Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto Relating to Rule 4350(e) To Amend the Annual Shareholder Meeting Requirement, 76895-76897 [E5-7896]

Download as PDF Federal Register / Vol. 70, No. 248 / Wednesday, December 28, 2005 / Notices Week of January 9, 2006—Tentative Tuesday, January 10, 2006 9:30 a.m.—Briefing on International Research and Bilateral Agreements (Public Meeting). (Contact: Roman Shaffer, 301–415–7606) This meeting will be webcast live at the Web address https://www.nrc.gov Wednesday, January 11, 2006 1:55 p.m.—Affirmation Session (Public Meeting) (Tentative). a. Hydro Resources, Inc. (Crownpoint, New Mexico) Petition for Review of LBP–05–17 (Groundwater Issues) (Tentative) 2:00 p.m.—Meeting with Advisory Committee on Nuclear Waste (ACNW) (Public Meeting). (Contact: John Larkins, 301–415–7360) This meeting will be webcast live at the Web address https://www.nrc.gov. Thursday, January 12, 2006 9:30 a.m.—Discussion of Security Issues (closed—ex. 2 & 3). August Spector, at 301–415–7080, TDD: 301–415–2100, or by e-mail at aks@nrc.gov. Determinations on requests for reasonable accommodation will be made on a case-by-case basis. * * * * * This notice is distributed by mail to several hundred subscribers; if you no longer wish to receive it, or would like to be added to the distribution, please contact the Office of the Secretary, Washington, DC 20555 (301–415–1969). In addition, distribution of this meeting notice over the Interned system is available. If you are interested in receiving this Commission meeting schedule electronically, please send an electronic message to dkw@nrc.gov. Dated: December 22, 2005. R. Michelle Scroll, Office of the Secretary. [FR Doc. 05–24628 Filed 12–23–05; 3:06 pm] BILLING CODE 7590–01–M Week of January 16, 2006—Tentative OFFICE OF MANAGEMENT AND BUDGET Tuesday, January 17, 2006 1:30 p.m.—Discussion of Security Issues (closed—ex. 1 & 3). Acquisition Advisory Panel; Cancellation of an Upcoming Meeting of the Acquisition Advisory Panel Week of January 23, 2006—Tentative There are no meetings scheduled for the Week of January 23, 2006. Week of January 30, 2006—Tentative wwhite on PROD1PC65 with NOTICES Tuesday, January 31, 2006 9:30 a.m.—Briefing on Strategic WorkForce Planning and Human Capital Initiatives (closed—ex. 2). Wednesday, February 1, 2006 9:30 a.m.—Discussion of Security Issues (closed—ex. 1 & 3). *The schedule for Commission meetings is subject to change on short notice. To verify the status of meetings call (recording)—(301) 415–1292. Contact person for more information: Michelle Scroll, (301) 415–1662. * * * * * The NRC Commission Meeting Schedule can be found on the Internet at: https://www.nrc.gov/what-we-do/ policy-making/schedule.html * * * * * The NRC provides reasonable accommodation to individuals with disabilities where appropriate. If you need a reasonable accommodation to participate in these public mergings, or need this meeting notice or the transcript or other information from the public meetings in another format (e.g., braille, large print), please notify the NRC’s Disability Program Coordinator, VerDate Aug<31>2005 17:37 Dec 27, 2005 Jkt 208001 Office of Management and Budget, Executive Office of the President. ACTION: Cancellation of a Federal Advisory Committee Meeting. AGENCY: SUMMARY: The Office of Management and Budget is issuing this notice to cancel the January 5, 2006, public meeting of the Acquisition Advisory Panel (AAP or ‘‘Panel’’) established in accordance with the Services Acquisition Reform Act of 2003. DATES: The only meeting being cancelled by this notice is the January 5, 2006, meeting. ADDRESSES: The meeting was to have been held at the Federal Deposit Insurance Corporation (FDIC), Basement auditorium, 801 17th Street, NW., Washington, DC 20434. FOR FURTHER INFORMATION CONTACT: Members of the public wishing further information concerning this cancellation notice or any future meetings or the Acquisition Advisory Panel itself, should contact Ms. Laura Auletta, Designated Federal Officer (DFO), at: laura.auletta@gsa.gov, phone/ voice mail (202) 208–7279, or mail at: General Services Administration, 1800 F Street, NW., Room 4006, Washington, DC, 20405. SUPPLEMENTARY INFORMATION: (a) Background: The cancelled meeting was PO 00000 Frm 00161 Fmt 4703 Sfmt 4703 76895 originally announced in the Federal Register at 70 FR 67761 on November 8, 2005. Only the January 5, 2006, meeting is being cancelled. Laura Auletta, Designated Federal Officer (Executive Director), Acquisition Advisory Panel. [FR Doc. 05–24605 Filed 12–27–05; 8:45 am] BILLING CODE 3110–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–52985; File No. SR–NASD– 2005–073] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto Relating to Rule 4350(e) To Amend the Annual Shareholder Meeting Requirement December 20, 2005. 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 June 6, 2005, the National Association of Securities Dealers, Inc. (‘‘NASD’’), through its subsidiary, The Nasdaq Stock Market, Inc. (‘‘Nasdaq’’), 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 prepared by Nasdaq. On December 5, 2005, Nasdaq filed Amendment No. 1 to the proposed rule change.3 On December 9, 2005, Nasdaq filed Amendment No. 2 to the proposed rule change.4 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Nasdaq proposes to amend NASD Rule 4350 in order to change its annual shareholder meeting requirement. Nasdaq would implement the proposed rule change, as amended, immediately upon approval by the Commission. Below is the text of the proposed rule 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 In Amendment No. 1, Nasdaq revised the proposed rule text and corresponding description of the proposal in its Form 19b–4. Amendment No. 1 replaced Nasdaq’s original filing in its entirety. 4 In Amendment No. 2, Nasdaq made further clarifying changes to the proposed rule text of IM– 4350–8 with respect to certain issuers still subject to the annual shareholder meeting requirement under NASD 4350(e). 2 17 E:\FR\FM\28DEN1.SGM 28DEN1 76896 Federal Register / Vol. 70, No. 248 / Wednesday, December 28, 2005 / Notices change. Proposed new language is in italics; proposed deletions are in [brackets]. * * * * * II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 4350. Qualitative Listing Requirements for Nasdaq National Market and Nasdaq Capital Market Issuers Except for Limited Partnerships In its filing with the Commission, 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 Item IV below. Nasdaq has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. (a)–(d) No change. (e) Shareholder Meetings Each issuer listing common stock or voting preferred stock, and their equivalents, shall hold an annual meeting of shareholders [and shall provide notice of such meeting to Nasdaq.] no later than one year after the end of the issuer’s fiscal year-end. (f)–(n) No change. * * * * * wwhite on PROD1PC65 with NOTICES IM–4350–8. Shareholder Meetings Rule 4350(e) requires that each issuer listing common stock or voting preferred stock, and their equivalents, hold an annual meeting of shareholders within one year of the end of each fiscal year. At each such meeting, shareholders must be afforded the opportunity to discuss company affairs with management and to elect directors, if required by the issuer’s governing documents. A new listing that was not previously subject to a requirement to hold an annual meeting is required to hold its first meeting within one-year after its first fiscal year-end following listing. Of course, Nasdaq’s meeting requirement does not supplant any applicable state or federal securities laws concerning annual meetings. This requirement is not applicable as a result of an issuer listing the following types of securities: securities listed pursuant to Rule 4420(f) (such as Trust Preferred Securities and Contingent Value Rights), unless the listed security is a common stock or voting preferred stock equivalent (e.g., a callable common stock); Portfolio Depository Receipts listed pursuant to Rule 4420(i); Index Fund Shares listed pursuant to Rule 4420(j); and Trust Issued Receipts listed pursuant to Rule 4420(l). Notwithstanding, if the issuer also lists common stock or voting preferred stock, or their equivalent, the issuer must still hold an annual meeting for the holders of that common stock or voting preferred stock, or their equivalent. * * * * * The text of the proposed rule change, as amended, is also available on Nasdaq’s Internet Web site (https:// www.nasdaq.com), at Nasdaq’s principal office, and at the Commission’s Public Reference Room. VerDate Aug<31>2005 17:37 Dec 27, 2005 Jkt 208001 A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose NASD Rule 4350(e) currently requires all Nasdaq issuers to hold an annual meeting of shareholders and to provide notice of such meeting to Nasdaq.5 An annual meeting allows the equity owners of a company—typically its common stockholders—the opportunity to elect directors and meet with management to discuss company affairs.6 This requirement, however, is not necessary for an issuer as a result of listing certain securities because the holders of those securities do not directly participate as equity holders and do not vote in the election of directors. For example, Nasdaq lists a number of securities pursuant to NASD Rule 4420(f) (Quantitative Designation Criteria, Other Securities), which allows for the listing of securities that possess attributes or features of more than one category of security.7 Typically, these securities are not an issuer’s primary equity security, and their holders have only limited economic interests and other rights. Nasdaq also lists Portfolio Depository Receipts and Index Fund Shares, securities issued by unit investment 5 Nasdaq’s annual shareholder meeting requirement applies in addition to any applicable state and federal securities laws concerning such annual meetings. 6 Nasdaq permits the use of webcasts instead of, or in addition to, a physical meeting, provided such webcasts are permissible under the applicable state law and that shareholders have the opportunity to ask questions of management. 7 Securities currently listed under Rule 4420(f) include: (i) Trust Preferred Securities, the payments on which are linked to the performance of another security; (ii) Index Linked Notes, the payments on which are linked to the performance of an underlying index; and (iii) Contingent Value Rights, the performance of which are tied to the performance of another security, a particular division of the company, or the occurrence of a certain event. PO 00000 Frm 00162 Fmt 4703 Sfmt 4703 trusts and open-end management investment companies, respectively, that are organized as exchange-traded funds. These exchange-traded funds, which are generally passive investment vehicles that seek to match the performance of an index, must obtain an exemptive order from the Commission before they offer securities. As a result, their operations are circumscribed by numerous representations and conditions of the applicable orders, and they do not typically experience the need for operational or other changes requiring a shareholder vote, and, by extension, a shareholder meeting.8 These entities are also extremely sensitive to expenses, and as a result, some of these entities have stated to Nasdaq that the imposition of an annual shareholder meeting requirement could impact the ability of some exchangetraded funds to compete with other investment types, such as typical openend funds. In addition, Nasdaq lists Trust Issued Receipts, which are securities issued by a trust that holds, but does not manage, specific securities on behalf of the investors in the trust. These trusts typically do not hold shareholder (or unitholder) meetings because the trusts have no boards of directors and essentially serve only as conduits for the investors’ indirect investments in the underlying securities of the trusts. For these reasons, in the past, Nasdaq has not required certain issuers to hold annual shareholder meetings as a result of listing these securities. Nasdaq now proposes to amend NASD Rule 4350(e) such that only issuers of voting and non-voting common and voting preferred stock, and their equivalents, would be required to hold an annual shareholder meeting, except as set forth in proposed IM–4350–8. By clearly identifying those issuers that will be subject to the annual shareholder meeting requirement, Nasdaq believes that the rule will be more transparent. In addition, NASD Rule 4350(e) currently requires all issuers to provide notice of their annual meetings to Nasdaq. Nasdaq, however, does not rely on this notification to monitor compliance with the annual shareholder meeting requirement. Instead, the Nasdaq staff reviews proxy statements (and, in the case of issuers that do not file proxy statements, other Commission filings) to determine compliance. As such, Nasdaq believes that the current 8 These exchange-traded funds are registered under, and remain subject to, the Investment Company Act of 1940, which imposes various shareholder-voting requirements that may be applicable to the funds. E:\FR\FM\28DEN1.SGM 28DEN1 Federal Register / Vol. 70, No. 248 / Wednesday, December 28, 2005 / Notices notification requirement is redundant and proposes to eliminate it. Finally, while the current rule does not provide a deadline for holding the annual shareholder meeting, Nasdaq proposes that the annual shareholder meeting must be held within one year of the end of the issuer’s fiscal year. Nasdaq believes that codifying this time frame would provide additional transparency to the annual meeting requirement. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of section 15A of the Act,9 in general, and with section 15A(b)(6) of the Act,10 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 a free and open market and a national market system, and, in general, to protect investors and the public interest. Nasdaq asserts that the proposed rule change is consistent with these requirements in that it will provide transparency to its annual shareholder meeting rule and eliminate an unnecessary notification requirement. B. Self-Regulatory Organization’s Statement on Burden on Competition Nasdaq does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. wwhite on PROD1PC65 with NOTICES 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 self-regulatory organization consents, the Commission will: (A) By order approve such proposed rule change, as amended, or (B) Institute proceedings to determine whether the proposed rule change, as amended, 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. Comments may be submitted by any of the following methods: • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NASD–2005–073 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549–9303. BILLING CODE 8010–01–P [Release No. 34–52986; File No. SR–PCX– 2005–137] Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto To Expand Its $2.50 Strike Price Program December 20, 2005. 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 December 14, 2005, the Pacific Exchange, Inc. All submissions should refer to File (‘‘PCX’’ or ‘‘Exchange’’), filed with the Number SR–NASD–2005–073. This file Securities and Exchange Commission number should be included on the (‘‘Commission’’) the proposed rule subject line if e-mail is used. To help the change as described in Items I and II Commission process and review your below, which Items have been prepared by PCX. On December 16, 2005, PCX comments more efficiently, please use only one method. The Commission will filed Amendment No. 1 to the proposed post all comments on the Commission’s rule change.3 The Exchange has filed the proposal as a ‘‘non-controversial’’ Internet Web site (https://www.sec.gov/ rule change pursuant to Section rules/sro.shtml). Copies of the 19(b)(3)(A) of the Act 4 and Rule 19b– submission, all subsequent 4(f)(6) thereunder,5 which renders it amendments, all written statements effective upon filing with the with respect to the proposed rule Commission. The Commission is change that are filed with the publishing this notice to solicit Commission, and all written comments on the proposed rule change, communications relating to the as amended, from interested persons. proposed rule change between the Commission and any person, other than I. Self-Regulatory Organization’s Statement of the Terms of Substance of those that may be withheld from the the Proposed Rule Change public in accordance with the provisions of 5 U.S.C. 552, will be PCX proposes to amend PCX Rule 6.4 available for inspection and copying in Commentary .03 governing the listing of the Commission’s Public Reference options with strike price intervals of Section, 100 F Street, NE., Washington, $2.50. Below is the text of the proposed DC 20549. Copies of such filing also will rule change. Proposed new language is be available for inspection and copying in italics; proposed deletions are in at the principal offices of the Exchange. [brackets]. All comments received will be posted * * * * * without change; the Commission does Rule 6.4. Series of Options Open for not edit personal identifying Trading information from submissions. You (a)–(e)—No change. should submit only information that Commentary .01–.02—No change. you wish to make available publicly. All submissions should refer to File 11 17 CFR 200.30–3(a)(12). Number SR–NASD–2005–073 and 1 15 U.S.C. 78s(b)(1). should be submitted on or before 2 17 CFR 240.19b–4. January 18, 2006. 3 Amendment No. 1 corrected an omission in the proposed rule text. 4 15 U.S.C. 78s(b)(3)(A). 5 17 CFR 240.19b–4(f)(6). U.S.C. 78o–3. 10 15 U.S.C. 78o–3(b)(6). 18:24 Dec 27, 2005 For the Commission, by the Division of Market Regulation, pursuant to delegated authority.11 Jonathan G. Katz, Secretary. [FR Doc. E5–7896 Filed 12–27–05; 8:45 am] SECURITIES AND EXCHANGE COMMISSION Electronic Comments 9 15 VerDate Aug<31>2005 Jkt 208001 76897 PO 00000 Frm 00163 Fmt 4703 Sfmt 4703 E:\FR\FM\28DEN1.SGM 28DEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 248 (Wednesday, December 28, 2005)]
[Notices]
[Pages 76895-76897]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-7896]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52985; File No. SR-NASD-2005-073]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing of Proposed Rule Change and Amendment 
Nos. 1 and 2 Thereto Relating to Rule 4350(e) To Amend the Annual 
Shareholder Meeting Requirement

December 20, 2005.
    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 June 6, 2005, the National Association of Securities Dealers, Inc. 
(``NASD''), through its subsidiary, The Nasdaq Stock Market, Inc. 
(``Nasdaq''), 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 prepared by Nasdaq. On December 5, 
2005, Nasdaq filed Amendment No. 1 to the proposed rule change.\3\ On 
December 9, 2005, Nasdaq filed Amendment No. 2 to the proposed rule 
change.\4\ The Commission is publishing this notice to solicit comments 
on the proposed rule change, as amended, from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, Nasdaq revised the proposed rule text 
and corresponding description of the proposal in its Form 19b-4. 
Amendment No. 1 replaced Nasdaq's original filing in its entirety.
    \4\ In Amendment No. 2, Nasdaq made further clarifying changes 
to the proposed rule text of IM-4350-8 with respect to certain 
issuers still subject to the annual shareholder meeting requirement 
under NASD 4350(e).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to amend NASD Rule 4350 in order to change its 
annual shareholder meeting requirement. Nasdaq would implement the 
proposed rule change, as amended, immediately upon approval by the 
Commission. Below is the text of the proposed rule

[[Page 76896]]

change. Proposed new language is in italics; proposed deletions are in 
[brackets].
* * * * *

4350. Qualitative Listing Requirements for Nasdaq National Market and 
Nasdaq Capital Market Issuers Except for Limited Partnerships

    (a)-(d) No change.
    (e) Shareholder Meetings
    Each issuer listing common stock or voting preferred stock, and 
their equivalents, shall hold an annual meeting of shareholders [and 
shall provide notice of such meeting to Nasdaq.] no later than one year 
after the end of the issuer's fiscal year-end.
    (f)-(n) No change.
* * * * *

IM-4350-8. Shareholder Meetings

    Rule 4350(e) requires that each issuer listing common stock or 
voting preferred stock, and their equivalents, hold an annual meeting 
of shareholders within one year of the end of each fiscal year. At each 
such meeting, shareholders must be afforded the opportunity to discuss 
company affairs with management and to elect directors, if required by 
the issuer's governing documents. A new listing that was not previously 
subject to a requirement to hold an annual meeting is required to hold 
its first meeting within one-year after its first fiscal year-end 
following listing. Of course, Nasdaq's meeting requirement does not 
supplant any applicable state or federal securities laws concerning 
annual meetings.
    This requirement is not applicable as a result of an issuer listing 
the following types of securities: securities listed pursuant to Rule 
4420(f) (such as Trust Preferred Securities and Contingent Value 
Rights), unless the listed security is a common stock or voting 
preferred stock equivalent (e.g., a callable common stock); Portfolio 
Depository Receipts listed pursuant to Rule 4420(i); Index Fund Shares 
listed pursuant to Rule 4420(j); and Trust Issued Receipts listed 
pursuant to Rule 4420(l). Notwithstanding, if the issuer also lists 
common stock or voting preferred stock, or their equivalent, the issuer 
must still hold an annual meeting for the holders of that common stock 
or voting preferred stock, or their equivalent.
* * * * *
    The text of the proposed rule change, as amended, is also available 
on Nasdaq's Internet Web site (https://www.nasdaq.com), at Nasdaq's 
principal office, 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, 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 
Item IV 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NASD Rule 4350(e) currently requires all Nasdaq issuers to hold an 
annual meeting of shareholders and to provide notice of such meeting to 
Nasdaq.\5\ An annual meeting allows the equity owners of a company--
typically its common stockholders--the opportunity to elect directors 
and meet with management to discuss company affairs.\6\
---------------------------------------------------------------------------

    \5\ Nasdaq's annual shareholder meeting requirement applies in 
addition to any applicable state and federal securities laws 
concerning such annual meetings.
    \6\ Nasdaq permits the use of webcasts instead of, or in 
addition to, a physical meeting, provided such webcasts are 
permissible under the applicable state law and that shareholders 
have the opportunity to ask questions of management.
---------------------------------------------------------------------------

    This requirement, however, is not necessary for an issuer as a 
result of listing certain securities because the holders of those 
securities do not directly participate as equity holders and do not 
vote in the election of directors. For example, Nasdaq lists a number 
of securities pursuant to NASD Rule 4420(f) (Quantitative Designation 
Criteria, Other Securities), which allows for the listing of securities 
that possess attributes or features of more than one category of 
security.\7\ Typically, these securities are not an issuer's primary 
equity security, and their holders have only limited economic interests 
and other rights.
---------------------------------------------------------------------------

    \7\ Securities currently listed under Rule 4420(f) include: (i) 
Trust Preferred Securities, the payments on which are linked to the 
performance of another security; (ii) Index Linked Notes, the 
payments on which are linked to the performance of an underlying 
index; and (iii) Contingent Value Rights, the performance of which 
are tied to the performance of another security, a particular 
division of the company, or the occurrence of a certain event.
---------------------------------------------------------------------------

    Nasdaq also lists Portfolio Depository Receipts and Index Fund 
Shares, securities issued by unit investment trusts and open-end 
management investment companies, respectively, that are organized as 
exchange-traded funds. These exchange-traded funds, which are generally 
passive investment vehicles that seek to match the performance of an 
index, must obtain an exemptive order from the Commission before they 
offer securities. As a result, their operations are circumscribed by 
numerous representations and conditions of the applicable orders, and 
they do not typically experience the need for operational or other 
changes requiring a shareholder vote, and, by extension, a shareholder 
meeting.\8\ These entities are also extremely sensitive to expenses, 
and as a result, some of these entities have stated to Nasdaq that the 
imposition of an annual shareholder meeting requirement could impact 
the ability of some exchange-traded funds to compete with other 
investment types, such as typical open-end funds.
---------------------------------------------------------------------------

    \8\ These exchange-traded funds are registered under, and remain 
subject to, the Investment Company Act of 1940, which imposes 
various shareholder-voting requirements that may be applicable to 
the funds.
---------------------------------------------------------------------------

    In addition, Nasdaq lists Trust Issued Receipts, which are 
securities issued by a trust that holds, but does not manage, specific 
securities on behalf of the investors in the trust. These trusts 
typically do not hold shareholder (or unitholder) meetings because the 
trusts have no boards of directors and essentially serve only as 
conduits for the investors' indirect investments in the underlying 
securities of the trusts.
    For these reasons, in the past, Nasdaq has not required certain 
issuers to hold annual shareholder meetings as a result of listing 
these securities. Nasdaq now proposes to amend NASD Rule 4350(e) such 
that only issuers of voting and non-voting common and voting preferred 
stock, and their equivalents, would be required to hold an annual 
shareholder meeting, except as set forth in proposed IM-4350-8. By 
clearly identifying those issuers that will be subject to the annual 
shareholder meeting requirement, Nasdaq believes that the rule will be 
more transparent.
    In addition, NASD Rule 4350(e) currently requires all issuers to 
provide notice of their annual meetings to Nasdaq. Nasdaq, however, 
does not rely on this notification to monitor compliance with the 
annual shareholder meeting requirement. Instead, the Nasdaq staff 
reviews proxy statements (and, in the case of issuers that do not file 
proxy statements, other Commission filings) to determine compliance. As 
such, Nasdaq believes that the current

[[Page 76897]]

notification requirement is redundant and proposes to eliminate it.
    Finally, while the current rule does not provide a deadline for 
holding the annual shareholder meeting, Nasdaq proposes that the annual 
shareholder meeting must be held within one year of the end of the 
issuer's fiscal year. Nasdaq believes that codifying this time frame 
would provide additional transparency to the annual meeting 
requirement.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 15A of the Act,\9\ in general, and with 
section 15A(b)(6) of the Act,\10\ 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 a free 
and open market and a national market system, and, in general, to 
protect investors and the public interest. Nasdaq asserts that the 
proposed rule change is consistent with these requirements in that it 
will provide transparency to its annual shareholder meeting rule and 
eliminate an unnecessary notification requirement.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78o-3.
    \10\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change would 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 self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change, as amended, or
    (B) Institute proceedings to determine whether the proposed rule 
change, as amended, 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. Comments may be 
submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NASD-2005-073 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-9303.

All submissions should refer to File Number SR-NASD-2005-073. 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 (https://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 Section, 100 F Street, 
NE., Washington, DC 20549. Copies of such filing also will be available 
for inspection and copying at the principal offices 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-NASD-2005-073 
and should be submitted on or before January 18, 2006.

    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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Jonathan G. Katz,
Secretary.
[FR Doc. E5-7896 Filed 12-27-05; 8:45 am]
BILLING CODE 8010-01-P

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