Document ID: SEC-2018-0385-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2018-03-07T05:00Z

[Federal Register Volume 83, Number 45 (Wednesday, March 7, 2018)]
[Notices]
[Pages 9765-9768]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-04557]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82796; File No. SR-NYSE-2017-42]

Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Granting Approval of Proposed Rule Change To Amend the NYSE Listed 
Company Manual To Modify Its Requirements With Respect to Physical 
Delivery of Proxy Materials to the Exchange

March 1, 2018.

I. Introduction

    On November 22, 2017, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act

[[Page 9766]]

of 1934 (``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed 
rule change to amend its rules that require listed companies to provide 
the Exchange with hard copies of proxy material sent to shareholders. 
The proposed rule change was published for comment in the Federal 
Register on December 12, 2017.\3\ On January 22, 2018, the Commission 
extended the time period within which to approve the proposed rule 
change, disapprove the proposed rule change, or institute proceedings 
to determine whether to approve or disapprove the proposed rule change 
to March 12, 2018.\4\ The Commission received no comment letters on the 
proposed rule change. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 82225 (December 6, 
2017), 82 FR 58473 (``Notice'').
    \4\ See Securities Exchange Act Release No. 82565, 83 FR 3812 
(January 26, 2018).
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II. Description of the Proposed Rule Change

    Currently, Sections 204.00(B) and 402.01 of the NYSE Listed Company 
Manual (``Manual'') set forth requirements with respect to the physical 
delivery of hard copies of proxy materials to the Exchange. Among other 
things, Section 204.00(B) requires listed companies to file with the 
Exchange six hard copies of proxy materials not later than the date on 
which the material is physically or electronically delivered to 
shareholders, and one hard copy of any filing made on Form 6-K that is 
not required to be filed through the SEC's EDGAR system not later than 
the date on which the Form 6-K is filed with the Commission. Section 
402.01 requires listed companies to provide the Exchange with three 
hard copies of definitive proxy material (together with proxy card) not 
later than the date on which such material is sent, or given, to any 
security holders, which satisfies the copies required to be provided to 
the Exchange under Rule 14a-6(b) of the Exchange Act.\5\
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    \5\ The copies required to be submitted to the Exchange pursuant 
to Rule 14a-6(b) under the Exchange Act only apply to domestic 
companies. See infra notes 9-11 and accompanying text. The 
Commission notes, however, that the Exchange's rules require listed 
companies, including foreign private issuers, to provide multiple 
hard copies of proxy materials under Sections 204.00 and 402.01 of 
the Manual.
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    In addition to the Exchange's own requirements mandating that any 
listed company provide the Exchange with hard copies of proxy materials 
that are sent to shareholders, all U.S. domestic listed companies that 
are subject to the Commission's proxy rules are required to 
electronically file their proxy materials on the SEC's EDGAR system.\6\ 
The Exchange stated that its staff is notified when a listed company 
submits a filing to the Commission on EDGAR and generally reviews proxy 
materials on the EDGAR system shortly after they are filed.\7\ The 
Exchange also stated that its staff generally has completed its review 
of proxy materials prior to receiving the hard copies of the materials, 
and therefore the Exchange has no real need to receive hard copies.\8\ 
As to listed foreign private issuers, while their securities are exempt 
from the Commission's proxy rules,\9\ the Exchange rules require listed 
companies, including foreign private issuers, to hold annual 
shareholder meetings and solicit proxies for such meetings.\10\ A 
foreign private issuer, including those listed on the Exchange, will 
generally furnish proxy material on EDGAR using Form 6-K or may file 
its proxy material on Form 8-K if the foreign private issuer chooses to 
file periodic reports under the provisions for domestic companies.
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    \6\ See Regulation S-T, 17 CFR 232.101.
    \7\ See Notice, supra note 3, at 58473.
    \8\ See id.
    \9\ 17 CFR 240.3a12-3(b).
    \10\ See Sections 302.00 (Annual Meetings) and 402.04 (Proxy 
Solicitation Required) of the Manual.
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    Accordingly, the Exchange proposed to amend its paper filings 
requirements related to proxy materials in Sections 204.00(B) and 
402.01 of the Manual to eliminate ``a significant amount of unnecessary 
use of paper and of resources devoted to processing unneeded materials 
received through the mail.'' \11\
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    \11\ See Notice, supra note 3, at 58474.
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    Specifically, the Exchange has proposed to amend Section 402.01 of 
the Manual to provide that listed companies will not be required to 
provide proxy materials to the Exchange in physical form, provided such 
proxy materials are included in a Commission filing available on the 
SEC's EDGAR filing system.\12\ If such proxy materials are available on 
EDGAR but not filed pursuant to Schedule 14A under the Exchange Act, 
the listed company would be required to provide to the Exchange 
information sufficient to identify such filing (by one of the means 
specified in Section 204.00(A)) \13\ not later than the date on which 
such material is sent, or given, to any security holders.\14\ 
Notwithstanding the foregoing, any listed company whose proxy materials 
are not included in their entirety (together with proxy card) in an SEC 
filing available on EDGAR will continue to be required to provide three 
definitive copies of any proxy material not available on EDGAR to the 
Exchange not later than the date on which such material is sent, or 
given, to any security holders. This is consistent with the number of 
copies required to be filed with the Exchange under Rule 14a-6(b) under 
the Exchange Act.\15\
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    \12\ See proposed Section 402.01.
    \13\ Section 204.00(A) of the Manual generally requires that 
prompt notice to the Exchange must be provided via a web portal or 
email address specified by the Exchange on its website.
    \14\ Domestic listed companies occasionally file their proxy 
materials on the SEC's EDGAR system using forms other than Schedule 
14A, which may not be readily identified by Exchange staff. See 
Notice, supra note 3, at 58474. The Exchange stated that, as there 
is no easy way to identify which SEC report includes a company's 
proxy materials, the Exchange proposed to require listed companies 
not filing proxies using Schedule 14A under the Exchange Act to 
provide to the Exchange information needed to identify the 
submission containing proxy materials. Id. at 58474.
    \15\ See proposed Section 402.01. The Exchange also proposed to 
correct an erroneous reference to SEC Rule 14a-6(c) in Section 
402.01 to refer instead to SEC Rule 14a-6(b). SEC Rule 14a-6(b) 
requires listed companies subject to the proxy rules to file three 
copies of such proxy material with the Exchange.
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    The Exchange has also proposed conforming amendments to Section 
204.00(B) of the Manual for consistency with the proposed amendments to 
Section 402.01. Specifically, the Exchange would amend Section 
204.00(B) so as to require listed companies to file three hard copies 
of any proxy materials required to be submitted to the Exchange in 
physical form pursuant to Section 402.01 (as proposed to be amended) 
not later than the date on which the material is physically or 
electronically delivered to shareholders.\16\ In addition, the Exchange 
would amend Section 204.00(B) to require companies to file one hard 
copy of any filing that is not required to be filed through EDGAR, 
including pursuant to a hardship exemption granted by the 
Commission.\17\
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    \16\ See id. The Exchange also proposed to delete from this 
provision a cross-reference to Section 402.00 (Proxies) in the 
Manual.
    \17\ See proposed Section 204.00(B); see also 17 CFR 232.201 and 
.202. As noted above, the current language in Section 204.00(B) only 
requires the Exchange to provide one hard copy of any filing made on 
Form 6-K that is not required to be filed through EDGAR to be 
provided to the Exchange, and does not include the reference to a 
hardship exemption that the Exchange now proposes to add. In 
addition, the Exchange has proposed non-substantive changes to 
Section 204.00(B), including removing from Section 204.00(B)'s 
introductory paragraph a sentence stating that listed companies are 
required to file hard copies of certain SEC reports and other 
materials (such as proxies) with the Exchange. See proposed Section 
204.00(B). The Exchange noted that this provision would be 
inconsistent with the Exchange's proposed revised approach to the 
review of SEC filings. See Notice, supra note 3, at 58473.

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[[Page 9767]]

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Exchange Act and the 
rules and regulations thereunder applicable to a national securities 
exchange.\18\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Exchange Act,\19\ 
which requires, among other things, that the rules of a national 
securities exchange 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, 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.
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    \18\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \19\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposed amendments to the Manual 
are consistent with Section 6(b)(5) of the Exchange Act because, by 
allowing the Exchange to rely on electronic copies of proxy materials 
available on EDGAR, the proposed amendments are reasonably designed to 
allow Exchange staff to review all listed company proxy material in a 
timely manner and to ensure compliance with Exchange rules and the 
federal securities laws \20\ while eliminating the need for unnecessary 
paper copies when warranted.\21\ At the same time, the proposed rule 
changes furthers the purposes of Section 6(b)(5), and in particular the 
protection of investors and the public interest, because Sections 
204.00(B) and 402.01 of the Manual will still require listed companies 
that do not file proxy materials electronically on EDGAR, or that do 
not include their entire proxy materials (including the proxy card) on 
EDGAR, to submit three hard copies of such materials to the Exchange.
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    \20\ Generally, the Exchange reviews proxies for purposes of 
Exchange rules concerning broker voting and for other matters that 
may arise concerning compliance with Exchange rules and the federal 
securities laws. In addition, the Commission notes that NYSE Listing 
Agreement requires listed companies to comply with the requirements 
of the federal securities laws, as well as NYSE rules. See https://www.nyse.com/publicdocs/nyse/listing/Domestic_Co_Listing_Agreement.pdf.
    \21\ The Commission notes that other national securities 
exchanges, such as The Nasdaq Stock Market LLC (``Nasdaq''), also 
have rules that allow listed companies to satisfy the exchange's 
filing requirements, including for proxies, by virtue of filing on 
EDGAR. See, e.g., Nasdaq Rules 5005(a)(16), 5620(b), and 5250(c)(1).
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    The Commission notes that it has previously granted the Exchange 
no-action relief, on behalf of listed companies and third party filers, 
from the obligation to provide paper copies to the Exchange with 
respect to materials filed with the Commission through the EDGAR 
system, including proxy materials (``1998 No-Action Letter'').\22\ The 
Exchange, however, had previously decided not to rely on the 1998 No-
Action Letter with respect to proxy material but now has, for the 
reasons described in its proposal, decided to do so. Given that the 
Exchange currently uses EDGAR to review proxies, the Commission would 
expect there should be little impact on the Exchange's proxy review 
process if it no longer also receives paper submissions of proxies 
filed on EDGAR. As the Exchange noted in its filing, it generally 
completes its review ``. . . long before [it] receives hard copies of 
proxy materials,'' \23\ so there appears to be little risk in 
eliminating the paper copy requirement for proxy material where the 
complete filing is available on EDGAR. Further, to the extent the 
Exchange cannot rely on the 1998 No-Action Letter because proxy 
material is not submitted on EDGAR (such as when a hardship exemption 
is granted) or is not available in its entirety on EDGAR, the Exchange 
rules will continue to require listed companies to provide three hard 
copies of such proxy material to the Exchange, which would meet the 
requirements of Rule 14a-6 under the Exchange Act for companies subject 
to the U.S. proxy rules.
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    \22\ See letter to Michael J. Simon, Milbank, Tweed, Hadley & 
McCloy from Ann M. Krauskopf, Special Counsel, Division of 
Corporation Finance, Commission, and Howard L. Kramer, Senior 
Associate Director, Office of Market Supervision, Division of Market 
Regulation, Commission, dated July 22, 1998. The 1998 No-Action 
Letter also granted the Exchange relief in relation to documents 
available for review on EDGAR from the recordkeeping requirements of 
Rule 17a-1 under the Exchange Act. The Exchange stated that at the 
time such no-action relief was granted, the Exchange decided not to 
rely on it in relation to proxy materials. See Notice, supra note 3, 
at 58474.
    \23\ See Notice, supra note 3, at 58473.
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    The Commission notes that the proposed changes to the Exchange 
rules are drafted to enable the Exchange to eliminate outdated paper 
copy requirements in the Manual only in those cases where the Exchange 
is able to review proxy material in a timely manner on EDGAR, for 
purposes of compliance with Exchange rules and the federal securities 
laws, and as long as consistent with the conditions of the 1998 No-
Action Letter.
    The Exchange's proposal also requires listed companies to provide 
to the Exchange information sufficient to identify proxy materials that 
have been submitted through EDGAR, but not filed pursuant to Schedule 
14A under the Exchange Act. This provision should enable the Exchange 
to identify the documents it needs to review proxy materials on EDGAR 
quickly to review for compliance with both Exchange rules and the 
federal securities laws consistent with investor protection and the 
public interest. In particular, this should help the Exchange more 
readily identify proxy materials filed on EDGAR by foreign private 
issuers, which, as the Exchange notes, often furnish and submit their 
proxy materials to the Commission as part of a Form 6-K or Form 8-
K,\24\ as well as proxy materials occasionally filed by domestic listed 
companies on forms other than Schedule 14A under the Exchange Act.
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    \24\ See Notice, supra note 3, at 58473. As the Exchange also 
noted, while foreign private issuers are not required to comply with 
the Commission's proxy rules, the Exchange requires them to solicit 
proxies. See id.
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    Finally, the proposal to require companies to file with the 
Exchange one hard copy of any filing that is not required to be filed 
through EDGAR should help enable the Exchange to continue to receive 
all filings made by its listed companies, which in turn should aid the 
Exchange in fulfilling its regulatory responsibilities to oversee 
companies for compliance with listing, and other Exchange, rules and 
the federal securities laws.\25\ This situation may arise, for example, 
when a listed company has been granted a hardship exemption under 
Regulation S-T to file in paper rather than electronically on 
EDGAR.\26\
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    \25\ The Commission notes that this change broadens the 
Exchange's current rule which had been limited to filings on Form 6-
K not submitted on EDGAR. See supra note 17. The requirement to 
submit to the Exchange one copy of any filing not filed in EDGAR 
covers all listed company filings with the Commission, including 
Form 6-Ks, with the exception of proxy material, for which three 
copies of all the proxy material not filed in EDGAR must be filed 
with the Exchange. See also General Instructions to Form 6-K.
    \26\ The Commission notes that the 1998 No-Action Letter stated 
that the no-action relief may not be relied upon and a paper filing 
with the Exchange would be required if a listed company or third 
party filer files a document with the Commission in paper pursuant 
to a hardship exemption.
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    Accordingly, for the reasons discussed above, the Commission finds 
that the proposed rule change is consistent with the Exchange Act.

[[Page 9768]]

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Exchange Act,\27\ that the proposed rule change (SR-NYSE-2017-42), be, 
and hereby is, approved.
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    \27\ 15 U.S.C. 78f(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
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    \28\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-04557 Filed 3-6-18; 8:45 am]
 BILLING CODE 8011-01-P