[Federal Register Volume 82, Number 70 (Thursday, April 13, 2017)]
[Notices]
[Pages 17919-17921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-07455]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80398; File No. SR-NYSE-2017-15]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Remove Section 204.25 (Treasury Stock Changes) From the NYSE Listed
Company Manual
April 7, 2017.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on March 27, 2017, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to remove Section 204.25 (``Treasury Stock
Changes'') from the NYSE Listed Company Manual (the ``Manual''). 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to remove Section 204.25 (``Treasury Stock
Changes'') from the Manual.
Section 204.25 provides that if issued and listed stock of a listed
company is reacquired or disposed of, directly or indirectly, for the
account of the company, the Exchange is required to receive notice of
such transaction within ten days after the close of the fiscal quarter
in which it occurs. This notice need state only the total number of
shares reacquired (shares of a company's own stock acquired by the
company and held for its own account are typically referred to as
``treasury shares'') or disposed of during the quarter and the balance
held by the company at the end of the quarter. If, during such quarter,
there were both reacquisitions and dispositions, the total amount
reacquired and the total amount disposed of should be stated. The only
purposes for which the Exchange generally uses treasury share
information is for determining compliance with its shareholder approval
requirements in relation to share issuances and for calculating annual
listing fees.
The Exchange believes it is unnecessary to require listed companies
to submit this information on a quarterly basis as it has not regularly
relied on this information for any regulatory purpose for many
years.\4\ In the event that the Exchange needs information about a
listed company's treasury stock position, it will either request that
information from the company in question or it will obtain it by
reviewing the company's financial statements included in its Form 10-K
or Form 10-Q. In addition, the Exchange notes that the primary purpose
for which it uses treasury share data is for purposes of analyzing
transactions under Sections 312.03 (``Shareholder Approval'') and
303A.08 (``Shareholder Approval of Equity Compensation
[[Page 17920]]
Plans'').\5\ To that end, the Exchange notes that Part 1 of Section
703.01 of the Manual provides that, in the event a company is issuing
shares from treasury in a transaction or series of related
transactions, it must notify the Exchange in writing in advance of the
issuance, indicating whether shareholder approval is required pursuant
to Sections 303A.08 or 312.03 and, if required, the date such
shareholder approval was obtained.\6\ In addition, the Exchange notes
that the form of subsequent listing application companies must complete
whenever they apply to list additional shares requires the company to
provide information about the total number of shares outstanding at the
time of entering into a definitive agreement in connection with the
applicable transaction, as well as the number of shares held in
treasury at that time. This requirement enables the Exchange to
calculate the percentage of the company's then outstanding shares
represented by the shares issued in the transaction and thereby ensure
that companies are complying with the shareholder approval requirements
of Section 312.03.
---------------------------------------------------------------------------
\4\ A listed company's treasury stock position was significant
at one time, as listed companies were able to reissue treasury
shares without giving rise to any shareholder approval requirements
under Section 312.03 of the Manual. Since the adoption of Section
312.04(j), issuances of treasury shares are treated like any other
issuance of common stock for purposes of Section 312.03. See
Securities Exchange Act Release No. 54999 (December 21, 2006); 72 FR
170 (January 3, 2007) (SR-NYSE-2006-30).
\5\ Exchange rules do not impose any substantive restrictions on
listed companies' ability to repurchase their own stock.
\6\ If the issuance involves both shares issued from treasury
and newly issued, the company may include this notification in the
subsequent listing application that the company files to list the
newly issued shares.
---------------------------------------------------------------------------
Section 902.03 of the Manual provides that companies must pay
annual listing fees on all shares outstanding, including treasury
shares. The Exchange bills companies for annual fees each year based on
the number of shares outstanding as of the previous December 31
(including treasury shares) as reported to the Exchange for that
purpose by the company's transfer agent. As such, the information
currently provided to the Exchange by companies pursuant to Section
204.25 with respect to changes in companies' treasury share positions
is not needed in connection with the Exchange's billing procedures.
The Exchange notes that it does not rely on treasury share
reporting under Section 204.25 in monitoring compliance with its
continued listing standards with respect to market capitalization and
publicly-held shares. Rather, the Exchange relies on the number of
shares outstanding as reported on a quarterly basis [sic] on the cover
of a company's annual report filed with the SEC and (where applicable)
Form 10-Qs. We also check these requirements against information
provided by the market data vendors.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\7\ in general, and furthers the
objectives of Section 6(b)(5) \8\ 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
and is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers. The Exchange believes the proposed rule
change is consistent with these goals in that it is designed to protect
the public interest, because the information gathered pursuant to the
current treasury stock reporting requirement can be obtained directly
from the applicable listed company or from its public filings on an as-
needed basis and is also provided in connection with every subsequent
listing application.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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 purposes of the Act. The proposed rule change is
designed to remove a treasury share reporting requirement imposed on
all listed companies because the Exchange can obtain that information
from public disclosures or from the applicable listed company or from
its public filings on an as-needed basis. As such, the proposed
amendment will not 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 \9\ and Rule 19b-4(f)(6) thereunder.\10\
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)(iii) thereunder.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6). The Commission notes that 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.
---------------------------------------------------------------------------
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) \11\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
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-NYSE-2017-15 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-NYSE-2017-15. 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
[[Page 17921]]
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
principal office of the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-NYSE-2017-15 and should be submitted on or before May 4,
2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-07455 Filed 4-12-17; 8:45 am]
BILLING CODE 8011-01-P