Document ID: SEC-2007-1092-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2007-08-09T04:00Z

[Federal Register: August 9, 2007 (Volume 72, Number 153)]
[Notices]               
[Page 44890-44891]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09au07-107]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56193; File No. SR-Amex-2007-38]

 
Self-Regulatory Organizations; American Stock Exchange LLC; Order 
Approving Proposed Rule Change Amending Preferred Stock Voting Rights

August 2, 2007.

I. Introduction

    On April 20, 2007, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend the minimum voting rights that must be 
provided to preferred shareholders in order for a preferred stock issue 
to list on the Amex. The proposed rule change was published for comment 
in the Federal Register on July 7, 2007.\3\ The Commission received no 
comments on the proposal. 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. 55963 (June 26, 
2007), 72 FR 36081.
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II. Description of the Proposal

    Section 124 of the Amex Company Guide, ``Preferred Voting Rights,'' 
provides that the Exchange may decline to list a preferred stock issue 
on the Amex if the issuer does not provide certain minimum voting 
rights to holders of preferred stock. Specifically, under the current 
rule, the Exchange may decline to list a preferred stock issue unless 
the preferred shareholders have the right, voting as a class, to vote 
on: (i) Any change in the rights, privileges or preferences of their 
preferred shares; and (ii) the creation of any additional class of 
preferred stock senior to or equal in preference to their preferred 
shares. The rule provides that any such change in the rights, 
privileges or preferences of preferred shares and any creation of an 
additional class of senior preferred stock must be approved by at least 
two-thirds of the preferred shareholders. 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 to modify the minimum preferred voting 
rights required for listing of a preferred stock issue on the Amex. 
First, the Exchange proposes to amend the provision relating to changes 
in the rights, privileges, or preferences of preferred shareholders, to 
provide that holders of at least two-thirds of the outstanding shares 
of a preferred stock issue should be required for the adoption of any 
charter or by-law amendment that would materially affect existing terms 
of the preferred stock. The amended rule would also provide that, 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 that will have a diminished 
status should be required to authorize such change. The Exchange also 
proposes to require that an issuer's charter not hinder the preferred 
shareholders' right to alter the terms of their stock by limiting 
modification to specific items, e.g., interest rate, redemption price.
    With respect to the creation of a senior issue, the amended rule 
would continue to provide that the creation of a senior issue should 
require approval of at least two-thirds of the outstanding preferred 
shares. However, the Exchange proposes to amend the rule to also 
provide that 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 of preferred stock if shareholders authorized such action when 
the existing series was created. Further, 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.
    The amended rule would also provide that an increase in the 
authorized

[[Page 44891]]

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. However, 
a majority vote would not 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.

III. Discussion

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange 
and, in particular, with section 6(b)(5) of the Act,\4\ 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 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.\5\
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    \4\ 15 U.S.C. 78f(b)(5).
    \5\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
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    The Commission notes that the proposed rule change will make Amex's 
listing requirements relating to minimum preferred voting rights 
substantially similar to those of the New York Stock Exchange LLC 
(``NYSE'').\6\ The Commission believes that the proposed rule change 
may provide additional flexibility to issuers of preferred stock with 
regard to their ability to raise capital, while at the same time, 
ensuring that preferred shareholders will retain important voting 
rights. The proposal also ensures that the rights and privileges of the 
preferred shareholders are protected and cannot be changed without 
prior approval of the preferred shareholders.
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    \6\ See Section 313.00(C) of the NYSE Listed Company Manual.
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IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-Amex-2007-38) be, and hereby 
is, approved.
    For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\8\
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    \7\ 15 U.S.C. 78s(b)(2).
    \8\ 17 CFR 200.30-3(a)(12).

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-15541 Filed 8-8-07; 8:45 am]

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