On April 6, the Securities and Exchange Commission (SEC) approved the NYSE's waiver of certain of its shareholder approval requirements for securities issuances through and including June 30, 2020 to facilitate capital raising through private transactions, as described in this Advisory. On July 2, this waiver was extended through and including September 30, 2020.

20% Rule: NYSE-listed companies must obtain shareholder approval of any transaction relating to the issuance of 20% or more of the company's common stock or voting power outstanding before such issuance other than a public offering for cash (20% Rule), subject to exceptions for certain bona fide private financings for cash at a price at least equal to the lower of the official closing price immediately preceding the signing of the binding agreement or the average official closing price for the five trading days immediately preceding the signing of the binding agreement (the Minimum Price Requirement).

Absent the extended waiver, a bona fide private financing must either be: (i) a sale to a registered broker-dealer that purchases the securities from the issuer with a view to the private sale of such securities to one or more purchasers; or (ii) sales by the issuer to multiple purchasers, if no one purchaser, or group of related purchasers, acquires, or has the right to acquire upon exercise or conversion of the securities, more than 5% of the shares of the issuer's common stock or voting power before the sale. The extension continues the waiver of these limitations on private financings through September 30, 2020, permitting companies to continue to undertake a bona fide private financing, regardless of its size, with a single purchaser without the involvement of a broker-dealer, provided that the transaction is a sale of the company's securities for cash at a price that meets the Minimum Price requirement. However, any transaction benefitting from the extended waiver will continue to require shareholder approval if required under any other rule, including rules pertaining to issuances in connection with equity compensation and a change of control and the Related Party Rule (described below).

Related Party Rule: Absent the extended waiver, NYSE-listed companies must obtain shareholder approval prior to issuances to specified related parties (or their affiliates) if the number of shares of common stock to be issued, or if the number of shares of common stock into which the securities may be convertible or exercisable, exceeds either 1% of the number of shares of common stock or 1% of the voting power outstanding before the issuance (Related Party Rule). However, shareholder approval is not required for cash sales to related parties (and their affiliates) that have that status solely because of security ownership in the company if the sales meet the Minimum Price requirement and relate to no more than 5% of the company's outstanding common stock or voting power.

The extension of the waiver allows companies to sell their securities through September 30, 2020 to related parties and other persons subject to the Related Party Rule without complying with its numerical limitations, as long as the sale is in a cash transaction that meets the Minimum Price requirement and also meets the other requirements noted below. To qualify for this waiver, a transaction must be reviewed and approved by the company's audit committee or a comparable committee comprised solely of independent directors. However, any transaction benefitting from the waiver will continue to require shareholder approval if required under any other rule.

The extended waiver will continue to be inapplicable to a sale of securities by a listed company to a related party if the proceeds will be used to fund an acquisition where the related party has a direct or indirect interest in the company or assets to be acquired or in the consideration to be paid, and the present or potential issuance of common stock, or securities convertible into or exercisable for common stock, could result in an increase in outstanding common shares or voting power of 5% or more.

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