[Federal Register Volume 68, Number 175 (Wednesday, September 10, 2003)]
[Notices]
[Pages 53413-53415]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-23051]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-48435; File No. SR-NYSE-2003-23]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the New York Stock Exchange, Inc. Repealing Exchange Rule 500
and Amending Section 806 of the Listed Company Manual
September 3, 2003.
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 August 20, 2003, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the NYSE.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\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 NYSE proposes to delete Exchange Rule 500 in its entirety and
amend Section 806 of the Exchange's Listed Company Manual regarding the
application by an issuer to delist its securities from the Exchange.
Below is the text of the proposed rule change. Proposed new language is
in italics; proposed deletions are in [brackets].
Rules of Board of Directors
General Rules
* * * * *
[Removal from the List Upon Request of the Issuer
Rule 500. An issuer may apply to delist a security after complying
with the following procedures:
(a) Stock of a domestic issuer:
(1) The issuer's audit committee and board of directors must
approve the application;
(2) The issuer must publish a press release announcing its proposed
delisting; and
(3) The issuer must send to at least each of its 35 record
shareholders with the largest positions in the security written notice
alerting them to the proposed delisting; such notice must specify the
earliest possible date of such delisting (which date shall be not less
than 20 business days nor more than 60 business days (or, subject to
Exchange approval, such longer period as the issuer may request) after
the later of the date the notice is sent or the press release is
issued) and must include a statement that the issuer complied with
paragraphs (a)(1) and (a)(2) above. The issuer must contemporaneously
send to the Exchange a copy of such notice.
(b) Stock of non-U.S. issuer:
(1) The issuer's board of directors must approve the application;
(2) The issuer must publish a press release announcing its proposed
delisting; and
(3) The issuer must send to at least each of its 35 U.S. record
shareholders with the largest positions in the security written notice
alerting them to the proposed delisting. The issuer must
contemporaneously send to the Exchange a copy of such notice.
(c) All listed bonds: The issuer's board of directors must approve
the application.
* * * Supplementary Material:
.10 Definition of ``stock'' and ``bond.''--Exchange Rule 4 defines
the term ``stock,'' and Exchange Rule 5 defines the term ``bond.''
.20 Requirement to issue a press release.--Pursuant to paragraphs
(a)(2) and (b)(2) of this Rule, the issuer must publish the press
release in compliance with the Procedures of Public Release of
Information in Para.202.06 of the Exchange's Listed Company Manual.
.30 Application to the Securities and Exchange Commission to
withdraw a security from listing.--After an issuer complies with the
procedures of this Rule, the issuer may file an application with the
Securities and Exchange Commission to withdraw the security from
listing on the Exchange and from registration under the Securities
Exchange Act of 1934. With respect to an issuer required to provide
security holders with notice of the proposed delisting pursuant to
paragraph (a) (3) of this Rule, the proposed date for such withdrawal
from listing and registration must be the same date specified in its
notice to security holders. The issuer must contemporaneously send to
the Exchange a copy of the application.
.40 Delisting of multiple classes of securities.--If an issuer
delists a class of stock from the Exchange pursuant to this Rule, but
does not delist other classes of listed securities, the Exchange will
give consideration to delisting one or more of such other classes.]
* * * * *
Listed Company Manual
* * * * *
806.00 Rule of the Exchange in respect of Removal From List upon
Request of Company.
[Rule 500 in effect as of July 21, 1999 is as follows:
[[Page 53414]]
Rule 500. An issuer may apply to delist a security after complying
with the following procedures:
(a) Stock of a domestic issuer:
(1) The issuer's audit committee and board of directors must
approve the application;
(2) The issuer must publish a press release announcing its proposed
delisting; and
(3) The issuer must send to at least each of its 35 record
shareholders with the largest positions in the security written notice
alerting them to the proposed delisting; such notice must specify the
earliest possible date of such delisting (which date shall be not less
than 20 business days nor more than 60 business days (or subject to
Exchange approval, such longer period as the issuer may request) after
the later of the date the notice is sent or the press release is
issued) and must include a statement that the issuer complied with
paragraphs (a) (1) and (a) (2) above. The issuer must contemporaneously
send to the Exchange a copy of such notice.
(b) Stock of non-U.S. issuer:
(1) The issuer's board of directors must approve the application;
(2) The issuer must publish a press release announcing its proposed
delisting; and
(3) The issuer must send to at least each of its 35 U.S. record
shareholders with the largest positions in the security written notice
alerting them to the proposed delisting. The issuer must
contemporaneously send to the Exchange a copy of such notice.
(c) All listed bonds: The issuer's board of directors must approve
the application.
* * * Supplementary Material:
.10 Definition of ``stock'' and ``bond.''--Exchange Rule 4 defines
the term ``stock,'' and Exchange Rule 5 defines the term ``bond.''
.20 Requirement to issue a press release.--Pursuant to paragraphs
(a)(2) and (b)(2) of this Rule, the issuer must publish the press
release in compliance with the Procedures of Public Release of
Information in Para.202.06 of the Exchange's Listed Company Manual.
.30 Application to the Securities and Exchange Commission to
withdraw a security from listing.--After an issuer complies with the
procedures of this Rule, the issuer may file an application with the
Securities and Exchange Commission to withdraw the security from
listing on the Exchange and from registration under the Securities
Exchange Act of 1934. With respect to an issuer required to provide
security holders with notice of the proposed delisting pursuant to
paragraph (a) (3) of this Rule, the proposed date for such withdrawal
from listing and registration must be the same date specified in its
notice to security holders. The issuer must contemporaneously send to
the Exchange a copy of the application.
.40 Delisting of multiple classes of securities.--If an issuer
delists a class of stock from the Exchange pursuant to this Rule, but
does not delist other classes of listed securities, the Exchange will
give consideration to delisting one or more of such other classes.]
An issuer may apply to delist a security after its board approves
the action and the issuer furnishes the Exchange with a copy of the
board resolution certified by the secretary of the issuer. The issuer
may thereafter file an application with the Securities and Exchange
Commission to withdraw the security from listing on the Exchange and
from registration under the Securities Exchange Act of 1934. If an
issuer delists a class of stock from the Exchange pursuant to this
Rule, but does not delist other classes of listed securities, the
Exchange will give consideration to delisting one or more of such other
classes.
* * * * *
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 is proposing to delete Exchange Rule 500 in its
entirety and to amend Section 806 of the Exchange's Listed Company
Manual regarding the application by an issuer to delist its securities
from the Exchange. Amended Section 806 would require simply that a
company furnish the Exchange with a certified board resolution
evidencing board approval of the voluntary delisting.
Exchange Rule 500 describes the procedures a listed company must
follow to voluntarily delist its securities from the Exchange. The
original rule, adopted in 1939, required two-thirds of a company's
outstanding shares to vote in favor of a delisting, with no more than
ten percent of the shares opposing. In 1999, the requirement of a
shareholder vote was eliminated, and since then the rule has required
only board and audit committee approval, prior written notice to the
company's 35 largest record holders, and a press release informing
shareholders generally of the proposed delisting. \3\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 41634 (July 21,
1999), 64 FR 40633 (July 27, 1999) (SR-NYSE 97-31) (hereinafter
referred to as the ``1999 SEC Approval Order''). Since the 1999
amendment, only one company has voluntarily delisted its common
stock to move to Nasdaq. Several companies have used the rule to
voluntarily delist bonds from the Exchange, which the NYSE
represents that it understood to be motivated by a desire to reduce
reporting burdens attendant to listing the bonds (the shareholder
notification requirement does not apply to a voluntarily delisting
of bonds). A similar motivation prompted a Swedish company with very
few U.S. shareholders to delist its ADRs earlier this year so that
it could avoid having to comply with U.S. reporting obligations.
Finally, three small closed end funds moved to the American Stock
Exchange because their declining net asset value placed them in
danger of falling below NYSE continued listing requirements.
---------------------------------------------------------------------------
In approving the 1999 amendment, the Commission requested that the
Exchange review periodically the shareholder notification requirement
of Rule 500 to determine whether it remained warranted and consistent
with the protection of investors. In fulfillment of the Commission's
request and in the context of the work the Exchange has done in re-
examining its corporate governance standards for listed companies, the
Exchange determined to reassess Rule 500. The Exchange has concluded
that it is now appropriate to require only that a company voluntarily
delisting its securities from the Exchange obtain the approval of its
board and furnish the Exchange with a copy of the board resolution. The
company would, of course, then be required under Commission rules to
file an application with the Commission to withdraw the security from
listing on the Exchange.\4\
---------------------------------------------------------------------------
\4\ See Rule 12d2-2(d) under the Act.
---------------------------------------------------------------------------
The rationale for the requirement in the current rule that a
company obtain a separate audit committee approval of a delisting was
to insure that independent directors approved the decision.\5\ In the
work the Exchange has done during the last two years on corporate
governance listing standards, the Exchange has learned that a majority
independent board has already become prevalent among Exchange listed
[[Page 53415]]
companies.\6\ After the Exchange's currently pending corporate
governance proposals become final, a majority independent board will
become an Exchange listing standard.\7\ As a result, the Exchange
believes that board approval of a voluntary delisting is all that must
be required by the Exchange.
---------------------------------------------------------------------------
\5\ See 1999 SEC Approval Order, footnote 16, and text
accompanying footnotes 44 and 45.
\6\ See Press Release from Investor Responsibility Research
Center, March 7, 2002, available at www.irrc.com/company/06062002_NYSE.html.
\7\ See Securities Exchange Act Release No. 47672 (April 11,
2003), 68 FR 19051 (April 17, 2003) (SR-NYSE 2002-33). Under the
Exchange's proposed standards, a controlled company will not be
required to have a majority independent board. Here too, however, a
board that is acceptable under the new Exchange standards should be
appropriate to make a delisting decision.
---------------------------------------------------------------------------
The Exchange further believes that neither advance notification to
shareholders nor a company press release need be mandated under
Exchange rules. In the case of a transfer of a listing from one market
to another, both the company transferring and the market to which it is
transferring are typically eager to publicize the event.\8\ Practical
considerations such as the need to make brokers and investors aware of
a change in ticker symbol also serve to insure that a planned move is
visible. In any event, companies are obligated to publicly disclose
material events,\9\ and the Exchange expects that a company that has
made a final determination to voluntarily delist its securities from
the Exchange would promptly disclose that determination to the
public.\10\
---------------------------------------------------------------------------
\8\ The company referred to in footnote 3 above that transferred
to Nasdaq issued a press release announcing that fact approximately
one month prior to the actual transfer.
\9\ See Sections 202.05 and .06 of the Exchange's Listed Company
Manual. The Exchange also notes that pending proposed amendments by
the SEC to Form 8-K will require a Form 8-K filing when a company
has taken definitive action to terminate a listing, including by
reason of a transfer to another market. See Securities Exchange Act
Release No. 46084 (June 17, 2002), 67 FR 42914 (June 25, 2002) (File
No. S7-22-02).
\10\ When reviewing this proposed rule change, members of the
Exchange's Pension Managers Advisory Committee as well as members of
the Exchange's Board of Directors observed that companies should not
voluntarily delist from the Exchange without investors in their
stock having advance notice of the event. For the reasons stated
above, the Exchange believes that there will be adequate public
notice. If, however, for some reason disclosure is not made by the
company or a third party when such disclosure is warranted, then the
Exchange itself will publicly announce the planned delisting.
---------------------------------------------------------------------------
The Exchange has for many years replicated Rule 500 in Section 806
of its Listed Company Manual, which is a separate compendium of rules
applicable to listed companies. In making this change, the Exchange
will delete Rule 500 in its entirety. The remaining requirement of
board approval and notice thereof to the Exchange will be codified in
section 806 of the Listed Company Manual.
2. Statutory Basis
The NYSE represents that the basis under the Act for this proposed
rule change is the requirement under section 6(b)(5)\11\ 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 remove impediments to, and perfect the
mechanism of a free and open market and, in general, to protect
investors and the public interest.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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 Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants or Others
Written comments were neither solicited nor received.
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 self-regulatory organization 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 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. 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 number SR-NYSE-2003-23 and
should be submitted by October 1, 2003.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-23051 Filed 9-9-03; 8:45 am]
BILLING CODE 8010-01-P