Document ID: SEC-2007-0885-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2007-07-02T04:00Z

[Federal Register: July 2, 2007 (Volume 72, Number 126)]
[Notices]               
[Page 36081-36082]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02jy07-100]                         

[[Page 36081]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55963; File No. SR-Amex-2007-38]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change Amending Preferred Stock 
Voting Rights

June 26, 2007.
    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 20, 2007, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been substantially prepared by the 
Amex. The Commission is publishing this notice to solicit comments on 
the proposed rule change from interested persons.
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    \1\Sec.  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 proposes to amend the minimum voting rights to be 
provided to preferred shareholders in order for a preferred stock issue 
to list on the Amex. The text of the proposed rule change is available 
at the Amex, on the Amex's Web site at http://amex.com, and at the 

Commission's Public Reference Room.

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 Amex 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 Amex 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
    Section 124, ``Preferred Voting Rights,'' of the Company Guide sets 
forth the minimum voting rights an issuer must provide to holders of 
preferred stock in order for a preferred stock issue to be approved for 
listing on the Amex. Currently, the Exchange may decline to list a 
preferred stock issue unless the preferred shareholders have the right, 
voting as a class, to vote on any change in the rights, privileges or 
preferences of their preferred shares and/or the creation of any 
additional class of preferred stock senior to or equal in preference to 
their preferred shares. Additionally, any such change in the rights, 
privileges or preferences of preferred shares and/or creation of an 
additional class of senior preferred stock must be approved by at least 
two-thirds of the preferred shareholders, and any creation of an 
additional class of preferred stock equal in preference must be 
approved by at least a majority of the preferred shareholders.
    The Exchange now proposes amendments to the minimum preferred 
voting rights required for listing in order to provide additional 
flexibility to issuers of preferred stock and to make the requirements 
more consistent with those of the New York Stock Exchange LLC 
(``NYSE'').\3\
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    \3\ Section 313.00(C) of the NYSE Listed Company Manual.
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    (i) Alteration of Existing Provisions. The Exchange proposes to 
amend paragraph (i) of Section 124(b) to specify that: (A) Holders of 
at least two-thirds of the outstanding shares of a preferred stock 
issue should be required to approve any charter or by-law amendment 
that would materially affect existing terms of the preferred stock; and 
(B) if all series of a class of preferred stock are not equally 
affected by a proposed change to the terms of the preferred stock, two-
thirds approval of both the class and the series to be affected by the 
proposed change should be required to authorize such change. The 
Exchange also proposes to require that an issuer's charter not hinder 
preferred shareholders' right to alter the terms of their stock by 
limiting modification to specific items, e.g., interest rate, 
redemption price.
    (ii) Creation of a Senior Issue. The Exchange proposes to amend 
paragraph (ii) of Section 124(b) to provide that: (A) A vote by an 
existing series of preferred stock is not required for the board of 
directors of an issuer to create a senior series if shareholders 
authorized such action when the existing series was created; and (B) a 
vote by an existing class is not required for the creation of a senior 
issue if the existing class received adequate notice of redemption to 
occur within 90 days and the existing issue is not being retired with 
proceeds from the sale of the new issue.
    (iii) Increase in Authorized Amount or Creation of a Pari Passu 
Issue. The Exchange proposes to provide in new paragraph (iii) of 
Section 124(b) that an increase in the authorized amount of a class of 
preferred stock or the creation of a pari passu issue is required to be 
approved by a majority of the outstanding shares of the class or 
classes to be affected by such change. A majority vote would not, 
however, be required if, at the time a class of preferred stock was 
created, the preferred shareholders gave the board of directors the 
authority to increase the authorized amount of a series of preferred 
stock or create an additional series of preferred stock equal in 
preference.
    The Exchange believes that by enabling preferred stock issuers to 
obtain in advance the shareholder authorization required for future 
creations of senior or pari passu series and/or increases in authorized 
amounts of a series, their capital raising processes will be less 
restricted. In addition, the proposed rule change will align preferred 
voting rights with current market practices. Shareholders purchasing 
affected preferred shares will be put on notice, either at the time of 
the initial offering or subsequently, that the board of directors has 
such authority. Moreover, preferred shareholders will still retain 
important voting rights, particularly in the case of dividend defaults, 
and will still be protected against adverse corporate actions pursuant 
to applicable state law.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\4\ in general, and furthers the objectives of Section 6(b)(5) of 
the Act,\5\ in particular, in that it 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.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.

[[Page 36082]]

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 such 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 is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number SR-Amex-2007-38 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Amex-2007-38. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). 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 on official business 
days between the hours of 10 a.m. and 3 p.m. Copies of the filing also 
will be available for inspection and copying at the principal office of 
the Exchange. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
Amex-2007-38 and should be submitted on or before July 23, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-12742 Filed 6-29-07; 8:45 am]

BILLING CODE 8010-01-P