[Federal Register Volume 80, Number 28 (Wednesday, February 11, 2015)]
[Notices]
[Pages 7659-7661]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-02747]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-74209; File No. SR-NYSEMKT-2015-09]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Part 8 of the NYSE MKT
Company Guide to (i) Require the Chief Executive Officers of Listed
Companies to Provide Annual Certification with Respect to the Company's
Compliance with the Requirements of Part 8 of the Company Guide, (ii)
Require Listed Companies to Submit Annual and Interim Written
Affirmations, and (iii) Make Certain Other Clarifying Changes
February 5, 2015.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that on February 3, 2015, NYSE MKT LLC (the ``Exchange'' or
``NYSE MKT'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C.78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Part 8 of the NYSE MKT Company Guide
(the ``Company Guide'') to (i) require the chief executive officers
(each, a ``CEO'') of listed companies to provide annual certification
with respect to the company's compliance with the requirements of Part
8 of the Company Guide, (ii) require listed companies to submit annual
and interim written affirmations, and (iii) make certain other
clarifying changes. The text of the proposed rule change is available
on the Exchange's Web site at www.nyse.com, at the principal office of
the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
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 those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
NYSE MKT proposes to amend Part 8 of the Company Guide to (i)
require the CEOs of listed companies to provide annual certification
with respect to the company's compliance with the requirements of Part
8 of the Company Guide, (ii) require listed companies to submit annual
and interim written affirmations, and (iii) make certain other
clarifying changes. Part 8 of the Company Guide sets forth the
Exchange's requirements with respect to listed company corporate
governance, including majority board independence, independence
requirements for audit committee and compensation committee members,
and that executive compensation and director nominations must be under
the jurisdiction of fully independent compensation and nominating
committees or be determined by a majority of the independent directors
acting as a group.
The Exchange proposes to add a new Section 810(a) to Part 8 of the
Company Guide that would require each listed company CEO, subject to
certain exceptions discussed below, to certify to the Exchange each
year that he or she is not aware of any violation by the listed company
of the NYSE MKT corporate governance listing standards set forth in
Part 8 of the Company Guide, qualifying the certification to the extent
necessary to reflect any violations of which the CEO is aware. A blank
copy of the CEO certification form required by Section 810(a) will be
posted on the Exchange's Web site.
The Exchange proposes to add a new Section 810(b) to Part 8 of the
Company Guide that would require each listed company CEO to promptly
notify the Exchange in writing after any executive officer of the
listed company becomes aware of any noncompliance with any applicable
provisions of Part 8.
The Exchange proposes to add a new Section 810(c) to Part 8 of the
Company Guide that would require each listed company to submit an
executed written affirmation of compliance with Part 8 of the Company
Guide annually to the Exchange. In addition, each listed company would
be required to promptly submit an interim written affirmation after
becoming aware of any noncompliance with Part 8 of the Company Guide or
in the event of any change in the composition of its board of directors
or the audit, compensation or nominating committees thereof. If the
interim written affirmation relates to noncompliance with Part 8 of the
Company Guide and is being submitted to the Exchange to satisfy the
notice requirement of Section 810(b), it must be signed by the
company's CEO. Blank copies of the affirmation forms required by
Section 810(c) will be posted on the Exchange's Web site.
The Exchange believes that the proposed additions to Part 8 of the
Company Guide will focus the CEO and senior management of listed
companies on compliance with the Exchange's corporate governance
requirements. Commentary to the proposed Section 810(a) would include a
statement to this effect. The Exchange notes that proposed Section 810
is comparable to Section 303A.12 of the NYSE Listed Company Manual and
that part of the rationale for adopting proposed Section 810 is to
harmonize NYSE MKT's requirements more closely with those of the NYSE,
as the two exchanges are under common ownership and regulated by the
same staff in NYSE Regulation.
With certain exceptions noted below, Part 8 of the Company Guide is
generally not applicable to asset-backed issuers and other passive
business organizations (such as royalty trusts) or to derivatives and
special purpose securities listed pursuant to Exchange Rules 1000, and
1200 and Sections 106, 107 and 118B as well as to issuers that only
have debt or preferred stock listed on the Exchange. However, to the
extent Rule 10A-3 under the Act requires such issuers to comply with
Section 803 of the Company Guide, the Exchange proposes to amend
Sections 801(c) and 801(g) to clarify that such issuers must also
comply with new Sections 810(b) and 810(c). Because such issuers need
only comply with Section 803 to the extent required by Rule 10A-3 under
the Act, the Exchange will be able to obtain all relevant information
to
[[Page 7660]]
monitor their compliance via the submissions required by Sections
810(b) and 810(c). In the Exchange's view, it is therefore not
necessary to subject such issuers to Section 810(a). Section 801(d)
would be amended to clarify that registered management investment
companies (including closed-end funds and open-end funds) would be
subject to proposed Section 810. Section 801(f) would be amended to
make clear that foreign issuers would be subject to Section 810,
notwithstanding any exemptions from the requirements of Part 8 they may
receive pursuant to Section 110.
The Exchange also proposes to amend Section 801 to delete the text
which provides that each listed company must provide prompt
notification to the Exchange after an executive officer of the listed
company becomes aware of any material noncompliance by the listed
company with the applicable requirements specified or referenced in
Part 8. This text would be redundant upon adoption of proposed Section
810(b), which contains a comparable requirement that the Exchange be
provided with prompt notification of any noncompliance with the
applicable provisions of Part 8 of the Company Guide, although Section
810(b) will require that a company's CEO provide this notification
while the current rule only states that it be provided by the listed
issuer. The Exchange proposes to delete a similar redundant
notification requirement from Section 802(b).
The Exchange proposes to amend Section 801(d) to correct an
erroneous cross-reference. The reference to Section 803B(5) is amended
to refer to Section 803B(4), which is the section containing the
provision referenced in Section 801(d) (i.e., requiring audit
committees for investment companies to establish procedures for the
confidential, anonymous submission of concerns regarding questionable
accounting or auditing matters by employees of the investment adviser,
administrator, principal underwriter, or any other provider of
accounting related services for the investment company, as well as
employees of the investment company). Also, the Exchange proposes to
amend Section 801(d) to clarify that, in addition to Section 803B(1) as
the rule currently states, closed end funds are subject to Section
803B(4) and to any of the other provisions of Section 803 to the extent
required by Rule 10A-3 under the Exchange Act.
Finally, the Exchange proposes to amend Section 803(B)(1)(b) to
correct an obsolete reference. Specifically, the Exchange proposes to
delete the reference to Independence Standards Board Standard 1 and
replace it with a reference to The Public Company Accounting Oversight
Board Rule 3526 which has superseded the deleted text.\4\
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\4\ See Securities Exchange Act Release No. 58415 (August 22,
2008), 73 FR 50843 (August 28, 2008) (PCAOB-2008-03).
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The Exchange proposes to implement the changes discussed herein on
February 4, 2015.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) \5\ of the Act, in general, and furthers the
objectives of Section 6(b)(5) \6\ of the Act, in particular in that it
is designed to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
The Exchange believes that the proposed amendment is consistent with
the investor protection objectives of the Act in that its purpose is to
enable the Exchange's regulatory staff to more effectively monitor
listed companies' compliance with the Exchange's corporate governance
requirements as an integral part of the Exchange's responsibilities as
a self-regulatory organization and to encourage companies to focus more
thoroughly on their compliance with the applicable requirements.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act. The Exchange notes that the
proposed amendments to Part 8 of the Company Guide are comparable in
substance to Section 303A.12 of the NYSE Listed Company Manual and are
designed to permit the Exchange's regulatory staff to more effectively
monitor listed companies' compliance with the Exchange's corporate
governance requirements. Because the purpose of the proposed amendment
is to adopt corporate governance affirmation requirements comparable to
those of the NYSE, the Exchange does not believe that the proposed rule
change will impose any burden on competition.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, 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 and Rule 19b-
4(f)(6) thereunder.\9\
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\7\ 15 U.S.C. 78s(b)(3)(A)(iii).
\8\ 17 CFR 240.19b-4(f)(6).
\9\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the 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.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \10\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \11\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has asked the Commission to waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The Exchange
believes that the proposal will enable its regulatory staff to more
effectively monitor listed companies' compliance with the Exchange's
corporate governance requirements and will also encourage companies to
focus more thoroughly on their fulfillment of these requirements. The
Commission believes that advancing these goals benefits investors and
serves the public interest by helping assure that listed companies
adhere to sound governance practices. The Commission further notes that
the Exchange's proposed approach to monitoring listed companies'
[[Page 7661]]
compliance is comparable, though not identical, to the approach used by
the New York Stock Exchange. Thus the Commission believes that waiving
the 30-day operative delay is consistent with the protection of
investors and the public interest. Therefore, the Commission hereby
waives the operative delay and designates the proposed rule change
operative upon filing.\12\
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\10\ 17 CFR 240.19b-4(f)(6).
\11\ 17 CFR 240.19b-4(f)(6)(iii).
\12\ For purposes only of waiving the 30-day operative delay,
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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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \13\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\13\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEMKT-2015-09 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEMKT-2015-09. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the NYSE's principal office and on its
Internet Web site at www.nyse.com. 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-NYSEMKT-2015-09 and should be submitted on or before
March 4, 2015.
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\14\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
Brent J. Fields,
Secretary.
[FR Doc. 2015-02747 Filed 2-10-15; 8:45 am]
BILLING CODE 8011-01-P