[Federal Register Volume 62, Number 241 (Tuesday, December 16, 1997)]
[Notices]
[Pages 65836-65838]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32750]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39412; File No. SR-Amex-97-42]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by
the American Stock Exchange, Inc. Providing for the Waiver of
Shareholder Approval as a Prerequisite to Certain Issuances of
Securities and the Removal of the Term ``Backdoor Listing'' From the
Exchange's Company Guide
December 8, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on November 3, 1997, the
American Stock Exchange, Inc. (``Amex'' 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 December 5, 1997, the Exchange filed
with the Commission Amendment No. 1 to the proposed rule change.\2\ 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. Sec. 78s(b)(1).
\2\ Amendment No. 1 corrected a drafting error that
inadvertently omitted Section 142 of the Exchange's Company Guide
from the proposed rule change provision that would eliminate the
term ``backdoor listing.'' See Letter from Claudia Crowley, Special
Counsel, Legal & Regulatory Policy, Exchange, to Michael L. Loftus,
Attorney, Division of Market Regulation, Commission, dated December
3, 1997.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange seeks to amend Section 710 of its Company Guide to
provide for the waiver of shareholder approval as a prerequisite to
certain issuances of securities, when obtaining such approval would
seriously jeopardize the financial viability of the issuer. The
Exchange also seeks to revise Sections 142, 341, 713, and 1003 of its
Company Guide to eliminate the term ``backdoor listing.''
[[Page 65837]]
The text of the proposed rule change is available at the Office of
the Secretary, the Exchange, and at the Commission.
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 Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange, along with the New York Stock Exchange (``NYSE'') and
The Nasdaq Stock Market, Inc. (``Nasdaq''), maintains guidelines
requiring shareholder approval for certain issuances of securities. The
Exchange's guidelines are set forth in Sections 711-713 of the
Exchange's Company Guide. These requirements typically apply to the
issuance of securities in connection with management stock option
plans, large acquisitions, or discounted private placements involving
the issuance of 20% or more of the issuer's shares. Because the process
of obtaining shareholder approval may be time-consuming, the Exchange
has long observed an unwritten policy allowing the waiver of the
shareholder approval requirement in circumstances where the very
process of obtaining shareholder approval would seriously jeopardize
the issuer's ability to survive. The Exchange notes that the rules of
the NYSE and Nasdaq specifically provide for such an exception.
To conform its rules to those of the other marketplaces, the
Exchange proposes to amend Section 710 of the Company Guide to provide
that waivers of the shareholder approval required for certain issuances
of securities may be granted, upon written application to the Exchange
when: (i) The delay in securing shareholder approval would seriously
jeopardize the financial viability of the issuer; (ii) reliance by the
issuer on this exception is expressly approved by the audit committee
of the issuer's board of directors or a comparable body; and (iii) the
issuer mails a letter to all shareholders, at least ten days before the
shares are to be issued, describing the transaction, alerting the
shareholders to its omission to seek the shareholder approval that
would otherwise be required, and indicating that the audit committee of
the issuer's board of directors or a comparable body has expressly
approved the exception.
In addition, the Exchange proposes to eliminate the term ``backdoor
listing'' from Section 341 of the Company Guide and certain related
provisions.\3\ The Exchange currently uses the term to describe a
merger between a listed and unlisted company, the net effect of which
is so substantial that the Exchange considers it appropriate to
evaluate the listing eligibility of the surviving entity under the
Exchange's original listing guidelines. The Exchange will retain the
substance of the affected Sections, but eliminate the term ``backdoor
listing'' because the Exchange believes the phrase creates an
undesirable image. The Exchange contends that Section 341 actually
enhances regulation by requiring a substantially changed company to
meet original listing guidelines in order to remain listed.
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\3\ Conforming changes are also proposed to be made to Sections
142, 713 and 1003 of the Company Guide.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\4\ in general, and furthers the
objectives of Section 6(b)(5),\5\ in particular, in that it is 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 to protect investors and the public
interest.
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\4\ 15 U.S.C. Sec. 78f(b).
\5\ 15 U.S.C. Sec. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe the proposed rule change will impose
any inappropriate burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange did not solicit or receive written comments with
respect to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change: (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 from December 5, 1997,
the date on which it was filed,\6\ and the Exchange provided the
Commission with written notice of its intent to file the proposed rule
change at least five business days prior to the filing date, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \7\ and
Rule 19b-4(e)(6) \8\ thereunder.
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\6\ The proposed rule change filing is deemed filed as of the
date Amendment No. 1 was received by the Commission.
\7\ 15 U.S.C. Sec. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(e)(6).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate 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.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549.
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 persons, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. Sec. 552, will be available for inspection and copying in
the Commission's Public Reference Section, 450 Fifth Street, NW.,
Washington, DC 20549. Copies of such filing will also be available for
inspection and copying at the principal office of the Exchange. All
submissions should refer to File No. SR-Amex-97-42 and should be
submitted by January 6, 1998.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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[[Page 65838]]
Jonathan G. Katz,
Secretary.
[FR Doc. 97-32750 Filed 12-15-97; 8:45 am]
BILLING CODE 8010-01-M