[Federal Register Volume 69, Number 49 (Friday, March 12, 2004)]
[Notices]
[Pages 11919-11921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-5651]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49371; File No. SR-Amex-2004-12]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange LLC Relating to Audit Committee 
Meeting Requirements Applicable to Registered Closed-End Management 
Investment Companies

March 5, 2004.
    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 February 13, 2004, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'')

[[Page 11920]]

the proposed rule change as described in Items I, II, and III 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.
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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 Amex proposes to amend section 121 of the Amex Company Guide to 
modify the audit committee meeting requirements applicable to 
registered closed-end management investment companies. Proposed new 
language is in italics; proposed deletions are in brackets.
* * * * *
American Stock Exchange Company Guide
Section 121. INDEPENDENT DIRECTORS AND AUDIT COMMITTEE
    A.--No change.
    B (1) and (2)--No change.
(3) Meeting Requirements.
    The Audit Committee of each listed company must meet on at least a 
quarterly basis[.], except that with respect to listed registered 
closed-end management investment companies, the Audit Committee must 
meet on a regular basis as often as necessary to fulfill its 
responsibilities, including at least annually in connection with 
issuance of the company's audited financial statements.
* * * * *

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 Amex 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 Amex 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 December 2003, the Commission approved a broad array of 
enhancements to the corporate governance requirements applicable to 
listed companies.\3\ Included within those changes is a revision to 
section 121 of the Amex Company Guide to explicitly require listed 
company audit committees to meet on at least a quarterly basis. This 
change was intended to codify the existing practice of virtually all 
operating companies.
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    \3\ See Securities Exchange Act Release No. 48863 (December 1, 
2003), 68 FR 68432 (December 8, 2003) (order approving File No. SR-
Amex-2003-65).
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    The Exchange is proposing to modify this requirement with respect 
to closed-end funds to specify that the audit committee of a closed-end 
fund must meet on a regular basis as often as necessary to fulfill its 
responsibilities, including at least annually in connection with 
issuance of the fund's audited financial statements. This change will 
more closely align the Amex requirement to the customary practices of 
most closed-end funds. In particular, while there is some variation in 
practice with respect to the frequency of closed-end fund audit 
committee meetings, most funds hold one or more audit committee 
meetings in connection with the preparation, review and issuance of 
their audited financial statements. While closed-end funds are subject 
to the pervasive federal regulation pursuant to the Investment Company 
Act of 1940 (which imposes specific corporate governance requirements), 
Commission rules do not require them to file quarterly reports with the 
Commission. The Exchange therefore does not believe it is necessary or 
appropriate to impose a quarterly audit committee meeting requirement. 
However, the proposed rule would require closed-end fund audit 
committees to meet as often as necessary, even if more frequently than 
quarterly, depending on the unique circumstances facing a particular 
fund.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6 of the Act \4\ in general and furthers the objectives of 
section 6(b)(5) \5\ in particular in that it is 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 facilitating transactions in securities, to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, to protect investors and the 
public interest, and is not designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers.
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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 any burden on competition.

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

    No written comments were solicited or received with respect to 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 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 proposed rule change, 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. Comments may also be submitted electronically at the 
following e-mail address: [email protected]. All comment letters 
should refer to File No. SR-Amex-2004-12. This file number should be 
included on the subject line if e-mail is used. To help the Commission 
process and review your comments more efficiently, comments should be 
sent in hardcopy or by e-mail but not by both methods. 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

[[Page 11921]]

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 Amex.
    All submissions should refer to the File No. SR-Amex-2004-12 and 
should be submitted by April 2, 2004.

    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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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-5651 Filed 3-11-04; 8:45 am]
BILLING CODE 8010-01-P