NASDAQ And NYSE Adopt Temporary COVID-19 Exceptions From Certain Shareholder Approval Rules

Nasdaq and NYSE both have recently adopted temporary relief from certain shareholder approval requirements for companies that need to raise capital due to the impact of COVID-19. The temporary relief will also allow limited insider participation in the capital raising where insider participation in the capital raise is demanded by unaffiliated investors for their investment. In the current environment, investors are often requiring participation by insiders to show insider support of and confidence in the company. Under existing Nasdaq and NYSE rules, shareholder approval is required for any issuance of common stock or securities convertible or exchangeable into common stock representing 20% or more of a company's outstanding common stock or voting power on a pre-transaction basis at a discount to the market price, other than a public offering for cash. Shareholder approval is also required under the equity compensation rules for certain issuances of common stock or