[Federal Register Volume 67, Number 123 (Wednesday, June 26, 2002)]
[Notices]
[Pages 43199-43201]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-16064]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46092; File No. SR-NYSE-2002-01]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 Thereto by the New York Stock Exchange, Inc. 
Removing Separate Exchange Requirements Regarding the Use of Consent 
Solicitations

June 19, 2002.
    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 January 3, 2002, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I, II, and III below, which Items have been substantially 
prepared by the NYSE. The NYSE submitted

[[Page 43200]]

Amendment No. 1 to the proposed rule change on May 23, 2002.\3\ 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, the Exchange: (1) added the following 
language to the proposed rule text: ``(including interpretations 
thereof), including, without limitation,'' and (2) added language to 
the purpose section clarifying the two options available to listed 
companies for obtaining shareholder approval. See letter from Darla 
C. Stuckey, Corporate Secretary, NYSE, to Nancy J. Sanow, Assistant 
Director, Division of Market Regulation, Commission, dated May 22, 
2002 (``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The NYSE proposes to amend Section 306 of the NYSE Listed Company 
Manual to remove separate NYSE requirements regarding the use of 
consent solicitations. The text of the proposed rule change is below. 
New language is italicized; deleted language is in brackets.

Listed Company Manual

306.00  Consents

    [The use of consents in lieu of special meetings as proper 
authorization for shareholder approval of corporate action may be 
appropriate under certain circumstances. When it appears that a special 
meeting of shareholders is not necessary, requests from listed 
companies to use consents will be reviewed and approved by the Exchange 
on an individual basis if they conform with these guidelines:
    A record date is used.
    Consent material is sent to all shareholders.
    Corporate action is not to be taken until the solicitation period 
has expired--even if the required vote is received earlier.
    A 30-day solicitation period is recommended and a minimum of 20 
days is required.
    Consent material conforms to normal proxy statement disclosure 
standards.

If, in the opinion of the Exchange, there is an important reason why an 
actual meeting should be held, the use of consents will not be 
approved.]
    Listed companies may use consents in lieu of special meetings of 
shareholders as permitted by applicable law. The Exchange has no 
separate requirements with respect to the solicitation of such 
consents, but listed companies must comply with applicable state and 
federal law and rules (including interpretations thereof), including, 
without limitation, SEC Regulations 14A and 14C.

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 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 Exchange has long required that listed companies solicit 
proxies in connection with all shareholder meetings. Section 306 of the 
Listed Company Manual specifies that companies are permitted to use 
shareholder consents in lieu of special meetings, although it provides 
that the corporate action should not be taken until the consent 
solicitation period has expired.
    In 1964, the Exchange Act was amended to expand federal proxy 
regulation to cover ``information statements,'' which are disclosure 
documents used to inform shareholders of corporate action that has been 
taken without the general solicitation of their proxy, consent, or 
authorization. This can arise when a corporation is permitted under 
state law to take action without a meeting upon the written consent of 
a specified percentage of shareholders, and the corporation has an 
individual or a small group that holds a sufficient percentage to 
effect the action involved.
    Since the Exchange permitted the listing of dual class 
capitalization companies, from time to time some Exchange-listed 
companies have been in a position to, and desired to, take action by 
written consent of the holders of a majority of their voting stock in 
lieu of a special meeting of shareholders. Such a company would be 
required by Section 14(c) of the Exchange Act and Regulation 14C 
thereunder to furnish to all shareholders an information statement that 
contains the same disclosure as would have been provided to those 
shareholders had they been sent a proxy or consent solicitation. 
Regulation 14C also specifies that the information statement must be 
sent at least 20 days prior to the earliest date the corporate action 
can be taken. Nonetheless, given the requirements of Section 306 of the 
Manual, at least in those situations where the shareholder vote is one 
required by Exchange rules (e.g., by 312.03 of the Manual), the 
Exchange has required such companies to actually solicit consents from 
all shareholders, which involves the additional logistics of collecting 
and tabulating the shareholder votes. These companies typically find 
this requirement onerous and without substantive justification, given 
that the outcome of the vote is a foregone conclusion and the 
information furnished to shareholders would be the same in any event.
    The Exchange is now of the opinion that those objections are 
credible and that it is appropriate to align the Exchange with what has 
become an accepted corporate practice that has long been sanctioned by 
state and federal regulation. The federal proxy rules insure that 
shareholders are provided all the information material to the corporate 
action being taken, regardless of whether the corporation must solicit 
shareholder approval generally, or is able to proceed based on the 
written consent of a smaller group. Accordingly, the Exchange proposes 
to modify Section 306 to eliminate the separate Exchange requirements 
with respect to use of consents in lieu of special meetings. As a 
result, listed companies will be permitted to either (1) hold a special 
meeting of shareholders, or (2) use consents in lieu of special 
meetings when and as permitted by applicable law.
    The Exchange would, however, retain its traditional policy that 
listed companies may not use written consents in lieu of the annual 
meeting of shareholders at which directors are to be elected.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\4\ in general and furthers the objectives 
of Section 6(b)(5),\5\ 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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    \4\ 15 U.S.C. 78f(b).
    \5\ 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

[[Page 43201]]

any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the 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 Exchange 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 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-2002-01 and should be submitted by July 17, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-16064 Filed 6-25-02; 8:45 am]
BILLING CODE 8010-01-P