[Federal Register Volume 63, Number 182 (Monday, September 21, 1998)]
[Notices]
[Pages 50271-50272]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-25133]
[[Page 50271]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40433; File No. SR-EMCC-98-08]
Self-Regulatory Organizations; Emerging Markets Clearing
Corporation; Notice of Filing of a Proposed Rule Change Relating to the
Offering of Shares of Common Stock
September 11, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on August 17, 1998, Emerging
Markets Clearing Corporation (``EMCC'') 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
primarily by EMCC. The Commission is publishing this notice to solicit
comments from interested persons on the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
Under the proposed rule change, EMCC will reclassify 2,000 shares
of previously authorized EMCC common stock as Class A common stock
(``Class A stock'') and will create a second class of common stock. In
addition, EMCC will amend its shareholder agreement to reflect the
changes to its common stock.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, EMCC 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. EMCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of such
statements.\2\
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\2\ The Commission has modified the text of the summaries
prepared by EMCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
On March 2, 1998, the Commission authorized EMCC to issue 2,000
shares of common stock (``original stock'').\3\ On July 31, 1998, EMCC
filed an amendment to its certificate of incorporation to reclassify
the original stock as Class A stock and to authorize the issuance of
non-voting Class B stock. The creation and offering of the Class B
stock will permit EMCC to raise additional capital which EMCC will use
in part to fund the development of EMCC projects.
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\3\ Securities Exchange Act Release No. 39694 (March 2, 1998),
63 FR 10251 [File No. SR-EMCC-98-01].
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EMCC will offer shares of Class B stock to the same entities that
were offered the opportunity to purchase the original stock.\4\ The
purchase price of Class B stock is $1,000 per share with a minimum
purchase requirement of $25,000. EMCC will offer the Class B shares to
prospective buyers through an offering letter.\5\
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\4\ The original stock was offered to the entities that
contributed to the development fund for the organization and initial
operation of EMCC.
\5\ Each prospective purchase of the original stock was provided
with a copy of EMCC's Form CA-1 (excluding the confidential
documents). EMCC will provide the prospective purchasers of the
Class B stock with updates to the Form CA-1 as appropriate.
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The Class B stock is non-voting and is subject to repurchase upon
the determination of EMCC's Board. However, EMCC has no obligation to
repurchase Class B shares owned by a member that terminates its EMCC
membership prior to the repurchase of all Class B shares. All
purchasers of Class A and Class B stock will be required to enter into
an amended version of EMCC's shareholder agreement. No dividends will
be paid on either the Class A or Class B stock and shareholders may
sell or transfer their shares only in compliance with EMCC's
shareholder agreement.
EMCC's amended shareholder agreement will replace the shareholder
agreement written for the original offering.\6\ The changes to the
shareholder agreement will reflect (i) the creation and offering of the
Class B stock, (ii) the conditions under which EMCC may repurchase the
Class B stock, and (iii) the fact that EMTA has not yet been issued any
shares of EMCC stock. In addition, the amended shareholder agreement
will permit EMCC to issue EMTA 300 Class A shares prior to, concurrent
with, or after the closing of the issuance of Class A stock to all
other persons. A further modification will reflect that the issuance of
the original stock did not occur prior to the previously established
deadline of June 30, 1998, and that the issuance and sale of Class A
stock must be completed by December 31, 1998. EMCC contemplates issuing
the Class A and Class B stock on September 25, 1998. Each purchaser of
Class A or Class B shares will be obligated to enter into the amended
shareholder agreement.
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\6\ The signatories of the amended shareholder agreement are the
National Securities Clearing Corporation (``NSCC''), the
International Securities Markets Association (``ISMA''), and the
Emerging Markets Traders Association (``EMTA'').
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After the Class A stock has been issued, EMCC will amend its
articles of incorporation to permit the following actions to be taken
upon a two-thirds vote of the shareholders instead of the current
requirement of unanimity: (i) any amendment or change to EMCC's
certificate of incorporation; (ii) any adoption, amendment or repeal by
the shareholders of by-laws of the corporation; (iii) any repurchase of
any securities issued by the corporation; and (iv) any issuance of any
securities by the corporation.
EMCC believes the proposed rule change is consistent with the
requirements of Section 17A of the Act \7\ and the rules and
regulations thereunder because the additional capital raised by the
Class B offering will further EMCC's ability to provide for the prompt
and accurate clearance and settlement of emerging markets securities.
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\7\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition
EMCC does not believe that the proposed rule change will have an
impact on or impose a 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 relating to the proposed rule change have been
solicited or received. EMCC will notify the Commission of any written
comments received by EMCC.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Within thirty-five days of the date of publication of this notice
in the Federal Register or within such longer period (i) as the
Commission may designate up to ninety days of such date if it finds
such longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which EMCC consents, the Commission will:
(A) by order approve such proposed rule change or
(B) institute proceedings to determine whether the proposed rule change
should be disapproved.
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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. 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 person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Section, 450 Fifth Street, NW.,
Washington, DC 20549. Copies of such filing also will be available for
inspection and copying at the principal office of EMCC.
All submissions should refer to File No. SR-EMCC-98-08 and should
be submitted by October 13, 1998.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-25133 Filed 9-18-98; 8:45 am]
BILLING CODE 8010-01-M