[Federal Register Volume 63, Number 228 (Friday, November 27, 1998)]
[Notices]
[Pages 65626-65627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-31582]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40688; File No. SR-NYSE-97-31]
Self-Regulatory Organizations; Notice of Filing of Amendment No.
2 to Proposed Rule Change by the New York Stock Exchange, Inc. To Amend
Its Rule 500 Relating to Voluntary Delistings by Listed Companies
November 18, 1998.
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 November 9, 1998, the New York Stock Exchange (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') Amendment No. 2 to the proposed rule change
as describe 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 Amendment No. 2 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 Exchange is proposing the second amendment to its proposed rule
change to replace existing NYSE Rule 500 with a new Rule 500 to revise
the procedures a NYSE-listed company must follow to delist its
securities from the Exchange. The test of Amendment No. 2 to the
proposed rule change is available at the Office of the Secretary, the
NYSE, and at the Commission.
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.
[[Page 65627]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On November 17, 1997, the Exchange submitted the proposed rule
change, proposing to amend NYSE Rule 500, which states the procedures a
NYSE-listed company must follow before voluntarily delisting its
securities from the Exchange. On December 3, 1997, the Exchange
submitted Amendment No. 1 to the proposed rule change to the
Commission. The amended proposal was published for comment in the
Federal Register on December 10, 1997.\3\
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\3\ Securities Exchange Act Release No. 39394 (December 3, 1997)
62 FR 65116.
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NYSE Rule 500 currently requires holders of 66 percent of a
security to approve a company's decision to delist the company's
securities from the Exchange, with less than ten percent of the
individual holders objecting to the delisting. As originally proposed,
the amended rule would have permitted a domestic issuer to delist stock
if it obtained the approval of: (1) A majority of the company's full
board of directors; and (2) the company's audit committee. The issuer
then would have been required to provide shareholders with between 45
and 60 calendar days' notice of the delisting. A non-U.S. issuer would
have had to obtain board approval to delist its stock. A non-U.S.
issuer also would have had to provide holders with reasonable notice of
its intention to delist, which would have required the issuer to send
written notice to U.S. holders and to follow home-country practice to
provide notice to non-U.S. holders.
In response to the Commission's request for comment on the original
proposal, the Commission received a number of comments both for and
against the proposal. In response to those comments and discussions
with Commission staff, the Exchange now proposes the following
amendments to the original proposal:
Permit approval by a company's board of directors
according to applicable state law requirements on majority votes
(generally the majority of a quorum), rather than requiring approval by
a majority of the entire board. The Exchange would continue to require
audit committee approval.
Amend the notice provision to require U.S. companies to
provide actual written notice to no less than 35 of their largest
record holders (rather than all holders). A foreign issuer would have
to provide such notice to its 35 largest U.S. shareholders.
Require both U.S. and foreign companies to issue a press
release to inform shareholders generally of the proposed delisting.
Shorten the minimum waiting period from 45 calendar days
to 20 business days, and change the maximum waiting period from 60
calendar days to 60 business days, with the ability of companies to
extend the period, subject to approval by the Exchange.
The Exchange believes that new Rule 500, as proposed to be amended,
will continue to provide investors with adequate procedural protections
in the delisting process while providing listed companies with greater
flexibility in this area.
2. Statutory Basis
The Exchange believes Amendment No. 2 to the proposed rule change
is consistent with the requirements of section 6(b)(5) of the Act,\4\
which requires that the rules of the Exchange be designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, and, in general, to protect investors
and the public interest.
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\4\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposal does not 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
In adopting the original proposal to amend Rule 500, the Exchange
consulted with numerous Board and advisory committees, pension funds
and other Exchange constituents. The Exchange also has informally
discussed the current proposals with various of these constituencies.
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 Amendment No. 2, including whether Amendment No. 2
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 at the Commission's
Public Reference Section, 450 Fifth Street, NW, Washington, DC 20549.
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-97-31 and should be submitted by December 18, 1998.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-31582 Filed 11-25-98; 8:45 am]
BILLING CODE 8010-01-M
