On September 28, 2020, the US Securities and Exchange Commission ("SEC") approved, with immediate effectiveness, the New York Stock Exchange's ("NYSE") proposal to further extend its waiver of the shareholder approval requirements set forth in Section 312.03 of the NYSE Listed Company Manual through December 31, 2020. As we previously blogged, the SEC initially approved the NYSE's waiver of such requirements through June 30, 2020 and thereafter approved an extension through September 30, 2020. In the proposal, the NYSE noted that a number of listed companies completed capital raising transactions that would not have been possible without the flexibility provided by the waivers and expressed that it wanted to continue to provide more flexibility to listed companies that need to access capital in the current unusual economic conditions.

Section 312.03(b) requires shareholder approval of any issuance to a related party if the number of shares of common stock to be issued (or that are exercisable) exceeds 1% of the number or voting power of shares prior to such issuance. The waiver of this requirement is limited to transactions that involve the sale of shares for cash at a price that meets an applicable minimum price standard. Section 312.03(c) requires shareholder approval of any transaction relating to an issuance of 20% or more of the company's outstanding common stock prior to such issuance other than a public offering for cash. In order to be afforded the waiver, among other requirements, the company needs to demonstrate that the transaction meets an applicable minimum price standard. In either case, an issuance to a related party must also be reviewed and approved by the company's audit committee. Any transaction will still be subject to shareholder approval if required under the change of control requirements of Section 312.03(d).

View the SEC's approval here.

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