Exchange's requirement of prior written consent 
for delivery of proxy materials to beneficial holders is more 
restrictive than the prerequisites contained in the Commission's 
current interpretations. The Exchange has also been asked whether 
delivery of these materials on a compact disk is permissible, and 
whether delivery of a CD by mail is delivery of the information by 
electronic means.
    The Exchange staff discussed all of the foregoing with the 
Exchange's Legal Advisory Committee (``LAC'') in June of this year. 
Specifically, it was noted that the Commission in effect had pre-empted 
the field in terms not only of the content of proxy material and the 
annual report, but also in regulating delivery of the material to 
investors, issuing specific interpretations since 1995. The LAC agreed 
that in view of this, it is advisable for the Exchange to cease 
attempting to legislate for listed companies how they must act in this 
regard. Accordingly, as recommended by the LAC, the Exchange proposes 
to eliminate from Section 402.04 any specific requirements regarding 
the format and method of delivery, specifying instead that companies 
should distribute proxy materials in such format and by such methods as 
are permitted or required by applicable law and regulations. To be 
helpful the Exchange will retain the informational references to the 
applicable Commission interpretive releases, and will cross-reference 
the Exchange's rules 451 and 465 applicable to members and member 
organizations when they furnish information to account holders. To be 
consistent, the Exchange also proposes to make similar amendments to 
Sections 203.01 and 204.04, dealing with annual reports.
    Finally, the Exchange is proposing to make housekeeping changes to 
Section 203.01(E) of the Manual relating to time limits for the 
delivery of annual reports and to Section 402.10 of the Manual relating 
to householding of reports to conform to related rule changes effected 
last year.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Exchange Act,\9\ in general, and furthers the 
objectives of Section 6(b)(5),\10\ in particular, because it is 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to remove impediments 
to, and perfect the mechanism of a free and open market and, in 
general, to protect investors and the public interest.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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 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 neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the NYSE consents, the Commission will:
    (A) by order approve the proposed rule change; or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, is consistent with the Exchange 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 in the Commission's Public Reference Room. Copies of such 
filing will also be available for inspection and copying at the 
principal office of the NYSE. All submissions should refer to File No. 
SR-NYSE-2001-40 and should be submitted by April 17, 2002.

    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. 02-7296 Filed 3-26-02; 8:45 am]
BILLING CODE 8010-01-P