NYSE Extends Temporary Relief from Shareholder Approval Requirements

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On September 28, the U.S. Securities and Exchange Commission (SEC) approved with immediate effect the request by the New York Stock Exchange (NYSE) to extend the temporary relief from certain shareholder approval requirements from September 30, 2020 to December 31, 2020.

In support of this extension, the NYSE stated that "a number of listed companies have completed capital raising transactions that would not have been possible without the flexibility provided by the waiver." Moreover, while noting the recovery of the equity indices from the initial decline associated with the pandemic, the NYSE cited the "ongoing economic disruption and uncertainty associated with the pandemic," in particular for listed companies that "continue to face circumstances in which their businesses and revenues are severely curtailed," as well as the "continued uncertainty as to the course the COVID-19 pandemic may take in the coming months and the possibility of further disruption."

Generally, Section 312.03 of the NYSE Listed Company Manual requires listed companies to obtain shareholder approval prior to the issuance of common stock, or securities convertible into or exercisable for common stock, in certain circumstances. This temporary relief provides for a waiver, subject to the satisfaction of several conditions, from certain of the limitations and approval requirements set forth in Section 312.03 of the NYSE Limited Company Manual, including relating to (1) private placements involving 20 percent or more of a company’s outstanding shares of common stock or voting power at a price that is lower than the “minimum price”1 and (2) related party transactions. For a more detailed discussion of the NYSE’s temporary relief, please see our prior Alert.

[1] “Minimum Price” means a price that is the lower of: (i) the Official Closing Price immediately preceding the signing of the binding agreement; or (ii) the average Official Closing Price for the five trading days immediately preceding the signing of the binding agreement. See Section 312.04(i) of the NYSE Listed Company Manual.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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