Tag: NYSE shareholder approval requirements
SEC approves amended NYSE proposal to relax shareholder approval requirements for certain equity sales
Happy new year! In September last year, the SEC posted a new NYSE proposed rule change that would “modify the circumstances under which a listed company must obtain shareholder approval of a sale of securities to a substantial security holder,” a holder of 5% or more. (See this PubCo post.) Under current listing rules, shareholder approval is required for sales in excess of 1% of the common stock to a substantial security holder, unless the transaction is a cash sale for a price that is at least equal to the “Minimum Price.” Under the proposal, the shareholder approval requirement would be narrowed to apply only to control parties—that is, in addition to directors and officers, to substantial security holders with indicia of control. By eliminating the shareholder approval requirement for sales to passive holders—which the NYSE views as unnecessary—the proposal is designed to facilitate the ability of NYSE-listed companies to raise necessary capital. Now the SEC has posted Amendment No. 1 to the proposal, which provides additional explanation of the reason the NYSE proposed the rule change and amends the rule text in several ways. The release indicates that the SEC has approved the proposed rule change, as modified by Amendment No. 1, on an accelerated basis.
NYSE proposes to relax shareholder approval requirements for certain equity sales
On Friday last week, the SEC posted a new NYSE proposed rule change that would “modify the circumstances under which a listed company must obtain shareholder approval of a sale of securities to a substantial security holder,” a holder of 5% or more. Under current listing rules, shareholder approval is required for sales in excess of 1% of the common stock to a substantial security holder, unless the transaction is a cash sale for a price that is at least equal to the “Minimum Price.” Under the proposal, the shareholder approval requirement would be narrowed to apply only to control parties, that is, in addition to directors and officers, the shareholder approval requirement would apply to “a controlling shareholder or member of a control group or any other substantial security holder of the company that has an affiliated person who is an officer or director of the company.” By eliminating the shareholder approval requirement for sales to passive holders—which the NYSE views as unnecessary—the proposal is designed to facilitate the ability of NYSE-listed companies to raise necessary capital. Comments on the proposal are due 21 days after publication of the proposal in the Federal Register.
NYSE proposes to amend shareholder approval requirements
No, it’s not Groundhog Day. (In fact, it’s election day. Go vote!) But this proposal from the NYSE to amend Sections 312.03 and 312.04 of the Listed Company Manual sounds remarkably similar to the one that the SEC has just approved for Nasdaq—modifications to the price requirements for purposes of determining whether shareholder approval is required for certain issuances. (See this PubCo post.) Just like the new Nasdaq rule, the NYSE proposal would
change the definition of market value for purposes of the shareholder approval rule and
eliminate the requirement for shareholder approval of issuances at a price less than book value but greater than market value.
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