[Federal Register: October 1, 2004 (Volume 69, Number 190)]
[Notices]
[Page 58987-58989]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01oc04-120]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-50452; File No. SR-NYSE-2004-49]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the New York Stock Exchange, Inc. Relating to Procedures for
Companies That Fail To File Annual Reports in a Timely Manner
September 27, 2004.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on August 19, 2004, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
items I, II, III below, which items have been prepared by the Exchange.
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\ 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 proposed rule change amends the Exchange's Listed Company
Manual to include procedures applicable to companies that fail to file
annual reports with the Commission in a timely manner. The text of the
proposed rule change is set forth below. Additions are in italics.
Listed Company Manual
* * * * *
802.01E SEC Annual Report Timely Filing Criteria
A company that fails to file its annual report (Forms 10-K, 10-KSB,
20-F, 40-F or N-CSR) with the SEC in a timely manner will be subject to
the following procedures:
Once the Exchange identifies that a company has failed to file a
timely periodic annual report with the SEC by the later of (a) the date
that the annual report was required to be filed with the SEC by the
applicable form or (b) if a Form 12b-25 was timely filed with the SEC,
the extended filing due date for the annual report, the Exchange will
notify the company in writing of its status. For purposes of this Para.
802.01E, the later of these two dates will be referred to as the
``Filing Due Date.''
Within five days of receipt of this notification, the company will
be required to (a) contact the Exchange to discuss the status of the
annual report filing, and (b) if it has not already done so, issue a
press release disclosing the status of the filing. If the company fails
to issue this press release in a timely manner, the Exchange will
itself issue a press release stating that the company has failed to
timely file its annual report with the SEC.
During the nine-month period from the Filing Due Date, the Exchange
will monitor the company and the status of the filing, including
through contact with the company, until the annual report is filed. If
the company fails to file the annual report within nine months from the
Filing Due Date, the Exchange may, in its sole discretion, allow the
company's securities to be traded for up to an additional three-month
trading period depending on the company's specific circumstances. If
the Exchange determines that an additional trading period of up to
three months is not appropriate, suspension and delisting procedures
will commence in accordance with the procedures set out in Para. 804.00
of the Listed Company Manual. A company is not eligible to follow the
procedures outlined in Paras. 802.02 and 802.03 with respect to this
criteria.
In determining whether an additional up to three-month trading
period is appropriate, the Exchange will consider the likelihood that
the filing can be made during the additional period, as well as the
company's general financial status, based on information provided by a
variety of sources, including the company, its audit committee, its
outside auditors, the staff of the SEC and any other regulatory body.
The Exchange strongly encourages companies to provide ongoing
disclosure on the status of the annual report filing to the market
through press releases, and will also take the frequency and detail of
such information into account in determining whether an additional
three-month trading period is appropriate.
If the Exchange determines that an additional up to three-month
trading period is appropriate and the company fails to file its
periodic annual report by the end of the additional period, suspension
and delisting procedures will commence in accordance with the
procedures set out in Para. 804.00.
Note that if, at any time, the Exchange deems it necessary or
appropriate in the public interest or for the protection of investors,
trading in any security can be suspended immediately, and, in
accordance with the procedures set out in Para. 804.00, application
made to the SEC to delist the security.
* * * * *
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 NYSE 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 and is set forth in Sections A, B, and C below.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to codify existing procedures followed
where companies fail to satisfy the Commission's filing requirements
for annual reports on Forms 10-K, 10-KSB, 20-F, 40-F, or N-CSR in a
timely manner.
The Exchange closely monitors whether listed companies have filed
their annual reports with the Commission as part of its continued
listing program. At any given point over the past four years, no more
than approximately two dozen NYSE-listed companies failed to file their
annual reports with the Commission by the later of the date the filing
was required to be made or, if the company filed a Form 12b-25 in a
timely manner, by the extended due date. Most of these companies
subsequently filed the required annual report within three to four
months of the filing due date, and the vast majority of the remaining
companies complied within six months of the filing due date.
Cumulatively, approximately 13 companies took more than six months to
make their filings over the past four years.
In all cases where a company failed to file its annual report by
the filing due date, Exchange staff held regular discussions and
meetings with each company's management, directors, regulators and
advisors to monitor the status of the annual report filing and to
determine whether to allow the company to continue to trade despite the
continued failure to file an annual report with the Commission. In
several of these situations, the Exchange ultimately moved to suspend
the company's trading and delist its securities due to the length of
time that passed without the company providing
[[Page 58988]]
audited financial statements to the marketplace.
In order to formalize the process that the Exchange currently
follows when a company has failed to file its annual report on a timely
basis, the Exchange proposes to amend Section 802.01 of the Listed
Company Manual as described below.
Proposed Section 802.01E
A company that fails to file its annual report (Forms 10-K, 10-KSB,
20-F, 40-F or N-CSR) with the Commission in a timely manner will be
subject to the following procedures:
Once the Exchange identifies that a company has failed to file a
timely periodic annual report with the Commission by the later of (a)
the date that the annual report was required to be filed with the
Commission by the applicable form or (b) if a Form 12b-25 was timely
filed with the Commission, the extended filing due date for the annual
report, the Exchange would notify the company in writing of its status.
The later of these two dates would be referred to as the ``Filing Due
Date.''
Within five days of receipt of this notification, the company would
be required to (a) contact the Exchange to discuss the status of the
annual report filing, and (b) if it has not already done so, issue a
press release disclosing the status of the filing. If the company fails
to issue this press release in a timely manner, the Exchange would
itself issue a press release stating that the company has failed to
timely file its annual report with the Commission.
During the nine-month period from the Filing Due Date, the Exchange
would monitor the company and the status of the filing, including
through contact with the company, until the annual report is filed. If
the company fails to file the annual report within nine months from the
Filing Due Date, the Exchange would be permitted, in its sole
discretion, to allow the company's securities to be traded for up to an
additional three-month trading period depending on the company's
specific circumstances. If the Exchange determines that an additional
trading period of up to three months is not appropriate, suspension and
delisting procedures would commence in accordance with the procedures
set out in Para. 804.00 of the Listed Company Manual. A company would
not be eligible to follow the procedures outlined in Paras. 802.02 and
802.03 with respect to this criteria.
In determining whether an additional up to three-month trading
period is appropriate, the Exchange would consider the likelihood that
the filing could be made during the additional period, as well as the
company's general financial status, based on information provided by a
variety of sources, including the company, its audit committee, its
outside auditors, the staff of the Commission and any other regulatory
body. The Exchange strongly encourages companies to provide ongoing
disclosure on the status of the annual report filing to the market
through press releases, and would also take the frequency and detail of
such information into account in determining whether an additional
three-month trading period is appropriate.
If the Exchange determined that an additional up to three-month
trading period was appropriate and the company failed to file its
periodic annual report by the end of the additional period, suspension
and delisting procedures would commence in accordance with the
procedures set out in Para. 804.00.
Note that if, at any time, the Exchange deemed it necessary or
appropriate in the public interest or for the protection of investors,
trading in any security could be suspended immediately, and, in
accordance with the procedures set out in Para. 804.00, application
made to the Commission to delist the security.
2. Statutory Basis
The Exchange believes that the basis for this proposed rule change
is the requirement under Section 6(b)(5) \3\ of the Act that an
exchange have rules that are designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to remove impediments to, and perfect the
mechanism of a free and open market and, in general, to protect
investors and the public interest; and are not designed to permit
unfair discrimination between customers, issuers, brokers, or dealers.
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\3\ 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 purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 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 90 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 the Exchange consents, the Commission will:
A. By order approve the proposed rule change, or
B. Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposal 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 e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSE-2004-49 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington, DC 20549-0609.
All submissions should refer to File Number SR-NYSE-2004-49. This
file number should be included on the subject line if e-mail 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 inspection
and copying in the Commission's Public Reference Room. Copies of the
filing also will be available for inspection and copying at the
principal offices of the NYSE. All comments received will be posted
[[Page 58989]]
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-2004-49 and should be submitted on or before
October 22, 2004.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\4\
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\4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E4-2450 Filed 9-30-04; 8:45 am]
BILLING CODE 8010-01-P