[Federal Register Volume 61, Number 91 (Thursday, May 9, 1996)]
[Notices]
[Pages 21216-21217]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11536]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37163; File No. SR-NASD-96-09]
Self-Regulatory Organizations; Order Approving Proposed Rule
Change by National Association of Securities Dealers, Inc. Relating to
the Distribution of Interim Reports to Beneficial Owners and the Use of
New Technology to Communicate Such Information to Shareholders
May 2, 1996.
On March 13, 1996, the National Association of Securities Dealers,
Inc. (``NASD'' or ``Association'') filed with the Securities and
Exchange Commission (``SEC'' or ``Commission'') a proposed rule change
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder.\2\ The rule change amends Part
II of Schedule D to the NASD By-Laws (``Schedule D'') \3\ by adding
precatory language recommending that Nasdaq issuers distribute interim
reports to both shareholders of record and beneficial shareholders \4\
to shareholders if they
[[Page 21217]]
distribute such reports to shareholders of record \5\ and encouraging
issuers to utilize communications technology to communicate to
shareholders in a timely manner.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ NASD Manual,. Schedules to the By-Laws, Schedule D, Part II
(CCH) Paras. 1803-06A.
\4\ Interim reports are reports that are voluntarily distributed
by an issuer as part of its shareholder relations activities and do
not include quarterly financial reports required to be filed with
the Commission pursuant to Sections 13(a) and 15(d) of the Act, 15
U.S.C. 78m(a), 78o(d).
\5\ The substance of this portion of the proposed rule change
has been adopted by the New York Stock Exchange and American Stock
Exchange. See NYSE Company Manual Rule 203.02 and American Stock
Exchange Company Guide Section 623.
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Notice of the proposed rule change, together with the substance of
the proposal, was provided by issuance of a Commission release
(Securities Exchange Act Release No. 37010, March 21, 1996) and by
publication in the Federal Register (61 FR 13909, March 28, 1996). No
comment letters were received. This order approves the proposed rule
change.
The rule change approved today adds new Section 1(d) to Part II of
Schedule D recommending that Nasdaq issuers distribute interim reports
to both shareholders of record and beneficial shareholders if they
distribute such reports to shareholders of record. The rule change also
adds new Section 2(f) of Part II to Schedule D regarding the
qualification requirements for issuers of non-Canadian foreign
securities and American Depositary Receipts that are included in The
Nasdaq Stock Market. Such issuers also are recommended to distribute
interim reports to both shareholders of record and beneficial
shareholders if they distribute such reports to shareholders of record.
The rule change will apply to both the Nasdaq National Market and The
Nasdaq SmallCap Market tiers of The Nasdaq Stock Market.
The rule change is the product of a review by various industry
groups, including the American Society of Corporate Secretaries and the
Securities Industry Association, of listed \6\ companies' dissemination
of interim earnings reports to shareholders. The industry groups have
been attempting to achieve some uniformity among listed companies in
the handling of interim earning reports. Presently, some listed
companies distribute interim reports to both record and beneficial
shareholders, some listed companies send interim reports to
shareholders of record only, and some do not send interim reports to
any shareholders. The portion of the proposed rule change recommending
that Nasdaq issuers distribute interim reports to both shareholders of
record and beneficial shareholders to shareholders if they distribute
such reports to shareholders of record is consistent with voluntary
provisions adopted by the New York Stock Exchange and the American
Stock Exchange \7\ and, therefore, would provide uniformity among these
markets regarding the handling of listed company interim earnings
reports.
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\6\ The securities of Nasdaq issuers are ``included in'' The
Nasdaq Stock Market; they are not ``listed on'' the Nasdaq Stock
Market. However, for purposes of this filing, the term ``listed''
will apply to Nasdaq, as well as exchange-listed securities.
\7\ See supra note 5.
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New Sections 1(d) and 2(f) to Part II of Schedule D also encourage
Nasdaq issuers to consider additional technological methods to
communicate such information to shareholders in a timely and less
costly manner as such technology becomes available. This provision is
intended to encourage Nasdaq issuers to utilize new communications
technology available to many but not all beneficial shareholders. The
NASD stated in its filing that Nasdaq issuers should consider this
provision of the rule change as a supplement to the first provision of
the proposed rule change recommending that Nasdaq issuers distribute
interim reports to both shareholders of record and beneficial
shareholders to shareholders if they distribute such reports to
shareholders of record.
The rule change is precatory and does not impose new requirements
on issuers. Nasdaq issuers that distribute interim reports to
shareholders of record only would not be subject to Nasdaq actions for
non-compliance with Nasdaq listing requirements.
The Commission finds that the rule change is consistent with the
provisions of Section 15A(b)(6) of the Act. The rule change 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 a national market
system, and, in general, to protect investors and the public interest
by, among other things, encouraging Nasdaq issuers to distribute
interim reports to both shareholders of record and beneficial
shareholders to shareholders if they distribute such reports to
shareholders of record. This provision of the proposed rule change is
consistent with provisions adopted by the New York Stock Exchange and
the American Stock Exchange \8\ and, therefore, will provide uniformity
among these markets regarding the handling of listed company interim
earnings reports. The rule change also encourages Nasdaq issuers to
consider new technological means to communicate the information
contained in their interim reports to shareholders in a timely and less
costly manner. These provisions are intended to enhance shareholder
communications in The Nasdaq Stock Market.
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\8\ See supra note 5.
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It is Therefore Ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change SR-NASD-96-09 be, and hereby is,
approved.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-11536 Filed 5-7-96; 8:45 am]
BILLING CODE 8010-01-M
