[Federal Register Volume 62, Number 26 (Friday, February 7, 1997)]
[Notices]
[Pages 5870-5871]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3067]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38226; File No. SR-NASD-97-03]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by National 
Association of Securities Dealers, Inc. and the Nasdaq Stock Market, 
Inc. Relating to the Filing of Changes to Total Shares Outstanding and 
Corporate Name of Nasdaq Issuers

January 31, 1997.
    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 January 22, 1997, the National Association of Securities Dealers, 
Inc. (``NASD'') and the Nasdaq Stock Market, Inc. (``Nasdaq'') 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 Nasdaq. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons and to grant accelerated approval to the proposed 
rule change.
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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

    NASD and Nasdaq are proposing to amend Nasdaq's listing 
requirements to restore a filing requirement that requires a Nasdaq-
listed company to notify NASD and Nasdaq when it changes the amount of 
shares outstanding by more than 5% or changes its corporate name. Below 
is the text of the proposed rule change. Proposed new language is in 
italics; there are no deletions.

Qualification Requirements for Domestic and Canadian Securities

* * * * *

Rule 4310(c)(20)

    The issuer shall notify the Association promptly in writing of any 
change in the general character or nature of its business and any 
change in the address of its principal executive offices. The issuer 
also shall file on a form designated by the Association notification of 
any corporate name change no later than 10 days after the change.

Rule 4310(c)(24)

    The issuer shall file, on a form designated by the Association no 
later than 10 days after the occurrence, any aggregate increase of any 
class of securities included in Nasdaq that exceeds 5% of the amount of 
securities of the class outstanding.

Qualification Requirements for Non-Canadian Foreign Securities and 
American Depositary Receipts

* * * * *

Rule 4320(e)(19)

    The issuer shall notify the Association promptly in writing of any 
change in the general character or nature of its business and any 
change in the address of its principal executive offices. The issuer 
also shall file on a form designated by the Association notification of 
any corporate name change no later than 10 days after the change.

Rule 4320(e)(21)

    The issuer shall file, on a form designated by the Association no 
later than 10 days after the occurrence, any aggregate increase or 
decrease of any class of securities included in Nasdaq that exceeds 5% 
of the amount of securities of the class outstanding.

II. Self-regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In their filing with the Commission, the NASD and Nasdaq 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 Items III below. Nasdaq 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
    Effective July 15, 1996, the SEC eliminated Rules 13a-17 and 15d-
17, and Form 10-C under the Exchange Act. These rules required Nasdaq-
listed companies to report to the SEC and the NASD: (1) Aggregate 
increases or decreases of a class of securities that exceed 5% of the 
amount of securities of the class outstanding; and (2) corporate name 
changes. The SEC eliminated these requirements as part of a general 
streamlining of their disclosure requirements, stating that the 
information could be found in a company's financial statements.\3\
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    \3\ Exchange Act Release No. 37262 (May 31, 1996), 61 FR 30397 
(``Phase One Recommendations of Task Force on Disclosure 
Simplification'').
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    Because NASD Rules 4310(c)(14) and 4320(e)(13) require Nasdaq 
issuers to file with the NASD and Nasdaq any filings submitted to the 
SEC, the elimination of the SEC requirements has, in effect, eliminated 
timely notification of this information to the NASD and Nasdaq.
    It is important, however, for the NASD and Nasdaq to continue to 
receive this information from issuers as it becomes available. 
Information concerning total shares outstanding is necessary to 
calculate market capitalization and adjust the various market indices 
that contain Nasdaq securities. In addition, the information is 
relevant to Nasdaq listing

[[Page 5871]]

requirements regarding minimum public float, and a ``market 
capitalization'' test that Nasdaq is in the process of proposing. 
Corporate name charge information also must be kept up to date.
2. Statutory Basis
    The NASD and Nasdaq believe the proposed rule change is consistent 
with Sections 15A(b)(6) \4\ and 11A(a)(1)(C) \5\ of the Act. Section 
15A(b)(6) requires that the rules of a national securities association 
be 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 regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, and to remove impediments to 
and perfect the mechanism of a free and open market. Section 
11A(a)(1)(C) provides that it is in the public interest and appropriate 
for the protection of investors to, among other things, assure the 
availability to brokers, dealers, and investors of information with 
respect to quotations for and transactions in securities. The 
restoration of the notification requirement is necessary to ensure that 
the NASD and Nasdaq have current information on the total shares 
outstanding for Nasdaq issuers. This information is important to 
accurately calculate market capitalization and adjust indices 
containing Nasdaq securities. These indices are relied upon by market 
participants and the public to indicate the value and movement, in the 
aggregate, of the securities of which they are comprised. In addition, 
the information is relevant to Nasdaq listing standards. Records 
regarding corporate name changes also must be kept current.
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    \4\ 15 U.S.C. 78o-3(b)(6).
    \5\ 15 U.S.C. 78k-1(a)(1)(C).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The NASD and Nasdaq do not believe that the proposed rule change 
will result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended.

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. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 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 
NASD. All submissions should refer to File No. SR-NASD-97-03 and should 
be submitted by February 28, 1997.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    The Commission finds that the NASD's and Nasdaq's proposal is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities association. 
Specifically, the Commission finds that the proposed rule change is 
consistent with Sections 15A(b)(6) \6\ and 11A(a)(1)(C) \7\ of the Act, 
which require that a national securities association have rules that 
are 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 regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and, in general, to 
protect investors and the public interest.
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    \6\ 15 U.S.C. 78o-3(b)(6).
    \7\ 15 U.S.C. 78k-1(a)(1)(C).
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    The Commission believes that this proposal is consistent with 
Section 15A(b)(6) and 11A(a)(1)(C) of the Act because it will reinstate 
filing requirements imposed on Nasdaq-listed companies prior to the 
elimination of Form 10-C by the Commission. The reinstatement of the 
notification requirement will ensure that the NASD and Nasdaq continue 
to receive pertinent information relating to Nasdaq-listed companies on 
a timely basis. The Commission believes that the continued receipt of 
timely information relating to changes in the amount of shares 
outstanding of more than 5% or changes in corporate name of Nasdaq-
listed companies may prevent fraudulent or manipulative acts and 
practices and will serve the public interest as such information is 
relied upon by market participants. The Commission therefore finds good 
cause for approving the proposed rule change prior to the thirtieth day 
after the date of publication of notice thereof in the Federal 
Register.
    It is therefore ordered, pursuant to Section 19(b)(2) \8\ of the 
Act, that the proposed rule change (File No. SR-NASD-97-03) is hereby 
approved on an accelerated basis.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-3067 Filed 2-6-97; 8:45 am]
BILLING CODE 8010-01-M