On April 3, 2020, the New York Stock Exchange ("NYSE") filed with the Securities and Exchange Commission ("SEC") for approval two proposals designed to assist NYSE-listed companies with temporary relief in response to the market-wide declines as a result of COVID-19.

The first proposes to waive certain shareholder approval requirements set forth in Section 312.03 of the NYSE Listed Company Manual through June 30, 2020.  Section 312.03 requires listed companies to obtain shareholder approval prior to issuances to directors, officers or substantial security holders ("Related Parties") if the number of shares of common stock (or common stock equivalents) to be issued exceeds 1% of the number or voting power of outstanding shares before the issuance.  In the case of a substantial security holder that is not a director or officer, shareholder approval is required if the number of securities or the voting power exceeds 5% of the pre-transaction shares or voting power outstanding and the securities are issued at a price that is lower than the minimum price.  In order to qualify for the waiver, the proposed transaction must be reviewed and approved by the company's audit committee.  If the proposed rule is adopted, NYSE-listed companies would be permitted to sell securities to Related Parties without complying with the numerical limitations of the current rule, as long as the sale is for cash and in a transaction that meets the NYSE's minimum price requirement.

The second proposes to suspend the application of the NYSE's $50 million market capitalization and $1.00 price continued listing requirements through June 30, 2020.  The NYSE's proposed suspension of the continued listing standards is in addition to the ongoing temporary suspension of the $15 million market capitalization standard through June 30, 2020, with respect to which the NYSE submitted an earlier rule filing to the SEC.  The compliance period applicable to any company that is in a compliance period for noncompliance with these standards at the time of commencement of the rule suspension would have that compliance period tolled and the period would recommence at the end of the proposed suspension.

The proposals are subject to the review and approval of the SEC.  Links to the two proposals are set forth below.

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