[Federal Register Volume 69, Number 190 (Friday, October 1, 2004)]
[Notices]
[Pages 58987-58989]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2450]



[[Page 58987]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50452; File No. SR-NYSE-2004-49]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc. Relating to Procedures for 
Companies That Fail To File Annual Reports in a Timely Manner

September 27, 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 August 19, 2004, 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, 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 proposed rule change amends the Exchange's Listed Company 
Manual to include procedures applicable to companies that fail to file 
annual reports with the Commission in a timely manner. The text of the 
proposed rule change is set forth below. Additions are in italics.

Listed Company Manual

* * * * *

802.01E SEC Annual Report Timely Filing Criteria

    A company that fails to file its annual report (Forms 10-K, 10-KSB, 
20-F, 40-F or N-CSR) with the SEC in a timely manner will be subject to 
the following procedures:
    Once the Exchange identifies that a company has failed to file a 
timely periodic annual report with the SEC by the later of (a) the date 
that the annual report was required to be filed with the SEC by the 
applicable form or (b) if a Form 12b-25 was timely filed with the SEC, 
the extended filing due date for the annual report, the Exchange will 
notify the company in writing of its status. For purposes of this Para. 
802.01E, the later of these two dates will be referred to as the 
``Filing Due Date.''
    Within five days of receipt of this notification, the company will 
be required to (a) contact the Exchange to discuss the status of the 
annual report filing, and (b) if it has not already done so, issue a 
press release disclosing the status of the filing. If the company fails 
to issue this press release in a timely manner, the Exchange will 
itself issue a press release stating that the company has failed to 
timely file its annual report with the SEC.
    During the nine-month period from the Filing Due Date, the Exchange 
will monitor the company and the status of the filing, including 
through contact with the company, until the annual report is filed. If 
the company fails to file the annual report within nine months from the 
Filing Due Date, the Exchange may, in its sole discretion, allow the 
company's securities to be traded for up to an additional three-month 
trading period depending on the company's specific circumstances. If 
the Exchange determines that an additional trading period of up to 
three months is not appropriate, suspension and delisting procedures 
will commence in accordance with the procedures set out in Para. 804.00 
of the Listed Company Manual. A company is not eligible to follow the 
procedures outlined in Paras. 802.02 and 802.03 with respect to this 
criteria.
    In determining whether an additional up to three-month trading 
period is appropriate, the Exchange will consider the likelihood that 
the filing can be made during the additional period, as well as the 
company's general financial status, based on information provided by a 
variety of sources, including the company, its audit committee, its 
outside auditors, the staff of the SEC and any other regulatory body. 
The Exchange strongly encourages companies to provide ongoing 
disclosure on the status of the annual report filing to the market 
through press releases, and will also take the frequency and detail of 
such information into account in determining whether an additional 
three-month trading period is appropriate.
    If the Exchange determines that an additional up to three-month 
trading period is appropriate and the company fails to file its 
periodic annual report by the end of the additional period, suspension 
and delisting procedures will commence in accordance with the 
procedures set out in Para. 804.00.
    Note that if, at any time, the Exchange deems it necessary or 
appropriate in the public interest or for the protection of investors, 
trading in any security can be suspended immediately, and, in 
accordance with the procedures set out in Para. 804.00, application 
made to the SEC to delist the security.
* * * * *

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 and is set forth in Sections A, B, and C below.

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 codify existing procedures followed 
where companies fail to satisfy the Commission's filing requirements 
for annual reports on Forms 10-K, 10-KSB, 20-F, 40-F, or N-CSR in a 
timely manner.
    The Exchange closely monitors whether listed companies have filed 
their annual reports with the Commission as part of its continued 
listing program. At any given point over the past four years, no more 
than approximately two dozen NYSE-listed companies failed to file their 
annual reports with the Commission by the later of the date the filing 
was required to be made or, if the company filed a Form 12b-25 in a 
timely manner, by the extended due date. Most of these companies 
subsequently filed the required annual report within three to four 
months of the filing due date, and the vast majority of the remaining 
companies complied within six months of the filing due date. 
Cumulatively, approximately 13 companies took more than six months to 
make their filings over the past four years.
    In all cases where a company failed to file its annual report by 
the filing due date, Exchange staff held regular discussions and 
meetings with each company's management, directors, regulators and 
advisors to monitor the status of the annual report filing and to 
determine whether to allow the company to continue to trade despite the 
continued failure to file an annual report with the Commission. In 
several of these situations, the Exchange ultimately moved to suspend 
the company's trading and delist its securities due to the length of 
time that passed without the company providing

[[Page 58988]]

audited financial statements to the marketplace.
    In order to formalize the process that the Exchange currently 
follows when a company has failed to file its annual report on a timely 
basis, the Exchange proposes to amend Section 802.01 of the Listed 
Company Manual as described below.
Proposed Section 802.01E
    A company that fails to file its annual report (Forms 10-K, 10-KSB, 
20-F, 40-F or N-CSR) with the Commission in a timely manner will be 
subject to the following procedures:
    Once the Exchange identifies that a company has failed to file a 
timely periodic annual report with the Commission by the later of (a) 
the date that the annual report was required to be filed with the 
Commission by the applicable form or (b) if a Form 12b-25 was timely 
filed with the Commission, the extended filing due date for the annual 
report, the Exchange would notify the company in writing of its status. 
The later of these two dates would be referred to as the ``Filing Due 
Date.''
    Within five days of receipt of this notification, the company would 
be required to (a) contact the Exchange to discuss the status of the 
annual report filing, and (b) if it has not already done so, issue a 
press release disclosing the status of the filing. If the company fails 
to issue this press release in a timely manner, the Exchange would 
itself issue a press release stating that the company has failed to 
timely file its annual report with the Commission.
    During the nine-month period from the Filing Due Date, the Exchange 
would monitor the company and the status of the filing, including 
through contact with the company, until the annual report is filed. If 
the company fails to file the annual report within nine months from the 
Filing Due Date, the Exchange would be permitted, in its sole 
discretion, to allow the company's securities to be traded for up to an 
additional three-month trading period depending on the company's 
specific circumstances. If the Exchange determines that an additional 
trading period of up to three months is not appropriate, suspension and 
delisting procedures would commence in accordance with the procedures 
set out in Para. 804.00 of the Listed Company Manual. A company would 
not be eligible to follow the procedures outlined in Paras. 802.02 and 
802.03 with respect to this criteria.
    In determining whether an additional up to three-month trading 
period is appropriate, the Exchange would consider the likelihood that 
the filing could be made during the additional period, as well as the 
company's general financial status, based on information provided by a 
variety of sources, including the company, its audit committee, its 
outside auditors, the staff of the Commission and any other regulatory 
body. The Exchange strongly encourages companies to provide ongoing 
disclosure on the status of the annual report filing to the market 
through press releases, and would also take the frequency and detail of 
such information into account in determining whether an additional 
three-month trading period is appropriate.
    If the Exchange determined that an additional up to three-month 
trading period was appropriate and the company failed to file its 
periodic annual report by the end of the additional period, suspension 
and delisting procedures would commence in accordance with the 
procedures set out in Para. 804.00.
    Note that if, at any time, the Exchange deemed it necessary or 
appropriate in the public interest or for the protection of investors, 
trading in any security could be suspended immediately, and, in 
accordance with the procedures set out in Para. 804.00, application 
made to the Commission to delist the security.
2. Statutory Basis
    The Exchange believes that the basis for this proposed rule change 
is the requirement under Section 6(b)(5) \3\ of the Act 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; and are not designed to permit 
unfair discrimination between customers, issuers, brokers, or dealers.
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    \3\ 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 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 proposal is 
consistent with the Act. Comments may be submitted by any of the 
following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NYSE-2004-49 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-NYSE-2004-49. 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, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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 the 
filing also will be available for inspection and copying at the 
principal offices of the NYSE. All comments received will be posted

[[Page 58989]]

without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSE-2004-49 and should be submitted on or before 
October 22, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E4-2450 Filed 9-30-04; 8:45 am]
BILLING CODE 8010-01-P