8011-01p
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100460; File No. SR-NYSE-2024-35]
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 to
Exempt Closed-End Funds Registered Under the Investment Company Act of 1940 From
the Requirement to Hold Annual Shareholder Meetings
July 3, 2024.
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 June 21, 2024, New York Stock Exchange LLC
(“NYSE” or the “Exchange”) 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 by the self-regulatory organization. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested persons.
I.

Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed
Rule Change
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 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

15 U.S.C. 78s(b)(1).

17 CFR 240.19b-4.

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 the Statutory
Basis for, the Proposed Rule Change
1.

Purpose

Closed-end funds (“CEFs”) are a category of investment companies that are registered
under the Investment Company Act of 1940 (“1940 Act”)3 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.4 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 include CEFs among the categories of
issuers that are exempt from this requirement.
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

15 USC 80a-1 et seq.

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).

time propose to provide an exemption from the annual meeting requirement of Section 302.00 to
BDCs.
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 Act5
specifies the right of CEF shareholders to elect directors as follows:
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.
The Exchange also notes that the 1940 Act requires that directors who are not “interested
persons”6 (“1940 Act Interested Persons”) must comprise at least 40% of an investment

15 USC 80a-16(a).

The term “interested person” is defined in Section 2(a)(19) of the 1940 Act.

company’s board.7 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.
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.8
Specifically, the following types of actions require approval of a majority of a CEF’s directors
who are not 1940 Act Interested Persons : approval of advisory agreements;9 approval of
underwriting agreements;10 selection of independent public accountant;11 acquisition of
securities by a CEF from an underwriting syndicate of which the CEF’s advisor or certain other
affiliates are members;12 the purchase or sale of securities between CEFs that have the same
investment advisor;13 mergers or asset acquisitions involving CEFs that have the same
investment advisor;14 use of an affiliate broker-dealer to effect portfolio transactions on a
national securities exchange;15 and approval of the CEF’s fidelity bond coverage.16
There are also a number of material matters with respect to which the 1940 Act requires
registered investment companies, including CEFs, to obtain shareholder approval. These
matters include: a new investment management agreement or a material amendment to an
investment management agreement;17 a change from closed-end to open-end status or vice

15 U.S.C. 80a-2(a)(19).

See Section 15 of the 1940 Act. 15 USC 80a-15.

Ibid.

Ibid.

See Section 32 of the 1940 Act. 15 USC 80a-32.

See 1940 Act Rule 10f-3(h).

See 1940 Act Rule 17a-7(e).

See 1940 Act Rule 17a-8(e).

See 1940 Act Rule 17e-1(b).

See 1940 Act Rule 17g-1(d).

See U.S.C. 80a-15.

versa;18 a change from diversified company to non-diversified company;19 a change in a policy
with respect to borrowing money, issuing senior securities; underwriting securities that other
persons issue, purchasing or selling real estate or commodities or making loans to other persons,
except in each case in accordance with the recitals of policy contained in its registration
statement in respect thereto;20 a deviation from a policy in respect of concentration of
investments in any particular industry or fundamental investment policy;21 and a change in the
nature of the investment company’s business so as to cease to be an investment company.22
In light of the above-described significant statutory protections under the 1940 Act
provided to the shareholders of CEFs, for which there are no parallel legal protections for the
shareholders of public operating companies, the Exchange believes that it is appropriate to
exempt CEFs from the annual shareholder meeting requirements of Section 302.00 of the
Manual. The Exchange notes that all of the categories of investment companies for which the
Exchange has listing standards other than CEFs are already explicitly exempt from the annual
shareholder meeting requirement of Section 302.00 of the Manual.
2.

Statutory Basis

The Exchange believes that the proposed rule change is consistent with Section 6(b) of
the Act,23 in general, and furthers the objectives of Section 6(b)(5) of the Act,24 in particular,
because it is designed to prevent fraudulent and manipulative acts and practices, 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

See U.S.C. 80a-13.

Ibid.

Ibid.

Ibid.

Ibid.

15 U.S.C. 78f(b).

15 U.S.C. 78f(b)(5).

a national market system, and, in general, to protect investors and the public interest and because
it is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers.
The Exchange believes that the proposed exemption of CEFs from the annual shareholder
meeting requirement of Section 302.00 of the Manual is consistent with the protection of
investors and the public interest because of the provisions in the 1940 Act providing significant
protection of CEF shareholders, including by requiring: (i) the election of directors by the CEF’s
shareholders when the number of 1940 Act Interested Persons on the board exceed specified
levels; (ii) the approval of certain specified material matters by a majority of the directors who
are not 1940 Act Interested Persons ; and (ii) the approval of certain specified material matters
by the shareholders.
B.

Self-Regulatory Organization’s Statement on Burden on Competition

The Exchange believes that the proposal will not impose any burden on competition that
is not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange believes that the proposal will not impose a burden on either intramarket
or intermarket competition that is not necessary or appropriate in furtherance of the purposes of
the Act. The proposed rule change is designed to permit CEFs to rely on the shareholder voting
requirements under the 1940 Act rather than complying with the annual meeting requirement of
Section 302.00 of the Manual. As all CEFs listed on the NYSE would be treated the same under
the proposed amended rule, the Exchange does not believe that the proposal would impose any
burden on intramarket competition. Any other market that lists CEFs could seek to amend its
own annual meeting requirements applicable to CEFs and, as such, the Exchange does not
believe that the proposal places any undue burden on intermarket competition.
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
Within 45 days of the date of publication of this notice in the Federal Register or within

such longer period up to 90 days (i) as the Commission may designate if it finds such longer
period to be appropriate and publishes its reasons for so finding or (ii) as to which the selfregulatory organization consents, the Commission will:
(A)

by order approve or disapprove 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 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
(https://www.sec.gov/rules/sro.shtml); or

•

Send an email to rule-comments@sec.gov. Please include file number
SR-NYSE-2024-35 on the subject line.

Paper Comments:
•

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

All submissions should refer to file number SR-NYSE-2024-35. 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 website (https://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 website 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 a.m. and 3
p.m. Copies of the filing also will be available for inspection and copying at the principal office
of the Exchange. Do not include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We may redact in part or
withhold entirely from publication submitted material that is obscene or subject to copyright
protection. All submissions should refer to file number SR-NYSE-2024-35 and should be
submitted on or before [INSERT DATE 21 DAYS AFTER DATE OF PUBLICATION IN THE
FEDERAL REGISTER].
For the Commission, by the Division of Trading and Markets, pursuant to delegated
authority.25
Sherry R. Haywood,
Assistant Secretary.

[FR Doc. 2024-15037 Filed: 7/8/2024 8:45 am; Publication Date: 7/9/2024]

17 CFR 200.30-3(a)(12).