Self-Regulatory Organizations; New York Stock Exchange, Inc. (n/k/a New York Stock Exchange LLC); Order Approving Proposed Rule Change and Amendment No. 1 Thereto, and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 3, Relating to Annual Financial Statement Distribution Requirements and Listed Company Manual Sections 103.00, 202.05, 203.00, 203.01, 203.02, 203.03, 204.00 Through .33, 303A.14, 313.00, 401.04, and 703.09, 51260-51264 [E6-14276]
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the protection of investors, or otherwise
in furtherance of the purposes of the
Act.15
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received written comments on the
proposed rule change, as amended.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change, as
amended: (i) Does not significantly
affect the protection of investors or the
public interest; (ii) does not impose any
significant burden on competition; and
(iii) does not become operative for 30
days after the date of the filing, or such
shorter time as the Commission may
designate if consistent with the
protection of investors and the public
interest, the proposed rule change has
become effective pursuant to Section
19(b)(3)(A) of the Act 11 and Rule 19b–
4(f)(6) thereunder.12
A proposed rule change filed under
Rule 19b–4(f)(6) 13 normally does not
become operative prior to thirty days
after the date of filing. NYSE requests
that the Commission waive the 30-day
operative delay, as specified in Rule
19b–4(f)(6)(iii), and designate the
proposed rule change to become
operative immediately. The Commission
hereby grants the request. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest because the extension
will allow NYSE to have substantially
similar distribution requirements to
other Exchanges and does not unduly
burden the marketplace.14 For these
reasons, the Commission designates the
proposed rule change, as amended, as
effective and operative immediately.
At any time within 60 days of the
filing of the proposed rule change, as
amended, the Commission may
summarily abrogate such proposed rule
change if it appears to the Commission
that such action is necessary or
appropriate in the public interest, for
11 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). Pursuant to Rule 19b–
4(f)(6)(iii) under the Act, the Exchange is required
to give the Commission written notice of its intent
to file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has requested that the Commission waive the 5-day
pre-filing notice requirement. The Commission has
determined to waive this requirement.
13 17 CFR 240.19b–4(f)(6).
14 For purposes only of waiving the operative
delay for this proposal, 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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Number SR–NYSE–2006–64 and should
be submitted on or before September 19,
2006.
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:
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.16
Nancy M. Morris,
Secretary.
[FR Doc. E6–14307 Filed 8–28–06; 8:45 am]
Electronic Comments
• 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–NYSE–2006–64 on the
subject line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSE–2006–64. 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
Room. 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
15 For purposes of calculating the 60-day period
within which the Commission may summarily
abrogate the proposed rule change, as amended,
under Section 19(b)(3)(C) of the Act, the
Commission considers the period to commence on
August 21, 2006, the date on which the Exchange
submitted Amendment No. 1. See 15 U.S.C.
78s(b)(3)(C).
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BILLING CODE 8010–01–P
[Release No. 34–54344; File No. SR–NYSE–
2005–68]
Self-Regulatory Organizations; New
York Stock Exchange, Inc. (n/k/a New
York Stock Exchange LLC); Order
Approving Proposed Rule Change and
Amendment No. 1 Thereto, and Notice
of Filing and Order Granting
Accelerated Approval to Amendment
No. 3, Relating to Annual Financial
Statement Distribution Requirements
and Listed Company Manual Sections
103.00, 202.05, 203.00, 203.01, 203.02,
203.03, 204.00 Through .33, 303A.14,
313.00, 401.04, and 703.09
August 21, 2006.
I. Introduction
On September 30, 2005, the New York
Stock Exchange LLC (‘‘NYSE’’ 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
relating to the Exchange’s annual
financial statement distribution
requirements and Listed Company
Manual Sections 103.00, 202.05, 203.00,
203.01, 203.02, 203.03, 204.00 through
.33, 303A.14, 313.00, 401.04, and
703.09. On June 9, 2006, the Exchange
submitted Amendment No. 1 to the
proposed rule change.3 The proposed
rule change, as amended, was published
for comment in the Federal Register on
June 29, 2006.4 The Commission
received five comments regarding the
proposal.5 On August 10, 2006, the
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Amendment No. 1 dated June 9, 2006
(‘‘Amendment No. 1’’). In Amendment No. 1, the
Exchange eliminated from the present filing other
proposed rule changes to Section 103 and 302 of
the Listed Company Manual, and clarified certain
details of its proposal.
4 See Securities Exchange Act Release No. 54029
(June 21, 2006), 71 FR 37147 (June 29, 2006)
(‘‘Notice’’).
5 See Letter from Richard J. Daly, Group CoPresident, ADP Brokerage Services Group (‘‘ADP’’),
1 15
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Exchange filed Amendment No. 3 to the
proposed rule change.6 On August 11,
2006, the Exchange submitted a letter to
the Commission responding to the
comments.7 This order approves the
proposed rule change, as amended by
Amendments Nos. 1 and 3, provides
notice of Amendment No. 3, solicits
comments from interested persons on
Amendment No. 3, and grants
accelerated approval of Amendment No.
3.
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II. Description of the Proposal
The Exchange proposes to amend
Section 203.01 of the Listed Company
Manual to allow a listed company to
satisfy NYSE’s annual financial
statement distribution requirement by
making the company’s annual report on
Form 10–K, 20–F, 40–F or N–CSR
available on or by a link through its
corporate Web site. In Amendment No.
3, the Exchange modified the proposal
to provide that in the case of a listed
company that is a closed-end fund, if
the company does not maintain its own
Web site, the company may utilize a
Web site that the company is allowed to
use to satisfy the Web site posting
requirement in Rule 16a–3(k) of the
Act.8 Included with this link or posting,
to Nancy M. Morris, Secretary, Commission, dated
July 20, 2006 (‘‘ADP Letter’’); Letter from Dorothy
M. Donohue, Associate Counsel, Investment
Company Institute, to Nancy M. Morris, Secretary,
Commission, dated July 20, 2006 (‘‘ICI Letter’’);
Letter from David P. Cosper, Chief Financial
Officer, Executive Vice President, Sonic
Automotive, Inc., to Nancy M. Morris, Secretary,
Commission, dated July 6, 2006 (‘‘Sonic Letter’’);
Letter from Philip Broadley, Chair, The Hundred
Group of Finance Directors, and Mark Harding,
Chair, General Counsel 100 Group, to Nancy M.
Morris, Secretary, Commission, dated June 19, 2006
(‘‘Hundred Group Letter’’); Letter from Scott Lamb,
Vice President, Investor Relations, Coeur d’Alene
Mines Corporation, to Jonathan G. Katz, Secretary,
Commission, dated October 18, 2005 (‘‘Coeur
Letter’’).
6 See Amendment No. 3 dated August 10, 2006
(‘‘Amendment No. 3’’). In Amendment No. 3, the
Exchange modified the proposed rule language in
Section 303A.14 in response to the ICI Letter. ICI
recommended that the Exchange modify the
proposed rule change to make it clear that
investment companies that do not have their own
Web sites can use a related Web Site. See infra Part
III. In Amendment No. 3, the Exchange also
modified the proposed rule change to require that
when a listed company issues a press release
announcing the filing of its annual report with the
Commission, that this press release also state the
Web site where shareholders may access the annual
report. The Exchange submitted Amendment No. 2
to the Commission on August 4, 2006 and withdrew
Amendment No. 2 on August 10, 2006.
7 See Letter from Mary Yeager, Assistant
Secretary, NYSE, to Nancy M. Morris, Secretary,
Commission, dated August 11, 2006 (‘‘NYSE
Response Letter’’).
8 17 CFR 240.16a–3(k) states, in pertinent part,
that: ‘‘In the case of an issuer that is an investment
company that does not maintain its own Web site;
if any of the issuer’s investment advisor, sponsor,
depositor, trustee, administrator, principal
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the listed company must also include a
prominent undertaking in English that it
would deliver a paper copy of the
company’s complete audited financial
statements free of charge to any
shareholder who requests it. The
Exchange would also require a listed
company to issue a press release
simultaneously with its Web site
posting stating that its annual report has
been filed with the Commission. This
press release must also specify the
company’s Web site address 9 and
indicate that shareholders have the
ability to receive a hard copy of the
company’s complete audited financial
statements free of charge upon request
within a reasonable period of time.
The Exchange also proposes to amend
Section 203.01 of the Listed Company
Manual to eliminate the following
provisions: (i) That a company inform
the NYSE if it is unable to file its annual
report with the Commission in a timely
manner; (ii) that a company notify the
NYSE prior to the filing deadline if it
will not file its annual report with the
Commission on time, as well as the
language setting out the date by which
a company must distribute its annual
report once the late annual report has
been filed with the Commission; (iii) the
Exchange’s requirements regarding the
content of annual reports and annual
financial statements; and (iv)
requirements regarding the publication
and distribution of annual financial
statements.10
The Exchange also proposes to amend
Section 203.02 of the Listed Company
Manual to consolidate and summarize
the Exchange’s reporting requirements
for interim financial statements and to
eliminate those provisions of Section
203.02 of the Listed Company Manual
that are no longer applicable or that do
not contain actual listing
requirements.11
The Exchange also proposes to amend
Section 103.00 of the Listed Company
Manual to eliminate the requirement
that foreign private issuers distribute to
shareholders at least a summary annual
report that includes summary financial
information reconciled to U.S. generally
accepted accounting principles and
provide a full annual report to
shareholders upon request, as well the
requirement that a company that
proposes to distribute a summary
underwriter, or any affiliated person of the
investment company maintains a Web site that
includes the name of the issuer, the issuer shall
comply with the posting requirements by posting
the forms on one such Web site.’’ See also
Amendment No. 3, supra note 6.
9 See Amendment No. 3, supra note 6.
10 See Notice at 37148–49.
11 See id. at 37149–50.
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annual report contact an Exchange
representative to determine whether the
proposed use of the summary annual
report meets the Exchange’s
requirements. NYSE also proposes to
eliminate language from the first and
sixth paragraphs of Section 103.00 of
the Listed Company Manual to the
extent that such language does not set
forth actual listing requirements.12
The Exchange also proposes
conforming amendments to Sections
202.05, 203.03, 204.00 through .33 and
313.00 of the Listed Company Manual.13
These amendments include
renumbering of sections and the
elimination of references to annual
report obligations throughout the Listed
Company Manual, including with
respect to procedures relating to the
distribution of annual reports.
The Exchange also proposes to amend
Section 204.00 of the Listed Company
Manual to consolidate the requirements
for companies to provide notice to and
file certain documents with the
Exchange.14 In particular, the Exchange
proposes to limit the need for
companies to provide information to the
Exchange that is available via the
Commission’s Electronic Data Gathering
Analysis and Retrieval (EDGAR) system.
The Exchange also proposes to
eliminate certain explanatory language
from Section 204.00 of the Listed
Company Manual that the Exchange
represented to be superfluous as a result
of the proposed changes.
The Exchange also proposes to add a
new Section 303A.14 to the Listed
Company Manual that specifically
requires listed companies to have and
maintain a Web site.15 This proposed
section also includes the information
required under Section 303A of the
Listed Company Manual that listed
companies must post to their Web sites,
including committee charters, corporate
governance guidelines and their code of
business conduct and ethics. In
Amendment No. 3, the Exchange
modified the proposal to provide that in
the case of a listed company that is a
closed-end fund, if the company does
not maintain its own Web site, the
company may utilize a Web site that the
company is allowed to use to satisfy the
Web site posting requirement in Rule
16a–3(k) of the Act.16
The Exchange also proposes to
eliminate Section 401.04 of the Listed
Company Manual which provides
guidance regarding the interval between
12 See
id. at 37147–48.
id. at 37148, 37150–51.
14 See id. at 37150–51.
15 See id. at 37150–51.
16 See id. at 37151.
13See
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the end of a listed company’s fiscal year
and its annual meeting of
shareholders.17 Lastly, the Exchange
proposes to amend Section 703.09 of the
Listed Company Manual to eliminate
requirements relating to the disclosure
of options, stock purchase and other
remuneration plans.18
III. Comments
The Commission received five
comment letters regarding the
proposal.19 Four comment letters
supported the Exchange’s proposed rule
change. The ICI stated that the
Exchange’s proposal was ‘‘highly
appropriate’’ given the tremendous
growth in the Internet and its
importance to investors as an
information source.20 The ICI also stated
that internet access provides a more
efficient way to access the reports, as
well the ability to search in the reports
for information of particular interest to
investors. Finally, the ICI recommended
that in the case of an investment
company that does not maintain its own
Web site, the investment company make
its annual report available on, or by a
link through, a Web site maintained, for
example, by the company’s investment
adviser.21
Another commenter, Sonic
Automotive, an NYSE-listed company,
commented that it was sensible to
deliver information in the most
expeditious and efficient manner in a
day and age of instant
communications.22 Coeur d’Alene
Mines Corporation, also an NYSE-listed
company, expressed support for the
proposal, citing its own experience that
most investors prefer the immediacy
and ease of access associated with
electronic delivery, and that the rule
change would permit it to materially
reduce costs associated with
distributing the annual report.23 This
commenter also noted that the
company’s annual report and other
Commission filings are already
routinely available on or through the
company’s Web site, and on other sites
such as EDGAR, long before they are
available through mass mailings or
individual mailings. In this regard, the
commenter noted that each year’s newly
published annual report is already ‘‘old
news’’ by the time it arrives in an
investor’s mailbox. Another commenter
expressed the view that shareholders
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17 See
id. at 37152.
id.
19 See Supra note 5.
20 ICI Letter, supra note 5.
21 Id.; see also Amendment No. 3, Supra note 6.
22 Sonic Automotive Letter, supra note 5.
23 Coeur Letter, supra note 5.
18 See
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prefer immediately available electronic
information, and that hard copies
provided later are of limited use.24
Moreover, this commenter stated that
these benefits would be achieved while
allowing for a ‘‘significant’’ cost
reduction for foreign private issuers
listed on the Exchange.
One commenter, ADP, opposed the
proposed rule change.25 ADP argued
that the Exchange’s proposal to
eliminate the annual financial statement
distribution requirement in Section
203.01 of the Listed Company Manual
could have adverse affects on U.S.
holders of securities of NYSE-listed
foreign private issuers. ADP expressed a
broad concern regarding the ‘‘access
equals delivery’’ model upon which the
proposed amendments are based, and
stated that the Exchange has proposed
making the change to Section 203.01 in
the absence of any meaningful data
supporting its underlying premise. ADP
disagrees with the Exchange’s belief that
the vast majority of people in this
country that review company financials
access them online—either through the
company’s own Web site, EDGAR, or
some other service provider. In
particular, ADP asserted that (i) fewer
shareholders would have access to
annual financial statements, (ii) fewer
shareholders would look at annual
financial statements, (iii) more votes
being cast without the benefit of
financial statement review, and (iv)
costs would be shifted to
shareholders.26
The Exchange responded by stating
that the Commission did not receive any
negative comment letters from a retail or
institutional investor with respect to the
proposed rule change.27 The Exchange
also noted that the proposed rule change
would not confine investors to online
access. Rather, the Exchange explained
that the proposed rule requires listed
companies to issue a press release to
inform investors that the annual report
filed with the Commission is available
on the listed company’s Web site, and
that the Exchange will also require that
shareholders have the ability to receive
a hard copy of the complete audited
financial statements free of charge upon
request within a reasonable period of
time. Finally, the NYSE noted that the
24 Hundred Group Letter, supra note 5. This
commenter also noted that its clientele, many
publicly traded United Kingdom companies, must
incur the costs of distributing two annual reports
to shareholders, one consisting of the annual report
and accounts required under the relevant U.K. laws,
and the other containing financial statements
reconciled to U.S. GAAP.
25 ADP Letter, supra note 5.
26 Id.
27 See NYSE Response Letter, supra note 7.
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proposed rule change simply provides
listed companies with an alternative to
physical delivery, and that a listed
company may continue to physically
distribute an annual report if it wishes
to do so.
IV. Discussion
After careful consideration of the
proposal and the comments received,
the Commission finds that the proposed
rule change, as amended, is consistent
with the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
exchange.28 Specifically, the
Commission finds that the proposal, as
amended, is consistent with Section
6(b)(5) of the Act,29 which requires,
among other things, that the rules of a
national securities exchange be
designed 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.
With respect to the Exchange’s
proposal to amend Section 203.01 of its
Listed Company Manual to allow
companies to satisfy the Exchange’s
annual financial distribution
requirement by making the company’s
annual report on Form 10–K, 20–F, 40–
F or N–CSR available on its corporate
Web site, the Exchange and several of
the commenters have stated that the
new rule will be a more efficient way for
listed companies to deliver, and
shareholders to utilize, annual financial
statements.30 The Commission believes
that electronic delivery may offer
shareholders immediate access to
financial information and greater ability
to search such information. The
Commission also believes that the
proposed rule change may lead to
significant cost savings for listed
companies, savings that will ultimately
accrue to those companies’
shareholders.
The Commission also notes the
concern raised by ADP that such an
approach may have the unintended
effect of preventing certain shareholders
28 In approving this proposal, the Commission has
considered its impact on efficiency, competition
and capital formation. 15 U.S.C. 78c(f).
29 15 U.S.C. 78f(b)(5).
30 The Commission notes that because U.S.
companies listed on the Exchange must still
distribute annual financial information as required
by the Commission’s proxy solicitation rules, the
Exchange’s proposed rule change will currently
have minimal impact on U.S. issuers. See 17 CFR
240.14a–3. For foreign private issuers listed on the
Exchange, however, the proposed rule change will
eliminate the only mandated physical distribution
requirement for annual financial statements.
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from obtaining annual financial
information from listed companies.31
The Commission believes, however, that
this risk is minimized by virtue of the
fact that the proposed rule change
requires the listed company to issue a
press release simultaneously with the
posting of the annual report stating that
the annual report is available, listing the
Web site where the annual report may
be accessed, and requiring the listed
company to send paper copies to those
shareholders that request one within a
reasonable time at no charge. The
Commission believes that it is
reasonable to assume that individual
shareholders will follow the public
announcements of those companies in
which they own stock, and that these
shareholders will either be able to
access the Web site with the annual
report or request a free paper copy if
they wish. Further, as noted by one
commenter on the proposal,32 because
of existing Internet and EDGAR access
to annual reports, the information
received in hard copy can be ‘‘old
news.’’ Indeed, information in the
annual report can already be
incorporated into the market price of the
listed company’s stock by the time
investors receive the hard copy.33
ADP also expressed concern that the
proposed rule change is based upon an
‘‘access equals delivery’’ model of
disclosure.34 The Commission notes
that it considered the NYSE’s
elimination of its annual report
distribution requirement for listed
companies under Section 19(b) of the
Act.35 The Commission’s determination
of what constitutes an appropriate SRO
rule under Section 19(b) of the Act is
distinct from the Commission’s
consideration of rulemaking under the
Act, and will not have any impact on
the Commission’s consideration of the
proposal concerning amendments to the
proxy rules.36
31 See
ADP Letter, supra note 5.
Letter, supra note 5.
33 The Commission also notes that in its response
letter, the NYSE stated that all of the comment
letters, with the exception of ADP’s comment letter,
were positive, that there were no negative
comments from individual or institutional
investors, and that the proposed rule change
provides listed companies with an alternative to
physical delivery, but that listed companies may
continue to physically distribute annual reports if
they so wish.
34 ADP Letter, supra note 5.
35 Section 19(b)(2) of the Act states, in pertinent
part, that: ‘‘The Commission shall approve a
proposed rule change of a self-regulatory
organization if it finds that such proposed rule
change is consistent with the requirements of this
title and the rules and regulations thereunder
applicable to such organization.’’ 15 U.S.C.
78s(b)(2).
36 See Securities Exchange Act Release No. 52926
(December 8, 2005), 70 FR 74598 (December 15,
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In connection with the Exchange’s
proposed amendments to the annual
financial distribution requirements in
Section 203.01 of the Listed Company
Manual, the Commission notes that the
Exchange has proposed conforming
amendments to Section 203.01 and
other sections of the Listed Company
Manual. For example, the Exchange’s
proposal would also eliminate the
requirements currently contained in
Section 203.01 that detail the
procedures for physical distribution of
the annual financial statements as well
as the notice requirement that
companies have followed if they could
not meet these physical distribution
requirements.37 Additionally, the
Exchange proposes to eliminate
provisions in Section 203.01 of the
Listed Company Manual that detail the
form and substance of the annual
financial statements.38 The Commission
notes that the Exchange has represented
that the notice requirement for
companies that fail to distribute annual
financial statements is no longer
necessary because the Exchange
monitors listed companies for timely
filing of their Commission reports on an
ongoing basis.39 Given this monitoring,
and the Exchange’s representation that
it monitors listed companies for timely
filing on an ongoing basis, the
Commission believes this aspect of the
proposed rule change is reasonable. The
Commission believes that the
Exchange’s deletion of the provisions of
Section 203.01 of the Listed Company
Manual regarding the form and
substance of the annual financial
statements eliminates duplicative, and
potentially confusing, disclosure
requirements for companies that are
fully described in the Act.40
The Exchange also proposes to amend
Section 103.00 of the Listed Company
Manual to eliminate the requirement
that foreign private issuers distribute at
least summary annual reports to
shareholders. The elimination of this
requirement is consistent with the
Exchange’s proposal in Section 203.01
of the Listed Company Manual because
the Exchange is no longer requiring
companies to physically distribute
2005) (proposing amendments to the proxy rules
that would provide an alternative method for
issuers and other persons to furnish proxy materials
to shareholders by posting them on an Internet Web
site and providing shareholders with notice of the
availability of the proxy materials with copies being
made available to shareholders on request, at no
cost).
37 See Notice at 37148.
38 Id.
39 See Notice at 37153 (stating that the Exchange
monitors listed companies for timely filing of their
Commission reports on an ongoing basis).
40 See, e.g., 17 CFR 210.1–01 et seq.
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51263
annual financial information to
shareholders. The Commission notes
that the Exchange’s proposal would still
require foreign private issuers to send
hard copies of the annual financial
statements to shareholders, free of
charge, upon request, within a
reasonable period of time.
The Exchange also proposes to delete
Section 401.04 from the Listed
Company Manual. In approving this
portion of the proposed rule change, the
Commission notes that the Exchange
has specifically stated that it is not
disavowing that best practice is for a
listed company to hold its annual
meeting within a reasonable time after
the close of the company’s fiscal year.41
While the Commission also agrees that
best practice is for a listed company to
hold its annual meeting within a
reasonable time after the close of its
fiscal year, the Commission believes
that it is not unreasonable for the
Exchange to eliminate from the Listed
Company Manual language that is, by its
express terms, not an enforceable
requirement, both to prevent confusion
amongst listed companies and to reduce
the Listed Company Manual to a
codification of mandatory requirements
for listed companies.
Lastly, the Exchange proposes to
eliminate certain provisions of Section
703.09 of the Listed Company Manual
regarding disclosure of options, stock
purchase and other remuneration plans.
The Commission believes the
Exchange’s deletion of these provisions
from Section 703.09 of the Listed
Company Manual is consistent with the
Act since it eliminates duplicative, and
potentially confusing, disclosure
requirements for companies that are
already more fully described in the
Act.42
Notice of Filing of and Order Granting
Accelerated Approval to Amendment
No. 3 to the Proposed Rule Change
In Amendment No. 3, the Exchange
modified the proposal to provide that in
the case of a listed company that is a
closed-end fund, if the company does
not maintain its own Web site, the
company may utilize a Web site that the
company is allowed to use to satisfy the
Web site posting requirement in Rule
16a–3(k) of the Act.43 The Exchange also
added a requirement that when a
company issues the press release
41 See Notice, 71 FR at 37154 (stating that the
Exchange is not disavowing that best practice is to
hold the annual meeting within a reasonable
interval after the close of the fiscal year).
42 See, e.g., 17 CFR 229.201(d) and 17 CFR
229.402.
43 17 CFR 240.16a–3(k); see also Amendment No.
3, supra note 6.
E:\FR\FM\29AUN1.SGM
29AUN1
51264
Federal Register / Vol. 71, No. 167 / Tuesday, August 29, 2006 / Notices
announcing that its annual report has
been filed, it must also specify in the
press release the Web site address where
shareholders may access the annual
report.44
The changes proposed by the
Exchange in Amendment No. 3 respond
to a concern raised by the ICI and are
designed to ensure that the proposed
rule change works as intended with
respect to investment companies.45 The
proposed change also improves the
press release proposal by requiring that
the Web site address where financial
statement can be accessed be included
in the press release. The Commission
believes that these proposed changes
strengthen the proposed rule change
and do not raise any new regulatory
issues beyond those raised by the
original proposal. Therefore, the
Commission finds good cause,
consistent with Sections 19(b) and
6(b)(5) of the Act, to approve
Amendment No. 3 to the proposed rule
change prior to the 30th day after the
amendment is published for comment
in the Federal Register.
V. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning Amendment No.
3, including whether Amendment No. 3
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 rulecomments@sec.gov. Please include File
No. SR–NYSE–2005–68 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.
jlentini on PROD1PC65 with NOTICES
44 See
Amendment No. 3, supra note 6.
45 The Commission notes that in its comment
letter, the ICI’s proposed modifications to Section
303A.14 referred to ‘‘investment companies,’’
whereas the Exchange’s proposed rule text
contained in Amendment No. 3 refers to ‘‘closedend funds.’’ See ICI Letter, supra note 5; see also
Amendment No. 3, supra note 6. The Exchange has
represented that the reason that it made this change
to the ICI’s suggested language is because under the
Exchange’s rules, the only listed ‘‘investment
companies’’ to which the proposed rule change can
apply are closed-end funds. See Telephone
Conference between Annmarie Tierney, Assistant
General Counsel, NYSE, and Raymond Lombardo,
Special Counsel, Division of Market Regulation,
Commission, on August 14, 2006.
VerDate Aug<31>2005
17:07 Aug 28, 2006
Jkt 208001
All submissions should refer to File No.
SR–NYSE–2005–68. 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
Room. Copies of such filing will also be
available for inspection and copying at
the principal office of the NYSE. 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 No.
SR–NYSE–2005–68 and should be
submitted on or before September 19,
2006.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,46 that the
proposed rule change (SR–NYSE–2005–
68), as amended, is approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.47
Nancy M. Morris,
Secretary.
[FR Doc. E6–14276 Filed 8–28–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54348; File No. SR–
NYSEArca–2006–47]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Amendment No. 1 Thereto of Proposed
Rule Change Relating to Voluntary
Withdrawal Procedures by Listed
Issuers
August 22, 2006.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
46 15
47 17
PO 00000
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
Frm 00082
Fmt 4703
Sfmt 4703
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on August 4,
2006, NYSE Arca, Inc. (‘‘NYSE Arca’’ 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
prepared by the Exchange. On August
17, 2006, the Exchange filed
Amendment No. 1 to the proposed rule
change.3 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
NYSE Arca, through its wholly-owned
subsidiary NYSE Arca Equities, Inc.
(‘‘NYSE Arca Equities’’ or
‘‘Corporation’’), proposes to amend
NYSE Arca Equities Rule 5.4(b) relating
to the voluntary withdrawal by issuers
of their securities listed on NYSE Arca,
L.L.C. (also referred to as the ‘‘NYSE
Arca Marketplace’’), the equities trading
facility of NYSE Arca Equities,
including with respect to dually-listed
issuers. Below is the text of the
proposed rule change, as amended.
Proposed new language is italics;
proposed deletions are in brackets.
*
*
*
*
*
Rule 5 Listings
*
*
*
*
*
[Issuer Proposing to Withdraw]
Rule 5.4(b). Issuer Proposing to
Withdraw
[An issuer proposing to withdraw a
security from listing on the Corporation
shall submit to the Corporation a
certified copy of a resolution adopted by
the board of directors of the issuer
authorizing withdrawal from listing and
registrations, a letter from an authorized
officer of the issuer providing the
specific reasons cited by the board of
directors of the issuer for the proposed
withdrawal, and a copy of the Form 25
that the issuer has filed with the
Securities and Exchange Commission in
accordance with Rule 12d2–2
promulgated under Section 12(d) of the
Securities Exchange Act of 1934, as
amended, no later than the date of such
filing. The issuer may be required,
under special circumstances, to submit
the proposed withdrawal to the
shareholders for their vote at a meeting
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 In Amendment No. 1, the Exchange replaced
Exhibit 5 with the correct rule text and corrected
a typographical error in the heading of Exhibit 1.
2 17
E:\FR\FM\29AUN1.SGM
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]]>Agencies
[Federal Register Volume 71, Number 167 (Tuesday, August 29, 2006)]
[Notices]
[Pages 51260-51264]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-14276]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54344; File No. SR-NYSE-2005-68]
Self-Regulatory Organizations; New York Stock Exchange, Inc. (n/
k/a New York Stock Exchange LLC); Order Approving Proposed Rule Change
and Amendment No. 1 Thereto, and Notice of Filing and Order Granting
Accelerated Approval to Amendment No. 3, Relating to Annual Financial
Statement Distribution Requirements and Listed Company Manual Sections
103.00, 202.05, 203.00, 203.01, 203.02, 203.03, 204.00 Through .33,
303A.14, 313.00, 401.04, and 703.09
August 21, 2006.
I. Introduction
On September 30, 2005, the New York Stock Exchange LLC (``NYSE'' 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 relating to the Exchange's annual financial
statement distribution requirements and Listed Company Manual Sections
103.00, 202.05, 203.00, 203.01, 203.02, 203.03, 204.00 through .33,
303A.14, 313.00, 401.04, and 703.09. On June 9, 2006, the Exchange
submitted Amendment No. 1 to the proposed rule change.\3\ The proposed
rule change, as amended, was published for comment in the Federal
Register on June 29, 2006.\4\ The Commission received five comments
regarding the proposal.\5\ On August 10, 2006, the
[[Page 51261]]
Exchange filed Amendment No. 3 to the proposed rule change.\6\ On
August 11, 2006, the Exchange submitted a letter to the Commission
responding to the comments.\7\ This order approves the proposed rule
change, as amended by Amendments Nos. 1 and 3, provides notice of
Amendment No. 3, solicits comments from interested persons on Amendment
No. 3, and grants accelerated approval of Amendment No. 3.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Amendment No. 1 dated June 9, 2006 (``Amendment No.
1''). In Amendment No. 1, the Exchange eliminated from the present
filing other proposed rule changes to Section 103 and 302 of the
Listed Company Manual, and clarified certain details of its
proposal.
\4\ See Securities Exchange Act Release No. 54029 (June 21,
2006), 71 FR 37147 (June 29, 2006) (``Notice'').
\5\ See Letter from Richard J. Daly, Group Co-President, ADP
Brokerage Services Group (``ADP''), to Nancy M. Morris, Secretary,
Commission, dated July 20, 2006 (``ADP Letter''); Letter from
Dorothy M. Donohue, Associate Counsel, Investment Company Institute,
to Nancy M. Morris, Secretary, Commission, dated July 20, 2006
(``ICI Letter''); Letter from David P. Cosper, Chief Financial
Officer, Executive Vice President, Sonic Automotive, Inc., to Nancy
M. Morris, Secretary, Commission, dated July 6, 2006 (``Sonic
Letter''); Letter from Philip Broadley, Chair, The Hundred Group of
Finance Directors, and Mark Harding, Chair, General Counsel 100
Group, to Nancy M. Morris, Secretary, Commission, dated June 19,
2006 (``Hundred Group Letter''); Letter from Scott Lamb, Vice
President, Investor Relations, Coeur d'Alene Mines Corporation, to
Jonathan G. Katz, Secretary, Commission, dated October 18, 2005
(``Coeur Letter'').
\6\ See Amendment No. 3 dated August 10, 2006 (``Amendment No.
3''). In Amendment No. 3, the Exchange modified the proposed rule
language in Section 303A.14 in response to the ICI Letter. ICI
recommended that the Exchange modify the proposed rule change to
make it clear that investment companies that do not have their own
Web sites can use a related Web Site. See infra Part III. In
Amendment No. 3, the Exchange also modified the proposed rule change
to require that when a listed company issues a press release
announcing the filing of its annual report with the Commission, that
this press release also state the Web site where shareholders may
access the annual report. The Exchange submitted Amendment No. 2 to
the Commission on August 4, 2006 and withdrew Amendment No. 2 on
August 10, 2006.
\7\ See Letter from Mary Yeager, Assistant Secretary, NYSE, to
Nancy M. Morris, Secretary, Commission, dated August 11, 2006
(``NYSE Response Letter'').
---------------------------------------------------------------------------
II. Description of the Proposal
The Exchange proposes to amend Section 203.01 of the Listed Company
Manual to allow a listed company to satisfy NYSE's annual financial
statement distribution requirement by making the company's annual
report on Form 10-K, 20-F, 40-F or N-CSR available on or by a link
through its corporate Web site. In Amendment No. 3, the Exchange
modified the proposal to provide that in the case of a listed company
that is a closed-end fund, if the company does not maintain its own Web
site, the company may utilize a Web site that the company is allowed to
use to satisfy the Web site posting requirement in Rule 16a-3(k) of the
Act.\8\ Included with this link or posting, the listed company must
also include a prominent undertaking in English that it would deliver a
paper copy of the company's complete audited financial statements free
of charge to any shareholder who requests it. The Exchange would also
require a listed company to issue a press release simultaneously with
its Web site posting stating that its annual report has been filed with
the Commission. This press release must also specify the company's Web
site address \9\ and indicate that shareholders have the ability to
receive a hard copy of the company's complete audited financial
statements free of charge upon request within a reasonable period of
time.
---------------------------------------------------------------------------
\8\ 17 CFR 240.16a-3(k) states, in pertinent part, that: ``In
the case of an issuer that is an investment company that does not
maintain its own Web site; if any of the issuer's investment
advisor, sponsor, depositor, trustee, administrator, principal
underwriter, or any affiliated person of the investment company
maintains a Web site that includes the name of the issuer, the
issuer shall comply with the posting requirements by posting the
forms on one such Web site.'' See also Amendment No. 3, supra note
6.
\9\ See Amendment No. 3, supra note 6.
---------------------------------------------------------------------------
The Exchange also proposes to amend Section 203.01 of the Listed
Company Manual to eliminate the following provisions: (i) That a
company inform the NYSE if it is unable to file its annual report with
the Commission in a timely manner; (ii) that a company notify the NYSE
prior to the filing deadline if it will not file its annual report with
the Commission on time, as well as the language setting out the date by
which a company must distribute its annual report once the late annual
report has been filed with the Commission; (iii) the Exchange's
requirements regarding the content of annual reports and annual
financial statements; and (iv) requirements regarding the publication
and distribution of annual financial statements.\10\
The Exchange also proposes to amend Section 203.02 of the Listed
Company Manual to consolidate and summarize the Exchange's reporting
requirements for interim financial statements and to eliminate those
provisions of Section 203.02 of the Listed Company Manual that are no
longer applicable or that do not contain actual listing
requirements.\11\
---------------------------------------------------------------------------
\10\ See Notice at 37148-49.
\11\ See id. at 37149-50.
---------------------------------------------------------------------------
The Exchange also proposes to amend Section 103.00 of the Listed
Company Manual to eliminate the requirement that foreign private
issuers distribute to shareholders at least a summary annual report
that includes summary financial information reconciled to U.S.
generally accepted accounting principles and provide a full annual
report to shareholders upon request, as well the requirement that a
company that proposes to distribute a summary annual report contact an
Exchange representative to determine whether the proposed use of the
summary annual report meets the Exchange's requirements. NYSE also
proposes to eliminate language from the first and sixth paragraphs of
Section 103.00 of the Listed Company Manual to the extent that such
language does not set forth actual listing requirements.\12\
---------------------------------------------------------------------------
\12\ See id. at 37147-48.
---------------------------------------------------------------------------
The Exchange also proposes conforming amendments to Sections
202.05, 203.03, 204.00 through .33 and 313.00 of the Listed Company
Manual.\13\ These amendments include renumbering of sections and the
elimination of references to annual report obligations throughout the
Listed Company Manual, including with respect to procedures relating to
the distribution of annual reports.
---------------------------------------------------------------------------
\13\See id. at 37148, 37150-51.
---------------------------------------------------------------------------
The Exchange also proposes to amend Section 204.00 of the Listed
Company Manual to consolidate the requirements for companies to provide
notice to and file certain documents with the Exchange.\14\ In
particular, the Exchange proposes to limit the need for companies to
provide information to the Exchange that is available via the
Commission's Electronic Data Gathering Analysis and Retrieval (EDGAR)
system. The Exchange also proposes to eliminate certain explanatory
language from Section 204.00 of the Listed Company Manual that the
Exchange represented to be superfluous as a result of the proposed
changes.
---------------------------------------------------------------------------
\14\ See id. at 37150-51.
---------------------------------------------------------------------------
The Exchange also proposes to add a new Section 303A.14 to the
Listed Company Manual that specifically requires listed companies to
have and maintain a Web site.\15\ This proposed section also includes
the information required under Section 303A of the Listed Company
Manual that listed companies must post to their Web sites, including
committee charters, corporate governance guidelines and their code of
business conduct and ethics. In Amendment No. 3, the Exchange modified
the proposal to provide that in the case of a listed company that is a
closed-end fund, if the company does not maintain its own Web site, the
company may utilize a Web site that the company is allowed to use to
satisfy the Web site posting requirement in Rule 16a-3(k) of the
Act.\16\
---------------------------------------------------------------------------
\15\ See id. at 37150-51.
\16\ See id. at 37151.
---------------------------------------------------------------------------
The Exchange also proposes to eliminate Section 401.04 of the
Listed Company Manual which provides guidance regarding the interval
between
[[Page 51262]]
the end of a listed company's fiscal year and its annual meeting of
shareholders.\17\ Lastly, the Exchange proposes to amend Section 703.09
of the Listed Company Manual to eliminate requirements relating to the
disclosure of options, stock purchase and other remuneration plans.\18\
---------------------------------------------------------------------------
\17\ See id. at 37152.
\18\ See id.
---------------------------------------------------------------------------
III. Comments
The Commission received five comment letters regarding the
proposal.\19\ Four comment letters supported the Exchange's proposed
rule change. The ICI stated that the Exchange's proposal was ``highly
appropriate'' given the tremendous growth in the Internet and its
importance to investors as an information source.\20\ The ICI also
stated that internet access provides a more efficient way to access the
reports, as well the ability to search in the reports for information
of particular interest to investors. Finally, the ICI recommended that
in the case of an investment company that does not maintain its own Web
site, the investment company make its annual report available on, or by
a link through, a Web site maintained, for example, by the company's
investment adviser.\21\
---------------------------------------------------------------------------
\19\ See Supra note 5.
\20\ ICI Letter, supra note 5.
\21\ Id.; see also Amendment No. 3, Supra note 6.
---------------------------------------------------------------------------
Another commenter, Sonic Automotive, an NYSE-listed company,
commented that it was sensible to deliver information in the most
expeditious and efficient manner in a day and age of instant
communications.\22\ Coeur d'Alene Mines Corporation, also an NYSE-
listed company, expressed support for the proposal, citing its own
experience that most investors prefer the immediacy and ease of access
associated with electronic delivery, and that the rule change would
permit it to materially reduce costs associated with distributing the
annual report.\23\ This commenter also noted that the company's annual
report and other Commission filings are already routinely available on
or through the company's Web site, and on other sites such as EDGAR,
long before they are available through mass mailings or individual
mailings. In this regard, the commenter noted that each year's newly
published annual report is already ``old news'' by the time it arrives
in an investor's mailbox. Another commenter expressed the view that
shareholders prefer immediately available electronic information, and
that hard copies provided later are of limited use.\24\ Moreover, this
commenter stated that these benefits would be achieved while allowing
for a ``significant'' cost reduction for foreign private issuers listed
on the Exchange.
---------------------------------------------------------------------------
\22\ Sonic Automotive Letter, supra note 5.
\23\ Coeur Letter, supra note 5.
\24\ Hundred Group Letter, supra note 5. This commenter also
noted that its clientele, many publicly traded United Kingdom
companies, must incur the costs of distributing two annual reports
to shareholders, one consisting of the annual report and accounts
required under the relevant U.K. laws, and the other containing
financial statements reconciled to U.S. GAAP.
---------------------------------------------------------------------------
One commenter, ADP, opposed the proposed rule change.\25\ ADP
argued that the Exchange's proposal to eliminate the annual financial
statement distribution requirement in Section 203.01 of the Listed
Company Manual could have adverse affects on U.S. holders of securities
of NYSE-listed foreign private issuers. ADP expressed a broad concern
regarding the ``access equals delivery'' model upon which the proposed
amendments are based, and stated that the Exchange has proposed making
the change to Section 203.01 in the absence of any meaningful data
supporting its underlying premise. ADP disagrees with the Exchange's
belief that the vast majority of people in this country that review
company financials access them online--either through the company's own
Web site, EDGAR, or some other service provider. In particular, ADP
asserted that (i) fewer shareholders would have access to annual
financial statements, (ii) fewer shareholders would look at annual
financial statements, (iii) more votes being cast without the benefit
of financial statement review, and (iv) costs would be shifted to
shareholders.\26\
---------------------------------------------------------------------------
\25\ ADP Letter, supra note 5.
\26\ Id.
---------------------------------------------------------------------------
The Exchange responded by stating that the Commission did not
receive any negative comment letters from a retail or institutional
investor with respect to the proposed rule change.\27\ The Exchange
also noted that the proposed rule change would not confine investors to
online access. Rather, the Exchange explained that the proposed rule
requires listed companies to issue a press release to inform investors
that the annual report filed with the Commission is available on the
listed company's Web site, and that the Exchange will also require that
shareholders have the ability to receive a hard copy of the complete
audited financial statements free of charge upon request within a
reasonable period of time. Finally, the NYSE noted that the proposed
rule change simply provides listed companies with an alternative to
physical delivery, and that a listed company may continue to physically
distribute an annual report if it wishes to do so.
---------------------------------------------------------------------------
\27\ See NYSE Response Letter, supra note 7.
---------------------------------------------------------------------------
IV. Discussion
After careful consideration of the proposal and the comments
received, the Commission finds that the proposed rule change, as
amended, is consistent with the requirements of the Act and the rules
and regulations thereunder applicable to a national securities
exchange.\28\ Specifically, the Commission finds that the proposal, as
amended, is consistent with Section 6(b)(5) of the Act,\29\ which
requires, among other things, that the rules of a national securities
exchange be designed 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.
---------------------------------------------------------------------------
\28\ In approving this proposal, the Commission has considered
its impact on efficiency, competition and capital formation. 15
U.S.C. 78c(f).
\29\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
With respect to the Exchange's proposal to amend Section 203.01 of
its Listed Company Manual to allow companies to satisfy the Exchange's
annual financial distribution requirement by making the company's
annual report on Form 10-K, 20-F, 40-F or N-CSR available on its
corporate Web site, the Exchange and several of the commenters have
stated that the new rule will be a more efficient way for listed
companies to deliver, and shareholders to utilize, annual financial
statements.\30\ The Commission believes that electronic delivery may
offer shareholders immediate access to financial information and
greater ability to search such information. The Commission also
believes that the proposed rule change may lead to significant cost
savings for listed companies, savings that will ultimately accrue to
those companies' shareholders.
---------------------------------------------------------------------------
\30\ The Commission notes that because U.S. companies listed on
the Exchange must still distribute annual financial information as
required by the Commission's proxy solicitation rules, the
Exchange's proposed rule change will currently have minimal impact
on U.S. issuers. See 17 CFR 240.14a-3. For foreign private issuers
listed on the Exchange, however, the proposed rule change will
eliminate the only mandated physical distribution requirement for
annual financial statements.
---------------------------------------------------------------------------
The Commission also notes the concern raised by ADP that such an
approach may have the unintended effect of preventing certain
shareholders
[[Page 51263]]
from obtaining annual financial information from listed companies.\31\
The Commission believes, however, that this risk is minimized by virtue
of the fact that the proposed rule change requires the listed company
to issue a press release simultaneously with the posting of the annual
report stating that the annual report is available, listing the Web
site where the annual report may be accessed, and requiring the listed
company to send paper copies to those shareholders that request one
within a reasonable time at no charge. The Commission believes that it
is reasonable to assume that individual shareholders will follow the
public announcements of those companies in which they own stock, and
that these shareholders will either be able to access the Web site with
the annual report or request a free paper copy if they wish. Further,
as noted by one commenter on the proposal,\32\ because of existing
Internet and EDGAR access to annual reports, the information received
in hard copy can be ``old news.'' Indeed, information in the annual
report can already be incorporated into the market price of the listed
company's stock by the time investors receive the hard copy.\33\
---------------------------------------------------------------------------
\31\ See ADP Letter, supra note 5.
\32\ Coeur Letter, supra note 5.
\33\ The Commission also notes that in its response letter, the
NYSE stated that all of the comment letters, with the exception of
ADP's comment letter, were positive, that there were no negative
comments from individual or institutional investors, and that the
proposed rule change provides listed companies with an alternative
to physical delivery, but that listed companies may continue to
physically distribute annual reports if they so wish.
---------------------------------------------------------------------------
ADP also expressed concern that the proposed rule change is based
upon an ``access equals delivery'' model of disclosure.\34\ The
Commission notes that it considered the NYSE's elimination of its
annual report distribution requirement for listed companies under
Section 19(b) of the Act.\35\ The Commission's determination of what
constitutes an appropriate SRO rule under Section 19(b) of the Act is
distinct from the Commission's consideration of rulemaking under the
Act, and will not have any impact on the Commission's consideration of
the proposal concerning amendments to the proxy rules.\36\
---------------------------------------------------------------------------
\34\ ADP Letter, supra note 5.
\35\ Section 19(b)(2) of the Act states, in pertinent part,
that: ``The Commission shall approve a proposed rule change of a
self-regulatory organization if it finds that such proposed rule
change is consistent with the requirements of this title and the
rules and regulations thereunder applicable to such organization.''
15 U.S.C. 78s(b)(2).
\36\ See Securities Exchange Act Release No. 52926 (December 8,
2005), 70 FR 74598 (December 15, 2005) (proposing amendments to the
proxy rules that would provide an alternative method for issuers and
other persons to furnish proxy materials to shareholders by posting
them on an Internet Web site and providing shareholders with notice
of the availability of the proxy materials with copies being made
available to shareholders on request, at no cost).
---------------------------------------------------------------------------
In connection with the Exchange's proposed amendments to the annual
financial distribution requirements in Section 203.01 of the Listed
Company Manual, the Commission notes that the Exchange has proposed
conforming amendments to Section 203.01 and other sections of the
Listed Company Manual. For example, the Exchange's proposal would also
eliminate the requirements currently contained in Section 203.01 that
detail the procedures for physical distribution of the annual financial
statements as well as the notice requirement that companies have
followed if they could not meet these physical distribution
requirements.\37\ Additionally, the Exchange proposes to eliminate
provisions in Section 203.01 of the Listed Company Manual that detail
the form and substance of the annual financial statements.\38\ The
Commission notes that the Exchange has represented that the notice
requirement for companies that fail to distribute annual financial
statements is no longer necessary because the Exchange monitors listed
companies for timely filing of their Commission reports on an ongoing
basis.\39\ Given this monitoring, and the Exchange's representation
that it monitors listed companies for timely filing on an ongoing
basis, the Commission believes this aspect of the proposed rule change
is reasonable. The Commission believes that the Exchange's deletion of
the provisions of Section 203.01 of the Listed Company Manual regarding
the form and substance of the annual financial statements eliminates
duplicative, and potentially confusing, disclosure requirements for
companies that are fully described in the Act.\40\
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\37\ See Notice at 37148.
\38\ Id.
\39\ See Notice at 37153 (stating that the Exchange monitors
listed companies for timely filing of their Commission reports on an
ongoing basis).
\40\ See, e.g., 17 CFR 210.1-01 et seq.
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The Exchange also proposes to amend Section 103.00 of the Listed
Company Manual to eliminate the requirement that foreign private
issuers distribute at least summary annual reports to shareholders. The
elimination of this requirement is consistent with the Exchange's
proposal in Section 203.01 of the Listed Company Manual because the
Exchange is no longer requiring companies to physically distribute
annual financial information to shareholders. The Commission notes that
the Exchange's proposal would still require foreign private issuers to
send hard copies of the annual financial statements to shareholders,
free of charge, upon request, within a reasonable period of time.
The Exchange also proposes to delete Section 401.04 from the Listed
Company Manual. In approving this portion of the proposed rule change,
the Commission notes that the Exchange has specifically stated that it
is not disavowing that best practice is for a listed company to hold
its annual meeting within a reasonable time after the close of the
company's fiscal year.\41\ While the Commission also agrees that best
practice is for a listed company to hold its annual meeting within a
reasonable time after the close of its fiscal year, the Commission
believes that it is not unreasonable for the Exchange to eliminate from
the Listed Company Manual language that is, by its express terms, not
an enforceable requirement, both to prevent confusion amongst listed
companies and to reduce the Listed Company Manual to a codification of
mandatory requirements for listed companies.
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\41\ See Notice, 71 FR at 37154 (stating that the Exchange is
not disavowing that best practice is to hold the annual meeting
within a reasonable interval after the close of the fiscal year).
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Lastly, the Exchange proposes to eliminate certain provisions of
Section 703.09 of the Listed Company Manual regarding disclosure of
options, stock purchase and other remuneration plans. The Commission
believes the Exchange's deletion of these provisions from Section
703.09 of the Listed Company Manual is consistent with the Act since it
eliminates duplicative, and potentially confusing, disclosure
requirements for companies that are already more fully described in the
Act.\42\
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\42\ See, e.g., 17 CFR 229.201(d) and 17 CFR 229.402.
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Notice of Filing of and Order Granting Accelerated Approval to
Amendment No. 3 to the Proposed Rule Change
In Amendment No. 3, the Exchange modified the proposal to provide
that in the case of a listed company that is a closed-end fund, if the
company does not maintain its own Web site, the company may utilize a
Web site that the company is allowed to use to satisfy the Web site
posting requirement in Rule 16a-3(k) of the Act.\43\ The Exchange also
added a requirement that when a company issues the press release
[[Page 51264]]
announcing that its annual report has been filed, it must also specify
in the press release the Web site address where shareholders may access
the annual report.\44\
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\43\ 17 CFR 240.16a-3(k); see also Amendment No. 3, supra note
6.
\44\ See Amendment No. 3, supra note 6.
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The changes proposed by the Exchange in Amendment No. 3 respond to
a concern raised by the ICI and are designed to ensure that the
proposed rule change works as intended with respect to investment
companies.\45\ The proposed change also improves the press release
proposal by requiring that the Web site address where financial
statement can be accessed be included in the press release. The
Commission believes that these proposed changes strengthen the proposed
rule change and do not raise any new regulatory issues beyond those
raised by the original proposal. Therefore, the Commission finds good
cause, consistent with Sections 19(b) and 6(b)(5) of the Act, to
approve Amendment No. 3 to the proposed rule change prior to the 30th
day after the amendment is published for comment in the Federal
Register.
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\45\ The Commission notes that in its comment letter, the ICI's
proposed modifications to Section 303A.14 referred to ``investment
companies,'' whereas the Exchange's proposed rule text contained in
Amendment No. 3 refers to ``closed-end funds.'' See ICI Letter,
supra note 5; see also Amendment No. 3, supra note 6. The Exchange
has represented that the reason that it made this change to the
ICI's suggested language is because under the Exchange's rules, the
only listed ``investment companies'' to which the proposed rule
change can apply are closed-end funds. See Telephone Conference
between Annmarie Tierney, Assistant General Counsel, NYSE, and
Raymond Lombardo, Special Counsel, Division of Market Regulation,
Commission, on August 14, 2006.
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V. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning Amendment No. 3, including whether Amendment No. 3
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 No. SR-NYSE-2005-68 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 No. SR-NYSE-2005-68. 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 Room. Copies of such
filing will also be available for inspection and copying at the
principal office of the NYSE. 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 No. SR-NYSE-2005-68 and should be submitted on or before September
19, 2006.
VI. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\46\ that the proposed rule change (SR-NYSE-2005-68), as amended,
is approved.
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\46\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\47\
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\47\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-14276 Filed 8-28-06; 8:45 am]
BILLING CODE 8010-01-P
