Release No. 34-5405

November 23, 1956. 

Adoption of Amendment to Rule X-12F-2 under the Securities and Exchange Act of 1934.

Statement of the Commission

On August 1, 1956, the Securities and Exchange Commission published a proposal to amend Rule X-12F-2 under the Securities Exchange Act of 1934.  The Commission has considered all the views and comments received on the proposal and has adopted the amendment in the form stated below.

Rule X-12F-2 deals with the continuation of unlisted trading privileges granted to a security pursuant to Section 12(f) of the act when changes occur with respect to the security.  Under the amended rule securities which are also fully listed and registered on another exchange are dealt with separately in a new paragraph (a)(1) under which continuation of unlisted trading privileges will depend upon whether or not the listing on the exchange where the security is fully listed can continue without a new application for registration of the security under the Securities Exchange Act.

Before the amendment, the rule provided that a security admitted to unlisted trading privileges would be deemed to be the security theretofore admitted to such privileges notwithstanding specified changes, including changes in the par value, the number of shares authorized or the number of shares outstanding.  Under paragraph (a)(2) of the amended rule if any of such changes occur with respect to a security which is not also fully listed and registered on another exchange, and such change is accompanied by a major change in the capitalization of the issuer as defined in the rule, the unlisted trading privileges will continue only if the Commission finds that, notwithstanding the change, the security is substantially equivalent to the security theretofore admitted to unlisted trading privileges.  A major change in capitalization is defined in paragraph (a)(3) of the rule to mean one where, by reason of one or more mergers, consolidations, acquisitions of assets or securities, or similar transactions (not including a sale of securities for cash, a stock dividend or a stock split) the number of outstanding shares of stock of the issuer has been increased by more than 100% within any 12 consecutive calendar months.  Paragraph (a)(2) provides for notice by the exchange on Form 27 where any change of the type enumerated occurs, unless an application is filed pursuant to paragraph (b) of the rule.

Paragraph (b) of the rule still provides that an exchange may file an application requesting the Commission to make the determination that in spite of any particular change the security shall be deemed to be substantially equivalent to the security previously admitted to unlisted trading privileges.  The only changes made in paragraph (b) are those necessary to conform its provisions to paragraph (a) as amended.

Statutory Basis

The Securities and Exchange Commission, acting pursuant to the provisions of the Securities Exchange Act of 1934, particularly Sections 12(f) and 23(a) thereof, and deeming each action necessary and appropriate in the public interest and to carry out its functions under the act, hereby amends Rule X-12F-2 as stated below.

Text of Rule as Amended

[Text omitted]

Effective Date

This amendment shall become effective January 2, 1957.

By the Commission.