Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Amending Section 302.00 of the NYSE Listed Company Manual

<NOTICE> SECURITIES AND EXCHANGE COMMISSION <DEPDOC>[Release No. 34-103244; File No. SR-NYSE-2025-20]</DEPDOC> <SUBJECT>Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Amending Section 302.00 of the NYSE Listed Company Manual</SUBJECT> <DATE>June 12, 2025.</DATE> Pursuant to Section 19(b)(1)  <SU>1</SU> <FTREF/> of the Securities Exchange Act of 1934 (“Act”)  <SU>2</SU> <FTREF/> and Rule 19b-4 thereunder, <SU>3</SU> <FTREF/> notice is hereby given that on June 6, 2025, New York Stock Exchange LLC (“NYSE” or the “Exchange”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I, II, and III 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. <FTNT> <SU>1</SU>  15 U.S.C. 78s(b)(1). </FTNT> <FTNT> <SU>2</SU>  15 U.S.C. 78a. </FTNT> <FTNT> <SU>3</SU>  17 CFR 240.19b-4. </FTNT> <HD SOURCE="HD1">I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change</HD> The Exchange proposes to amend Section 302.00 of the NYSE Listed Company Manual (“Manual”) to exempt closed-end funds registered under the 1940 Act from the requirement to hold annual shareholder meetings. The proposed rule change is available on the Exchange's website at <E T="03">www.nyse.com,</E> at the principal office of the Exchange, and at the Commission's Public Reference Room. <HD SOURCE="HD1">II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change</HD> 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. <HD SOURCE="HD2">A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change</HD> <HD SOURCE="HD3">1. Purpose</HD> Closed-end funds (“CEFs”) are a category of investment companies that are registered under the Investment Company Act of 1940 (“1940 Act”)  <SU>4</SU> <FTREF/> and listed by the NYSE under Section 102.04A of the Manual. Section 302.00 of the Manual provides that companies listing common stock or voting preferred stock and their equivalents are required to hold an annual shareholders' meeting for the holders of such securities during each fiscal year. <FTREF/> <SU>5</SU> CEFs are presently required to comply with the annual shareholder meeting requirement. The Exchange now proposes to amend Section 302.00 of the Manual to specify that newly listed CEFs would be exempt from the annual meeting requirement. <SU>6</SU> <FTREF/> Any CEF listed prior to approval of the proposal would remain subject to the Exchange's annual meeting requirement. The Exchange believes that providing an exemption to the annual shareholder meeting requirement exclusively to newly-listed CEFs achieves a balance by maintaining existing voting rights for shareholders in established funds while giving new funds an option to avoid the potentially costly and detrimental outcomes often associated with annual shareholder meetings for listed CEFs. Although the proposal would eliminate the Exchange requirement for annual shareholder meetings for newly-listed CEFs, new funds would still have the option to voluntarily include annual meeting requirements in their own bylaws if they choose to do so. <FTNT> <SU>4</SU>  15 U.S.C. 80a-1 <E T="03">et seq.</E> </FTNT> <FTNT> <SU>5</SU>  Section 302.00 of the Manual exempts from this requirement companies whose only securities listed on the Exchange are non-voting preferred and debt securities, passive business organizations (such as royalty trusts), or securities listed pursuant to Rule 5.2(j)(2) (Equity Linked Notes), Rule 5.2(j)(3) (Investment Company Units), Rule 5.2(j)(4) (Index-Linked Exchangeable Notes), Rule 5.2(j)(5) (Equity Gold Shares), Rule 5.2(j)(6) (Equity-Index Linked Securities, Commodity-Linked Securities, Currency-Linked Securities, Fixed Income Index-Linked Securities, Futures-Linked Securities and Multifactor Index-Linked Securities), Rule 5.2(j)(8) (Exchange-Traded Fund Shares), Rule 8.100 (Portfolio Depositary Receipts), Rule 8.200 (Trust Issued Receipts), Rule 8.201 (Commodity-Based Trust Shares), Rule 8.202 (Currency Trust Shares), Rule 8.203 (Commodity Index Trust Shares), Rule 8.204 (Commodity Futures Trust Shares), Rule 8.300 (Partnership Units), Rule 8.400 (Paired Trust Shares), Rule 8.600 (Managed Fund Shares), Rule 8.601 (Active Proxy Portfolio Shares), Rule 8.700 (Managed Trust Securities), and 8.900 (Managed Portfolio Shares). </FTNT> <FTNT> <SU>6</SU>  The Exchange previously submitted a similar proposed rule change that proposed to exempt all closed-end funds from the annual shareholder meeting requirement. See Securities Exchange Act No. 100460 (July 3, 2024) 89 FR 56447 (July 9, 2024) (SR-NYSE-2024-35) (Notice of Filing of a Proposed Rule Change Amending Section 302.00 of the NYSE Listed Company Manual to Exempt Closed-End Funds Registered Under the Investment Company Act of 1940 From the Requirement to Hold Annual Shareholder Meetings) (the “Prior Proposal”). The Commission issued an order instituting proceedings to determine whether to approve or disapprove the Prior Proposal, but the Exchange ultimately withdrew the Prior Proposal before the Commission issued a final order. See Securities Exchange Act Nos. 101257 (October 4, 2024), 89 FR 82277 (October 10, 2024) (Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Amend Section 302.00 of the NYSE Listed Company Manual to Exempt Closed-End Funds Registered Under the Investment Company Act of 1940 From the Requirement to Hold Annual Shareholder Meetings) (the “Prior Proposal OIP”); 102324 (February 3, 2025) 90 FR 9176 (February 7, 2025) (Notice of Withdrawal of a Proposed Rule Change to Amend Section 302.00 of the NYSE Listed Company Manual to Exempt Closed-End Funds Registered Under the Investment Company Act of 1940 From the Requirement to Hold Annual Shareholder Meetings). </FTNT> The Exchange notes that, in addition to the listing under Section 102.04A of the Manual of CEFs registered under the 1940 Act, the Exchange also lists under Section 102.04B of the Manual business development companies (“BDCs”). A BDC is a closed-end management investment company that is registered under the Exchange Act and that has filed an election to be treated as a business development company under the 1940 Act. The Exchange does not at this time propose to provide an exemption from the annual meeting requirement of Section 302.00 to BDCs. <HD SOURCE="HD3">Background</HD> The Exchange notes that there are significant differences between CEFs and listed operating companies that justify exempting CEFs from the Exchange's annual meeting requirement. In particular, the Exchange notes that the 1940 Act includes specific requirements with respect to the election of directors by CEF shareholders, while there is no such requirement under federal law for listed operating companies. Specifically, Section 16(a) of the 1940 Act  <SU>7</SU> <FTREF/> specifies the right of CEF shareholders to elect directors as follows: <FTNT> <SU>7</SU>  15 U.S.C. 80a-16(a). </FTNT> <EXTRACT> No person shall serve as a director of a registered investment company unless elected to that office by the holders of the outstanding voting securities of such company, at an annual or a special meeting duly called for that purpose; except that vacancies occurring between such meetings may be filled in any otherwise legal manner if immediately after filling any such vacancy at least two-thirds of the directors then holding office shall have been elected to such office by the holders of the outstanding voting securities of the company at such an annual or special meeting. In the event that at any time less than a majority of the directors of such company holding office at that time were so elected by the holders of the outstanding voting securities, the board of directors or proper officer of such company shall forthwith cause to be held as promptly as possible and in any event within sixty days a meeting of such holders for the purpose of electing directors to fill any existing vacancies in the board of directors unless the Commission shall by order extend such period. The foregoing provisions of this subsection shall not apply to members of an advisory board. </EXTRACT> The Exchange also notes that the 1940 Act requires that directors who are not “interested persons”  <SU>8</SU> <FTREF/> (“1940 Act Interested Persons”) must comprise at least 40% of an investment company's board. <SU>9</SU> <FTREF/> In the Exchange's experience, a large majority of listed CEFs exceed this requirement by having boards on which more than 50% of members are not 1940 Act Interested Persons. <FTNT> <SU>8</SU>  The term “interested person” is defined in Section 2(a)(19) of the 1940 Act. </FTNT> <FTNT> <SU>9</SU>  15 U.S.C. 80a-2(a)(19). </FTNT> In addition to the director election provisions described above, the 1940 Act requires that a majority of directors who are not 1940 Act Interested Persons approve significant actions, such as approval of the investment advisory agreement between a CEF and its investment advisor. <SU>10</SU> <FTREF/> Specifically, the following types of actions require approval of a majority of a CEF's directors who are not 1940 ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 29k characters. 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