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ARTICLE · 07 JANUARY 2021

SEC Solicits Comment On NYSE Proposed Changes To Shareholder Approval Rules

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On December 16, 2020, the New York Stock Exchange ("NYSE") filed a proposed rule change to certain of its shareholder approval requirements...

United StatesCorporate/Commercial Law
Brian D. Hirshberg
Brian D. Hirshberg
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On December 16, 2020, the New York Stock Exchange ("NYSE") filed a proposed rule change to certain of its shareholder approval requirements, which would bring the NYSE's shareholder approval rules into closer alignment with those of Nasdaq.  Last year, the NYSE temporarily waived certain requirements under Section 312 in order to provide listed companies with greater flexibility to raise capital during the COVID-19 crisis (the NYSE has proposed to extend these temporary waivers through March 31, 2021).  The NYSE's proposed rule change includes amendments that are identical to such waivers.

Section 312.03(b) requires shareholder approval for certain issuances of common stock to specified related parties.  Approval is required if the shares to be issued exceed 1% of the shares outstanding before the issuance.  However, a limited exception permits sales to related parties that are only substantial security holders of the issuer so long as no more than 5% of outstanding

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