[Federal Register Volume 65, Number 27 (Wednesday, February 9, 2000)]
[Notices]
[Pages 6432-6434]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-2881]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42364; File No. SR-NYSE-99-14]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment Nos. 1 and 2 Thereto by the New York Stock 
Exchange, Inc. Relating to Amendments to the Listed Company Manual

January 28, 2000.
    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 April 12, 1999, 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, and III below, which Items have been prepared by the 
Exchange. On October 25, 1999, the Exchange submitted Amendment No. 1 
to the proposed rule change.\3\ On December 16, 1999, the Exchange 
submitted Amendment No. 2.\4\ 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.
    \3\ In Amendment No. 1, the NYSE made several clarifications to 
the proposed rule change, incorporated appropriate provisions for 
Non-US issuers, and revised the procedures for the annual report 
requirement. See Letter to Richard Strasser, Assistant Director, 
Division of Market Regulation (``Division''), SEC, from James E. 
Buck, Senior Vice President and Secretary, NYSE, dated October 22, 
1999 (``Amendment No. 1'').
    \4\ In Amendment No. 2, the NYSE made several technical changes 
to the text of the proposed rule change and clarified that the 
supplemental listing application (``SLAP'') provision applies to 
Non-U.S. issuers. See Letter to Richard Strasser, Assistant 
Director, Division, SEC, from James E. Buck, Senior Vice President 
and Secretary, NYSE, dated December 14, 1999 (``Amendment No. 2''). 
In Amendment No. 2, the Exchange also requested accelerated approval 
of the proposed rule change. The Exchange withdrew this request as 
per telephone conversation between Amy Bilbija, Counsel, NYSE, and 
Terri Evans, Special Counsel, and Heather Traeger, Attorney, 
Division, SEC, on January 4, 2000.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The proposed rule change consists of amendments to the Listed 
Company Manual (``Manual'') to: (1) Implement regulatory reviews of key 
personnel associated with listing applicants; (2) codify the Exchange's 
procedures regarding supplemental listing applications for companies 
identified as being below continued listing standards; and (3) amend 
its disclosure requirements for listed companies late in filing their 
form 10-K or annual report. The text of the proposed rule change 
follows. New text is italicized. Deleted text is bracketed.

NYSE Listed Company Manual

* * * * *
Section 3
Corporate Responsibility
* * * * *
315.00  Regulatory Review of Listing Candidates and their Significant 
Related Individuals and Entities
    Each listing applicant must provide the Exchange with a letter from 
counsel representing that, to the company's knowledge, no officer,\*\ 
board member, no non-institutional shareholder with greater than 10% 
ownership of the company has been convicted of a felony or misdemeanor 
relating to financial issues (e.g., embezzlement, fraud, theft) in the 
past ten years. In addition, the Exchange will review background 
materials available to its regarding the aforementioned individuals as 
part of the eligibility review process.
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    \*\ As such term is defined by the Securities and Exchange 
Commission in Rule 16a-1(f) under the Securities Exchange Act of 
1934, or any successor rule.
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* * * * *
Section 7
Listing Applications
* * * * *
703.11 Supplemental Listing Process
* * * * *
    (C) No supplemental listing applications will be approved for 
companies that have been identified as being below the Exchange's 
continued listing standards (see Para. 802.01) for issuances to new 
shareholders unless such issuance is determined to be consistent with 
an Exchange-approved plan (or its goals) pursuant to Para. 802.02 or 
Para. 802.03 as applicable.
* * * * *
Section 2
Disclosure and Reporting Material Information
* * * * *
203.00 Annual and Interim Reporting Requirements
203.01 Annual Report Requirement

    The Exchange requires that companies publish at least once a year 
and [submit] distribute to shareholders an annual report containing 
financial statements of the company and its consolidated subsidiaries 
prepared in conformity with generally accepted accounting principles. 
The company must distribute its annual report to its shareholders not 
later than [three months] 120 days (225 days for non-US issuers) after 
the close of each fiscal year. [, but] Notwithstanding the foregoing, 
domestic issuers must make this distribution at least fifteen days in 
advance of the annual meeting. )Non-US issuers are encouraged to do so 
when possible.) When the annual report is mailed to shareholders, two 
copies should be sent to the Exchange together with advice as to the 
date of mailing to shareholders.
    Companies may satisfy the annual distribution requirement either by 
distributing an annual report to share holders, or by distributing to 
shareholders to Form 10-K (or Form 20-F for Non-US issuers) filed with 
the SEC, with an indication that it is distributed in lieu of a 
separate annual report. When the annual report (or Form 10-K or Form 
20-F) is mailed to shareholders, two copies should be sent to the

[[Page 6433]]

Exchange together with advice as to the date of mailing to 
shareholders. Distribution by electronic means (including by posting on 
the company's web site) will be effective only as to beneficial holders 
who have given their prior consent to receiving the report in that 
form. Such consent must be in writing, which may be in the form of 
electronic mail.
    A company that is unable to timely file its Form 10-K or Form 20-F 
with the SEC must notify the Exchange prior to the SEC filing deadline, 
explaining the reason for the delay and the anticipated filing date. 
The Exchange will evaluate the circumstances and the continued listing 
status of the company, and at a minimum will require the company to 
issue a press release indicating the delay, the reason for the delay 
and the anticipated filing date. In making its evaluation, the Exchange 
will consider whether the company has released or plans to release to 
the press information regarding its financial results for the fiscal 
year. Once the company does file its Form 10-K (Form 20-F) with the 
SEC, it must then distribute to shareholders an annual report or a Form 
10-K (Form 20-F) in lieu thereof no later than 15 days (30 days for a 
non-US issuer) after the filing.
    (A)-(E) Unchanged.
* * * * *
    [(F) Availability of Form 10-K When Annual Report is Delayed If 
distribution of the annual report to shareholders to be delayed more 
than two weeks even though the Form 10-K has been filed, the company 
should release to the financial press copies of the Form 10-K together 
with a statement advising that the annual report has been delayed and 
the reason for the delay, specifying the date when the annual report 
will be mailed and indicating that a copy of the Form 10-K is available 
to shareholders on request.]
* * * * *

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 Exchange 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 Exchange 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
    The purpose of the proposed rule change is to implement several 
enhancements to the Exchange's procedures and oversight of listed 
companies. First, the Exchange proposes to institute a regulatory 
review procedure for listing applicants whereby Exchange staff would 
access media outlets, run Central Registration Depository checks, and 
consult with staff in the SEC's Division of Enforcement to identify any 
potential issues of concern regarding the applicant company's board 
members, officers (as the term ``Officer'' is defined in Section 16 of 
the Act), and non-institutional shareholders with an interest in excess 
of 10 percent. In addition, the Exchange will require each applicant 
company to submit a letter from inside or outside counsel representing 
that, to the company's knowledge, no officer, board member, or non-
institutional shareholder with more than 10 percent ownership in the 
company has been convicted of a felony or misdemeanor relating to 
financial issues (e.g., embezzlement, fraud, or theft) in the past 10 
years.
    Second, the Exchange proposes to amend its procedures for 
processing SLAPs submitted for consideration by companies that have 
been identified as being below the Exchange's continued listing 
criteria.\5\ Upon receipt of a SLAP from such a company, Exchange staff 
would first determine whether or not the SLAP is for an issuance to 
current shareholders (e.g., a stock split). If so, the application 
would be authorized. If, however, the SLAP is for an issuance to new 
shareholders, the application will be reviewed against the plan 
pursuant to which the company is operating to return to financial 
compliance with the Exchange's listing standards. If the proposed 
issuance is within the scope of the plan, or furthers the goals of the 
plan, it will be approved. Conversely, the Exchange will deny 
authorization if the proposed issuance is outside the scope of the plan 
or contradicts its goals. In this context, the Exchange recognizes that 
employee stock option plans, although rarely a specific element of a 
financial plan, are customarily in furtherance of the company's 
objectives in that they are adopted to facilitate equity-based 
compensation to employees and thus provide incentive to employees to 
further the financial health of the company--a goal that is by its 
nature consistent with any approved plan.
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    \5\ This provision will apply to both U.S. and Non-U.S. issuers.
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    Third, the Exchange proposes to amend its annual report 
requirements. The Exchange proposes to require that a company mail to 
shareholders by the specified date either an annual report or a Form 
10-K (Form 20-F for Non-U.S. issuers) with an indication that is in 
lieu of the annual report.\6\ Due to longer mailing and processing 
time, international companies will have a maximum period following the 
SEC filing deadlines of 45 days to mail either the annual report or 
Form 20-F (with an indication that it is in lieu of the annual report), 
where domestic issuers have 30 days.\7\
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    \6\ See Amendment No. 1, supra note 3. Domestic companies are 
required to submit their annual filings on Form 10-K to the SEC 
within 90 days of the fiscal year end. International companies are 
required to submit their annual filings on Form 20-F within 180 days 
of the fiscal year end.
    \7\ Id.
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    For companies that are unable to timely file a Form 10-K (or Form 
20-F), the Exchange proposes to consider why the filing cannot be made, 
evaluate the continued listing status of the company in light of the 
specific facts presented, and require that the company issue a press 
release. Once the Form 10-K (or Form 20-F) is filed, the Exchange 
proposes to require a mailing of the Form 10-K (or Form 20-F) or an 
annual report to shareholders within 15 days (30 days for a Non-U.S. 
issuer).\8\
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    \8\ Id.
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    Additionally, the Exchange proposes to permit companies to 
distribute the annual reports or SEC forms electronically to beneficial 
holders who give prior written consent. Such consent must be in 
writing, which may be in the form of electronic mail.\9\
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    \9\ Id.
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    Failure to comply with these requirements will result in 
presentation of the company's situation to Exchange staff for 
appropriate action. Such action could include the determination to 
proceed with suspension of trading and application to the SEC to delist 
the security.
2. Statutory Basis
    The Exchange believes that the basis under the Act for the proposed 
rule change is the requirement under section 6(b)(5)\10\ that an 
Exchange have rules that are designed to promote just and equitable 
principles of trade, to remove impediments to, and perfect the 
mechanism of a free and open market

[[Page 6434]]

and, in general, to protect investors and the public interest.
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    \10\ 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

    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 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 proposed rule 
change, as amended, 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. 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 Room. Copies of such 
filing will also be available for inspection and copying at the 
principal office of the Exchange. All submissions should refer to File 
No. SR-NYSE-99-14 and should be submitted by March 1, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-2881 Filed 2-8-00; 8:45 am]
BILLING CODE 8010-01-M