80 FR 9776 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Section 402.05 of the NYSE Listed Company Manual To Clarify That Listed Companies Soliciting Proxy Material Through Brokers or Other Entities Must Comply With SEC Rule 14a-13

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 36 (February 24, 2015)

[Federal Register Volume 80, Number 36 (Tuesday, February 24, 2015)]
[Notices]
[Pages 9776-9778]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-03658]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74287; File No. SR-NYSE-2015-07]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Section 402.05 of the NYSE Listed Company Manual To Clarify 
That Listed Companies Soliciting Proxy Material Through Brokers or 
Other Entities Must Comply With SEC Rule 14a-13

February 18, 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, New York Stock Exchange LLC (``NYSE'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``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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[[Page 9777]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Section 402.05 of the NYSE Listed 
Company Manual (the ``Manual''). As amended, the rule will clarify that 
listed companies soliciting proxy material through brokers or other 
entities must comply with Rule 14a-13 (``SEC Rule 14a-13'') under the 
Act. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Section 402.05 of the Manual to 
clarify that listed companies soliciting proxy material through brokers 
or other entities must comply with SEC Rule 14a-13.
    SEC Rule 14a-13 sets forth procedures that must be followed by 
listed companies that intend to solicit proxies from holders of shares 
entitled to vote at a meeting, where such shares are held of record by 
a broker or other entity. Specifically, Rule 14a-13 mandates that, 
among other things, listed companies must inquire of the record holder 
whether other persons are beneficial owners of the subject shares and, 
if so, how many copies of the relevant proxy or other soliciting 
materials must be provided to supply such materials to the beneficial 
owners. SEC Rule 14a-13 further sets forth the timeline on which 
inquiry of the record holder must be made.
    SEC Rule 14a-13 requires listed companies to make the 
aforementioned inquiry at least 20 business days prior to the record 
date for the relevant shareholder meeting, or (i) if such inquiry is 
impracticable 20 business days prior to the record date of a special 
meeting, as many days before the record date of such meeting as is 
practicable or, (ii) if consents or authorizations are solicited, and 
such inquiry is impracticable 20 business days before the earliest date 
on which they may be used to effect corporate action, as many days 
before that date as is practicable, or (iii) at such later time as the 
rules of a national securities exchange on which the class of 
securities in question is listed may permit for good cause shown.
    In its current form, Section 402.05 of the Manual is intended to 
incorporate the requirements of SEC Rule 14a-13 with respect to the 
obligations of a listed company to make inquiry of brokers in advance 
of a shareholder meeting. Indeed, Section 402.05 makes specific 
reference to the Commission's rule requiring issuers to distribute 
broker search cards 20 business days in advance of a record date. 
However, Section 402.05 of the Manual in its current form also 
separately states that a listed company's inquiry of brokers must be 
made not less than 10 days in advance of a record date. The Exchange 
imposed this absolute 10 day minimum in recognition of the fact that 
the provisions of SEC Rule 14a-13 allow, in certain limited 
circumstances, for a listed company to inquire of brokers less than 20 
days in advance of a record date for a special meeting (but not for an 
annual shareholders' meeting). While providing for limited exceptions 
to the 20-day advance inquiry requirement, SEC Rule 14a-13 does not 
explicitly establish an absolute minimum number of days that the 
inquiry must be made in advance of the record date.
    Based on conversations with market participants and the SEC staff, 
the Exchange has become concerned that Section 402.05 of the Manual, as 
currently drafted, may lead to confusion with respect to what is 
required of listed companies making inquiry of brokers in advance of a 
shareholder meeting. First, despite making specific reference to the 
Commission's 20-day advance inquiry rule (i.e., SEC Rule 14a-13), the 
Exchange believes Section 402.05 could be read as requiring only a 10-
day advance inquiry. Second, the Exchange understands that while Rule 
14a-13(a)(3)(i) and (ii) codifies two exceptions to the 20-day advance 
inquiry requirement, any company seeking to rely on these exceptions in 
the limited, if any, circumstances in which the SEC would not object is 
not prohibited from conducting its inquiry less than 10 days in advance 
of the record date. Third, the Exchange has not adopted a rule, as 
contemplated by Rule 14a-13(a)(3)(iii), that permits issuers to show 
``good cause'' for why they cannot comply with Rule 14a-13's advance 
inquiry requirement. Accordingly, the Exchange believes that the 10-day 
period presently described in Section 402.05 is in conflict with the 
requirements of Rule 14a-13. Therefore, the Exchange proposes to revise 
Section 402.05 of the Manual to clarify that listed companies 
soliciting proxy material through brokers or other entities must comply 
with the provisions of SEC Rule 14a-13 and that the Exchange does not 
impose any additional requirements with respect to the relevant inquiry 
of brokers. Further, the Exchange proposes to delete the requirement in 
Section 402.05 of the Manual that listed companies immediately advise 
the Exchange if it becomes impossible for them to make an inquiry of 
brokers at least ten days before a record date. Given that listed 
companies are required to comply with SEC Rule 14a-13 and the Exchange 
has no authority to waive compliance with such rule, the Exchange 
believes that such notice requirement is unnecessary.
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) of the Act,\5\ 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 Section 6(b)(5) because it 
eliminates potential confusion between the requirements of SEC Rule 
14a-13 and Exchange rules and clarifies that SEC Rule 14a-13 is the 
ultimate authority with respect to requirements related to inquiry of 
brokers in advance of a shareholder meeting.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 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 proposed

[[Page 9778]]

rule change does not significantly affect competition, but rather 
simply seeks to align the Exchange rule with SEC Rule 14a-13 with 
respect to requirements related to inquiry of brokers in advance of a 
shareholder meeting.

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 \6\ and Rule 19b-4(f)(6) thereunder.\7\ 
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, it has become effective pursuant to 
Section 19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\
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    \6\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \7\ 17 CFR 240.19b-4(f)(6).
    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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 satisfied this requirement.
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    At any time within 60 days of the filing of the 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) of the Act \10\ to determine whether the proposed 
rule change should be approved or disapproved.
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    \10\ 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-NYSE-2015-07 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2015-07. 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 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-2015-07 and should be 
submitted on or before March 17, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-03658 Filed 2-23-15; 8:45 am]
BILLING CODE 8011-01-P