Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend Its Waiver of the Application of Certain of the Shareholder Approval Requirements in Section 312.03 of the NYSE Listed Company Manual Through March 31, 2021 Subject to Certain Conditions, 2712-2716 [2021-00465]
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Federal Register / Vol. 86, No. 8 / Wednesday, January 13, 2021 / Notices
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[FR Doc. 2021–00530 Filed 1–12–21; 8:45 am]
BILLING CODE 7710–12–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90865; File No. SR–NYSE–
2020–108]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Extend Its
Waiver of the Application of Certain of
the Shareholder Approval
Requirements in Section 312.03 of the
NYSE Listed Company Manual
Through March 31, 2021 Subject to
Certain Conditions
January 7, 2021.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on December
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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28, 2020, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to extend
through and including March 31, 2021
its waiver, subject to certain conditions,
of the application of certain of the
shareholder approval requirements set
forth in Section 312.03 of the NYSE
Listed Company Manual (‘‘Manual’’).
The proposed rule change is available
on the Exchange’s website at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Pursuant to an earlier proposed rule
change,4 the Exchange waived through
and including June 30, 2020, subject to
certain conditions, certain of the
shareholder approval requirements set
forth in Section 312.03 of the Manual
(the ‘‘Waiver’’). Subsequently, the
Exchange extended the Waiver for the
period through and including
September 30, 2020 5 and, thereafter, the
4 See Securities Exchange Act Release No. 34–
88572 (April 6, 2020); 85 FR 20323 (April 10, 2020)
(SR–NYSE–2020–30).
5 See Securities Exchange Act Release No. 89219
(July 2, 2020; 85 FR 41640 (July 10, 2020) (SR–
NYSE–2020–58) (extending the Waiver through
June 30, 2020); see also Securities Exchange Act
Release No. 90020 (September 28, 2020; 85 FR
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period through and including December
31, 2020. The Exchange now proposes
to extend the Waiver through and
including March 31. 2021.
It is important to note that the Waiver
as it has been applied (and will
continue to be applied pursuant to the
proposed extension) does not apply to
any sales of a listed company’s
securities where the use of proceeds is
to fund an acquisition. As such,
regardless of whether an issuance would
otherwise meet all of the requirements
for the Waiver, any issuance for which
the intended use of proceeds is to fund
one or more acquisitions remains
subject to the shareholder approval
requirements of Sections 312.03(b) and
312.03(c) and is ineligible for the
benefits of the Waiver.
The U.S. and global economies have
experienced unprecedented disruption
as a result of the ongoing spread of
COVID–19, including severe limitations
on companies’ ability to operate their
businesses and periods of volatility in
the U.S. and global equity markets. The
Exchange implemented the Waiver
because it believed that it was likely
that many listed companies would have
urgent liquidity needs during this crisis
period due to lost revenues and
maturing debt obligations. In those
circumstances, the Exchange believed
that listed companies would need to
access additional capital that might not
be available in the public equity or
credit markets.
Since the implementation of the
Waiver a number of listed companies
have completed capital raising
transactions that would not have been
possible without the flexibility provided
by the Waiver. While equity indices
have recovered from the decline
initially associated with the COVID–19
crisis, ongoing economic disruption and
uncertainty associated with the
pandemic have caused many listed
companies to continue to face
circumstances in which their businesses
and revenues are severely curtailed.
Such companies continue to experience
difficulty in accessing liquidity from the
public markets. In addition, there is
continued uncertainty as to the course
the COVID–19 pandemic may take in
the coming months and the possibility
of further disruption related to COVID–
19 exists. Consequently, the Exchange
believes it is appropriate to extend the
application of the Waiver for an
additional period through and including
March 31, 2021, to provide more
flexibility to listed companies that need
62357 (October 2, 2020) (SR–NYSE–2020–79)
(extending the Waiver through December 31, 2020).
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to access capital in the current unusual
economic conditions.
Section 312.03 of the Manual, which
requires listed companies to acquire
shareholder approval prior to certain
kinds of equity issuances, imposes
significant limitations on the ability of
a listed company to engage in the sort
of large private placement transaction
described above. The most important
limitations are as follows:
• Issuance to a Related Party. Subject
to an exception for early stage
companies set forth therein, Section
312.03(b) of the Manual requires
shareholder approval of any issuance to
a director, officer or substantial security
holder 6 of the company (each a
‘‘Related Party’’) or to an affiliate of a
Related Party 7 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. A limited exception
permits cash sales to Related Parties and
their affiliates that meet a market price
test set forth in the rule (the ‘‘Minimum
Price’’) 8 and that relate to no more than
5% of the company’s outstanding
common stock. However, this exception
may only be used if the Related Party in
question has Related Party status solely
because it is a substantial security
holder of the company.
• Transactions of 20% of More.
Section 312.03(c) of the Manual requires
6 For purposes of Section 312.03(b), Section
312.04(e) provides that: ‘‘An interest consisting of
less than either five percent of the number of shares
of common stock or five percent of the voting power
outstanding of a company or entity shall not be
considered a substantial interest or cause the holder
of such an interest to be regarded as a substantial
security holder.’’
7 Under Section 312.03 of the Manual, a ‘‘Related
Party’’ includes ‘‘(1) a director, officer or substantial
security holder of the company (each a ‘‘Related
Party’’); (2) a subsidiary, affiliate or other closelyrelated person of a Related Party; or (3) any
company or entity in which a Related Party has a
substantial direct or indirect interest;’’
8 Section 312.04(i) defines the ‘‘Minimum Price’’
as follows: ‘‘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.
Section 312.04(j) defines ‘‘Official Closing Price’’
as follows: ‘‘Official Closing Price’’ of the issuer’s
common stock means the official closing price on
the Exchange as reported to the Consolidated Tape
immediately preceding the signing of a binding
agreement to issue the securities. For example, if
the transaction is signed after the close of the
regular session at 4:00 p.m. Eastern Standard Time
on a Tuesday, then Tuesday’s official closing price
is used. If the transaction is signed at any time
between the close of the regular session on Monday
and the close if the regular session on Tuesday,
then Monday’s official closing price is used.
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2713
shareholder approval of any transaction
relating to 20% or more of the
company’s outstanding common stock
or 20% of the voting power outstanding
before such issuance other than a public
offering for cash. Section 312.03(c)
includes an exception for transactions
involving a cash sale of the company’s
securities that comply with the
Minimum Price requirement and also
meet the following definition of a ‘‘bona
fide private financing,’’ as set forth in
Section 312.04(g):
‘‘Bona fide private financing’’ refers to
a sale in which either:
Æ A registered broker-dealer
purchases the securities from the issuer
with a view to the private sale of such
securities to one or more purchasers; or
Æ the issuer sells the securities to
multiple purchasers, and no one such
purchaser, or group of related
purchasers, acquires, or has the right to
acquire upon exercise or conversion of
the securities, more than five percent of
the shares of the issuer’s common stock
or more than five percent of the issuer’s
voting power before the sale.’’
The Exchange expects that it will
continue to be the case that certain
companies during the course of the
ongoing unusual economic conditions
will urgently need to obtain new capital
by selling equity securities in private
placements.
In many cases, such transactions may
involve sales to existing investors in the
company or their affiliates that would
exceed the applicable 1% and 5% limits
of Section 312.03(b). Given the ongoing
economic disruption associated with the
COVID–19 pandemic, the Exchange
proposes to continue its partial waiver
of the application of Section 312.03(b)
for the period as of the date of this filing
through and including March 31, 2021,
with the Waiver specifically limited to
transactions that involve the sale of the
company’s securities for cash at a price
that meets the Minimum Price
requirement as set forth in Section
312.04.9 In addition, to qualify for the
Waiver, a transaction must be reviewed
and approved by the company’s audit
committee or a comparable committee
comprised solely of independent
directors.
This Waiver will continue to not be
applicable to any transaction involving
the stock or assets of another company
where any director, officer or substantial
security holder of the company has a
5% or greater interest (or such persons
collectively have a 10% or greater
interest), directly or indirectly, in the
company or assets to be acquired or in
the consideration to be paid in the
9 See
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transaction or series of related
transactions 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 (i.e., a
transaction which would require
shareholder approval under NASDAQ
Marketplace Rule 5635(a)). Specifically,
the Waiver will continue to not be
applicable to a sale of securities by a
listed company to any person subject to
the provisions of Section 312.03(b) in a
transaction, or series of transactions,
whose proceeds will be used to fund an
acquisition of stock or assets of another
company where such person has a
direct or indirect interest in the
company or assets to be acquired or in
the consideration to be paid for such
acquisition.
The effect of the extension of the
Waiver would be to allow companies to
sell their securities to Related Parties
and other persons subject to Section
312.03(b) 10 without complying with the
numerical limitations of that rule, as
long as the sale is in a cash transaction
that meets the Minimum Price
requirement and also meets the other
requirements noted above. As provided
by Section 312.03(a), any transaction
benefitting from the proposed waiver
will still be subject to shareholder
approval if required under any other
applicable rule, including the equity
compensation requirements of Section
303A.08 and the change of control
requirements of Section 312.03(d).
Existing large investors are often the
only willing providers of much-needed
capital to companies undergoing
difficulties and the Exchange believes
that it is appropriate to increase
companies’ flexibility to access this
source of capital for an additional
limited period. The Exchange notes that,
as a result of the extension of the
Waiver, the Exchange’s application of
Section 312.03(b) will be consistent
with the application of NASDAQ
Marketplace Rule 5635(a) 11 to sales of a
listed company’s securities to related
parties during the Waiver period.
Many private placement transactions
under the current market conditions
may also exceed the 20% threshold
established by Section 312.03(c).
Therefore, given the ongoing economic
disruption associated with the COIVD–
19 pandemic, the Exchange also
proposes to continue for the period
through and including March 31, 2021,
10 See
supra note 6.
11 If a company is raising capital through a
transaction, or series of transaction, via the waiver,
they cannot use such capital to fund an acquisition.
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for purposes of the bona fide financing
exception to the 20% requirement, its
waiver of the 5% limitation for any sale
to an individual investor in a bona fide
private financing pursuant to Section
312.03(c) and to permit companies to
undertake a bona fide private financing
during that period in which there is
only a single purchaser. As provided by
Section 312.03(a), any transaction
benefitting from the Waiver will still be
subject to shareholder approval if
required under any other applicable
rule, including the equity compensation
requirements of Section 303A.08 and
the change of control requirements of
Section 312.03(d). Any transaction
benefitting from the Waiver must be a
sale of the company’s securities for cash
at a price that meets the Minimum Price
requirement.
The effect of the proposed extension
of the Waiver would be that a listed
company would be exempt from the
shareholder approval requirement of
Section 312.03(c) in relation to a private
placement transaction regardless of its
size or the number of participating
investors or the amount of securities
purchased by any single investor,
provided that the transaction is a sale of
the company’s securities for cash at a
price that meets the Minimum Price
requirement. If any purchaser in a
transaction benefiting from this waiver
is a Related Party or other person
subject to Section 312.03(b), such
transaction must be reviewed and
approved by the company’s audit
committee or a comparable committee
comprised solely of independent
directors. The Exchange notes that, as a
result of the proposed extension of the
Waiver, the Exchange’s application of
Section 312.03(c) will continue to be
consistent during the Waiver period
with the application of NASDAQ
Marketplace Rule 5635(d) with respect
to private placements relating to 20% or
more of a company’s common stock or
voting power outstanding before such
transaction.12
The Exchange notes that these
temporary emergency waivers would
simply continue to provide NYSE listed
companies with the flexibility on a
temporary emergency basis to
consummate transactions without
shareholder approval that would not
require shareholder approval under the
rules of the NASDAQ Stock Market, as
the specific limitations the Exchange is
12 See supra note 11 which also applies to the
waivers available under Section 312.03(c).
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proposing to waive do not exist in the
applicable NASDAQ rules.13
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) of the
Act,14 in general, and furthers the
objectives of Section 6(b)(5) of the Act,15
in particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect the public interest
and the interests of investors, and
because it is not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
As a result of the economic disruption
related to the ongoing spread of the
COVID–19 virus, certain listed
companies may experience urgent
liquidity needs that they are unable to
meet by raising funds in the public
equity or credit markets. The proposed
rule change is designed to provide
temporary relief from certain of the
NYSE’s shareholder approval
requirements in relation to stock
issuances to provide companies with
additional flexibility to raise funds by
selling equity in private placement
transactions during the current unusual
economic conditions provided such
transactions meet certain conditions,
such as the Minimum Price as defined
in Section 312.04(i). The proposed
waivers are consistent with the
protection of investors because any
transaction benefiting from the waivers
will not, in the Exchange’s view, be
dilutive to the company’s existing
shareholders as it will be subject to a
minimum market price requirement and
because the audit committee or a
comparable committee comprised solely
of independent directors will review
and approve any transaction benefitting
from a waiver that involves a Related
Party or affiliates of a Related Party. In
addition, as provided by Section
312.03(a), any transaction benefitting
from the proposed waiver will still be
subject to shareholder approval if
required under any other applicable
rule, including the equity compensation
requirements of Section 303A.08 and
the change of control requirements of
13 See NASDAQ Marketplace Rule 5635,
including specifically subsections (a) and (d)
thereof.
14 15 U.S.C. 78f(b).
15 15 U.S.C. 78f(b)(5).
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Section 312.03(d). All companies listed
on the Exchange would be eligible to
take advantage of the proposed
temporary waivers.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change would impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change is not designed to
address any competitive issues but
rather is designed to provide temporary
relief from certain of the NYSE’s
shareholder approval requirements in
relation to stock issuances to provide
companies with additional flexibility to
raise funds by selling equity in private
placement transactions during the
current unusual economic conditions.
In addition, the proposed waivers will
simply temporarily conform the
treatment of transactions benefitting
from the waivers to their treatment
under the comparable NASDAQ rules.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 16 and Rule
19b–4(f)(6) thereunder.17 Because the
proposed rule change does not: (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 18 and Rule 19b-4(f)(6)(iii)
thereunder.19
16 15
U.S.C. 78s(b)(3)(A)(iii).
17 17 CFR 240.19b–4(f)(6).
18 15 U.S.C. 78s(b)(3)(A).
19 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has complied with this requirement.
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A proposed rule change filed under
Rule 19b–4(f)(6) 20 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),21 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing.
The Exchange believes that the
Waiver of the operative delay would be
consistent with the protection of
investors and the public interest
because, in the Exchange’s view, the
economic disruption caused by the
global spread of the COVID–19 virus
may give rise to companies experiencing
urgent liquidity needs which they may
need to meet by undertaking
transactions that would benefit from the
proposed relief. In support of its request
to waive the 30-day operative delay, the
Exchange stated, among other things, its
belief that the proposed Waiver does not
give rise to any novel investor
protection concerns, as the proposed
rule change conforms the NYSE’s
shareholder approval requirements
temporarily to those of NASDAQ and
would not permit any transactions
without shareholder approval that are
not permitted on another exchange. In
addition, the Exchange stated that all
transactions utilizing the Waiver would
have to satisfy the Minimum Price
requirement contained in the rule and
be reviewed and approved by the
issuer’s audit committee or comparable
committee of the board comprised
entirely of independent directors if any
transactions benefitting from the Waiver
involve a Related Party or affiliates of a
Related Party, as described above.22
Furthermore, the Exchange has stated
that, as provided by Section 312.04(a) of
the Manual, any transaction benefitting
from the proposed Waiver will still be
subject to shareholder approval if
required under any other applicable
rule, including the equity compensation
requirements of Section 303A.08 of the
Manual and the change of control
20 17
CFR 240.19b–4(f)(6).
CFR 240.19b–4(f)(6)(iii).
22 The Commission notes that, as described in the
purpose section above, all transactions utilizing the
Waiver for purposes of Section 312.03(b) would be
subject to review and approval by an audit
committee or comparable body of independent
directors. As to transactions utilizing the temporary
Waiver under Section 312.03(c) all transactions
involving Related Parties or other persons subject
to Section 312.03(b), as described above, must be
reviewed and approved by the company’s audit
committee or a comparable committee comprised
solely of independent directors.
21 17
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2715
requirements of Section 312.03(d) of the
Manual. The Exchange also noted that
the proposed Waiver is temporary in
nature and will only be applied through
and including March 31, 2021.
The Commission notes that the
proposed rule change would provide a
temporary waiver of certain shareholder
approval requirements under certain
conditions in light of current economic
conditions due to COVID–19. As noted
by NYSE, the Waiver is consistent with
NASDAQ’s shareholder approval rules
and would not permit any transactions
without shareholder approval that is not
permitted on another exchange.23 In
addition, all transactions utilizing the
Waiver would have to satisfy the
Minimum Price requirement which is a
market related price, as defined above.24
Further, all transactions subject to the
Waiver that involve Related Parties or
affiliates of Related Parties would have
to be approved by the listed company’s
audit committee or comparable
committee of the board comprised
entirely of independent directors. In
addition, the Commission notes that the
Waiver of the shareholder approval
provisions only applies to the specific
provisions in Sections 312.03(b) and (d)
of the Manual discussed above and any
transaction utilizing the Waiver would
still be subject to all other shareholder
approval requirements including, for
example, the equity compensation
requirements of Section 303A.08 and
the change of control requirements of
Section 312.03(d). The Commission also
notes that the proposal is a temporary
measure designed to allow companies to
raise necessary capital at market related
prices without shareholder approval
under the limited conditions discussed
above in response to current, unusual
economic conditions. For these reasons,
the Commission believes that waiver of
the 30-day operative delay is consistent
with the protections of investors and the
public interest. According, the
Commission hereby waives the 30-day
operative delay and designates the
proposal operative upon filing.25
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
23 In addition, as noted above, if a company is
raising capital through a transaction, or series of
transactions, via the Waiver, they cannot use such
capital to fund an acquisition.
24 See supra note 8.
25 For purposed only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
E:\FR\FM\13JAN1.SGM
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Federal Register / Vol. 86, No. 8 / Wednesday, January 13, 2021 / Notices
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 26 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSE–2020–108 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSE–2020–108. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSE–2020–108, and
should be submitted on or before
February 3, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–00465 Filed 1–12–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release Nos. 33–10918; 34–90874; IA–
5664; IC–34166]
Adjustments to Civil Monetary Penalty
Amounts
Securities and Exchange
Commission.
ACTION: Annual inflation adjustment of
civil monetary penalties.
AGENCY:
The Securities and Exchange
Commission (the ‘‘Commission’’) is
publishing this notice (the ‘‘Notice’’)
pursuant to the Federal Civil Penalties
Inflation Adjustment Act Improvements
Act of 2015 (the ‘‘2015 Act’’). This Act
requires all agencies to annually adjust
for inflation the civil monetary penalties
that can be imposed under the statutes
administered by the agency and publish
the adjusted amounts in the Federal
Register. This Notice sets forth the
annual inflation adjustment of the
maximum amount of civil monetary
penalties (‘‘CMPs’’) administered by the
Commission under the Securities Act of
1933, the Securities Exchange Act of
1934 (the ‘‘Exchange Act’’), the
Investment Company Act of 1940, the
Investment Advisers Act of 1940, and
certain penalties under the SarbanesOxley Act of 2002. These amounts are
effective beginning on January 15, 2021,
and will apply to all penalties imposed
after that date for violations of the
aforementioned statutes that occurred
after November 2, 2015.
FOR FURTHER INFORMATION CONTACT:
Stephen M. Ng, Senior Special Counsel,
Office of the General Counsel, at (202)
551–7957, or Hannah W. Riedel, Senior
Counsel, Office of the General Counsel,
at (202) 551–7918.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Background
This Notice is being published
pursuant to the 2015 Act,1 which
27 17
CFR 200.30–3(a)(12).
Law 114–74 Sec. 701, 129 Stat. 599–601
(Nov. 2, 2015), codified at 28 U.S.C. 2461 note.
1 Public
26 15
U.S.C. 78s(b)(2)(B).
VerDate Sep<11>2014
18:08 Jan 12, 2021
Jkt 253001
PO 00000
Frm 00080
Fmt 4703
Sfmt 4703
amended the Federal Civil Penalties
Inflation Adjustment Act of 1990 (the
‘‘Inflation Adjustment Act’’).2 The
Inflation Adjustment Act previously had
been amended by the Debt Collection
Improvement Act of 1996 (the ‘‘DCIA’’) 3
to require that each federal agency adopt
regulations at least once every four years
that adjust for inflation the CMPs that
can be imposed under the statutes
administered by the agency. Pursuant to
this requirement, the Commission
previously adopted regulations in 1996,
2001, 2005, 2009, and 2013 to adjust the
maximum amount of the CMPs that
could be imposed under the statutes the
Commission administers.4
The 2015 Act replaces the inflation
adjustment formula prescribed in the
DCIA with a new formula for calculating
the inflation-adjusted amount of CMPs.
The 2015 Act requires that agencies use
this new formula to re-calculate the
inflation-adjusted amounts of the
penalties they administer on an annual
basis and publish these new amounts in
the Federal Register by January 15 of
each year.5 The Commission previously
published the first annual adjustment
required by the 2015 Act on January 6,
2017 (the ‘‘2017 Adjustment’’).6 As part
of the 2017 Adjustment, the
Commission promulgated 17 CFR
201.1001(a) and Table I to Subsection
1001, which lists the penalty amounts
for all violations that occurred on or
before November 2, 2015. For violations
occurring after November 2, 2015,
Subsection 1001(b) provides that the
applicable penalty amounts will be
adjusted annually based on the formula
set forth in the 2015 Act. Subsection
1001(b) further provides that these
adjusted amounts will be published in
2 Public Law 101–410, 104 Stat. 890–892 (1990),
codified at 28 U.S.C. 2461 note.
3 Public Law 104–134, Title III, § 31001(s)(1), 110
Stat. 1321–373 (1996), codified at 28 U.S.C. 2461
note.
4 See Release Nos. 33–7361, 34–37912, IA–1596,
IC–22310, dated November 1, 1996 (effective
December 9, 1996), previously found at 17 CFR
201.1001 and Table I to Subpart E of Part 201;
Release Nos. 33–7946, 34–43897, IA–1921, IC–
24846, dated January 31, 2001 (effective February
2, 2001), previously found at 17 CFR 201.1002 and
Table II to Subpart E of Part 201; Release Nos. 33–
8530, 34–51136, IA–2348, IC–26748, dated
February 9, 2005 (effective February 14, 2005),
previously found at 17 CFR 201.1003 and Table III
to Subpart E of Part 201; Release Nos. 33–9009, 34–
59449, IA–2845, IC–28635, dated February 25, 2009
(effective March 3, 2009), previously found at 17
CFR 201.1004 and Table IV to Subpart E of Part 201;
and Release Nos. 33–9387, 34–68994, IA–3557, IC–
30408, dated February 27, 2013 (effective March 5,
2013), previously found at 17 CFR 201.1005 and
Table V to Subpart E of Part 201. The penalty
amounts contained in these releases have now been
consolidated into Table I to 17 CFR 201.1001.
5 28 U.S.C. 2461 note Sec. 4.
6 Release Nos. 33–10276; 34–79749; IA–4599; IC–
32414 (effective Jan. 18, 2017).
E:\FR\FM\13JAN1.SGM
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]]>Agencies
[Federal Register Volume 86, Number 8 (Wednesday, January 13, 2021)]
[Notices]
[Pages 2712-2716]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00465]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90865; File No. SR-NYSE-2020-108]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Extend Its Waiver of the Application of Certain of the Shareholder
Approval Requirements in Section 312.03 of the NYSE Listed Company
Manual Through March 31, 2021 Subject to Certain Conditions
January 7, 2021.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that on December 28, 2020, New York Stock Exchange LLC (``NYSE''
or the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I
and II below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend through and including March 31,
2021 its waiver, subject to certain conditions, of the application of
certain of the shareholder approval requirements set forth in Section
312.03 of the NYSE Listed Company Manual (``Manual''). The proposed
rule change is available on the Exchange's website at www.nyse.com, at
the principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
Pursuant to an earlier proposed rule change,\4\ the Exchange waived
through and including June 30, 2020, subject to certain conditions,
certain of the shareholder approval requirements set forth in Section
312.03 of the Manual (the ``Waiver''). Subsequently, the Exchange
extended the Waiver for the period through and including September 30,
2020 \5\ and, thereafter, the
[[Page 2713]]
period through and including December 31, 2020. The Exchange now
proposes to extend the Waiver through and including March 31. 2021.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 34-88572 (April 6,
2020); 85 FR 20323 (April 10, 2020) (SR-NYSE-2020-30).
\5\ See Securities Exchange Act Release No. 89219 (July 2, 2020;
85 FR 41640 (July 10, 2020) (SR-NYSE-2020-58) (extending the Waiver
through June 30, 2020); see also Securities Exchange Act Release No.
90020 (September 28, 2020; 85 FR 62357 (October 2, 2020) (SR-NYSE-
2020-79) (extending the Waiver through December 31, 2020).
---------------------------------------------------------------------------
It is important to note that the Waiver as it has been applied (and
will continue to be applied pursuant to the proposed extension) does
not apply to any sales of a listed company's securities where the use
of proceeds is to fund an acquisition. As such, regardless of whether
an issuance would otherwise meet all of the requirements for the
Waiver, any issuance for which the intended use of proceeds is to fund
one or more acquisitions remains subject to the shareholder approval
requirements of Sections 312.03(b) and 312.03(c) and is ineligible for
the benefits of the Waiver.
The U.S. and global economies have experienced unprecedented
disruption as a result of the ongoing spread of COVID-19, including
severe limitations on companies' ability to operate their businesses
and periods of volatility in the U.S. and global equity markets. The
Exchange implemented the Waiver because it believed that it was likely
that many listed companies would have urgent liquidity needs during
this crisis period due to lost revenues and maturing debt obligations.
In those circumstances, the Exchange believed that listed companies
would need to access additional capital that might not be available in
the public equity or credit markets.
Since the implementation of the Waiver a number of listed companies
have completed capital raising transactions that would not have been
possible without the flexibility provided by the Waiver. While equity
indices have recovered from the decline initially associated with the
COVID-19 crisis, ongoing economic disruption and uncertainty associated
with the pandemic have caused many listed companies to continue to face
circumstances in which their businesses and revenues are severely
curtailed. Such companies continue to experience difficulty in
accessing liquidity from the public markets. In addition, there is
continued uncertainty as to the course the COVID-19 pandemic may take
in the coming months and the possibility of further disruption related
to COVID-19 exists. Consequently, the Exchange believes it is
appropriate to extend the application of the Waiver for an additional
period through and including March 31, 2021, to provide more
flexibility to listed companies that need to access capital in the
current unusual economic conditions.
Section 312.03 of the Manual, which requires listed companies to
acquire shareholder approval prior to certain kinds of equity
issuances, imposes significant limitations on the ability of a listed
company to engage in the sort of large private placement transaction
described above. The most important limitations are as follows:
Issuance to a Related Party. Subject to an exception for
early stage companies set forth therein, Section 312.03(b) of the
Manual requires shareholder approval of any issuance to a director,
officer or substantial security holder \6\ of the company (each a
``Related Party'') or to an affiliate of a Related Party \7\ 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. A limited
exception permits cash sales to Related Parties and their affiliates
that meet a market price test set forth in the rule (the ``Minimum
Price'') \8\ and that relate to no more than 5% of the company's
outstanding common stock. However, this exception may only be used if
the Related Party in question has Related Party status solely because
it is a substantial security holder of the company.
---------------------------------------------------------------------------
\6\ For purposes of Section 312.03(b), Section 312.04(e)
provides that: ``An interest consisting of less than either five
percent of the number of shares of common stock or five percent of
the voting power outstanding of a company or entity shall not be
considered a substantial interest or cause the holder of such an
interest to be regarded as a substantial security holder.''
\7\ Under Section 312.03 of the Manual, a ``Related Party''
includes ``(1) a director, officer or substantial security holder of
the company (each a ``Related Party''); (2) a subsidiary, affiliate
or other closely-related person of a Related Party; or (3) any
company or entity in which a Related Party has a substantial direct
or indirect interest;''
\8\ Section 312.04(i) defines the ``Minimum Price'' as follows:
``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.
Section 312.04(j) defines ``Official Closing Price'' as follows:
``Official Closing Price'' of the issuer's common stock means the
official closing price on the Exchange as reported to the
Consolidated Tape immediately preceding the signing of a binding
agreement to issue the securities. For example, if the transaction
is signed after the close of the regular session at 4:00 p.m.
Eastern Standard Time on a Tuesday, then Tuesday's official closing
price is used. If the transaction is signed at any time between the
close of the regular session on Monday and the close if the regular
session on Tuesday, then Monday's official closing price is used.
---------------------------------------------------------------------------
Transactions of 20% of More. Section 312.03(c) of the
Manual requires shareholder approval of any transaction relating to 20%
or more of the company's outstanding common stock or 20% of the voting
power outstanding before such issuance other than a public offering for
cash. Section 312.03(c) includes an exception for transactions
involving a cash sale of the company's securities that comply with the
Minimum Price requirement and also meet the following definition of a
``bona fide private financing,'' as set forth in Section 312.04(g):
``Bona fide private financing'' refers to a sale in which either:
[cir] A registered broker-dealer purchases the securities from the
issuer with a view to the private sale of such securities to one or
more purchasers; or
[cir] the issuer sells the securities to multiple purchasers, and
no one such purchaser, or group of related purchasers, acquires, or has
the right to acquire upon exercise or conversion of the securities,
more than five percent of the shares of the issuer's common stock or
more than five percent of the issuer's voting power before the sale.''
The Exchange expects that it will continue to be the case that
certain companies during the course of the ongoing unusual economic
conditions will urgently need to obtain new capital by selling equity
securities in private placements.
In many cases, such transactions may involve sales to existing
investors in the company or their affiliates that would exceed the
applicable 1% and 5% limits of Section 312.03(b). Given the ongoing
economic disruption associated with the COVID-19 pandemic, the Exchange
proposes to continue its partial waiver of the application of Section
312.03(b) for the period as of the date of this filing through and
including March 31, 2021, with the Waiver specifically limited to
transactions that involve the sale of the company's securities for cash
at a price that meets the Minimum Price requirement as set forth in
Section 312.04.\9\ In addition, to qualify for the Waiver, a
transaction must be reviewed and approved by the company's audit
committee or a comparable committee comprised solely of independent
directors.
---------------------------------------------------------------------------
\9\ See supra note 8.
---------------------------------------------------------------------------
This Waiver will continue to not be applicable to any transaction
involving the stock or assets of another company where any director,
officer or substantial security holder of the company has a 5% or
greater interest (or such persons collectively have a 10% or greater
interest), directly or indirectly, in the company or assets to be
acquired or in the consideration to be paid in the
[[Page 2714]]
transaction or series of related transactions 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 (i.e., a
transaction which would require shareholder approval under NASDAQ
Marketplace Rule 5635(a)). Specifically, the Waiver will continue to
not be applicable to a sale of securities by a listed company to any
person subject to the provisions of Section 312.03(b) in a transaction,
or series of transactions, whose proceeds will be used to fund an
acquisition of stock or assets of another company where such person has
a direct or indirect interest in the company or assets to be acquired
or in the consideration to be paid for such acquisition.
The effect of the extension of the Waiver would be to allow
companies to sell their securities to Related Parties and other persons
subject to Section 312.03(b) \10\ without complying with the numerical
limitations of that rule, as long as the sale is in a cash transaction
that meets the Minimum Price requirement and also meets the other
requirements noted above. As provided by Section 312.03(a), any
transaction benefitting from the proposed waiver will still be subject
to shareholder approval if required under any other applicable rule,
including the equity compensation requirements of Section 303A.08 and
the change of control requirements of Section 312.03(d).
---------------------------------------------------------------------------
\10\ See supra note 6.
---------------------------------------------------------------------------
Existing large investors are often the only willing providers of
much-needed capital to companies undergoing difficulties and the
Exchange believes that it is appropriate to increase companies'
flexibility to access this source of capital for an additional limited
period. The Exchange notes that, as a result of the extension of the
Waiver, the Exchange's application of Section 312.03(b) will be
consistent with the application of NASDAQ Marketplace Rule 5635(a) \11\
to sales of a listed company's securities to related parties during the
Waiver period.
---------------------------------------------------------------------------
\11\ If a company is raising capital through a transaction, or
series of transaction, via the waiver, they cannot use such capital
to fund an acquisition.
---------------------------------------------------------------------------
Many private placement transactions under the current market
conditions may also exceed the 20% threshold established by Section
312.03(c). Therefore, given the ongoing economic disruption associated
with the COIVD-19 pandemic, the Exchange also proposes to continue for
the period through and including March 31, 2021, for purposes of the
bona fide financing exception to the 20% requirement, its waiver of the
5% limitation for any sale to an individual investor in a bona fide
private financing pursuant to Section 312.03(c) and to permit companies
to undertake a bona fide private financing during that period in which
there is only a single purchaser. As provided by Section 312.03(a), any
transaction benefitting from the Waiver will still be subject to
shareholder approval if required under any other applicable rule,
including the equity compensation requirements of Section 303A.08 and
the change of control requirements of Section 312.03(d). Any
transaction benefitting from the Waiver must be a sale of the company's
securities for cash at a price that meets the Minimum Price
requirement.
The effect of the proposed extension of the Waiver would be that a
listed company would be exempt from the shareholder approval
requirement of Section 312.03(c) in relation to a private placement
transaction regardless of its size or the number of participating
investors or the amount of securities purchased by any single investor,
provided that the transaction is a sale of the company's securities for
cash at a price that meets the Minimum Price requirement. If any
purchaser in a transaction benefiting from this waiver is a Related
Party or other person subject to Section 312.03(b), such transaction
must be reviewed and approved by the company's audit committee or a
comparable committee comprised solely of independent directors. The
Exchange notes that, as a result of the proposed extension of the
Waiver, the Exchange's application of Section 312.03(c) will continue
to be consistent during the Waiver period with the application of
NASDAQ Marketplace Rule 5635(d) with respect to private placements
relating to 20% or more of a company's common stock or voting power
outstanding before such transaction.\12\
---------------------------------------------------------------------------
\12\ See supra note 11 which also applies to the waivers
available under Section 312.03(c).
---------------------------------------------------------------------------
The Exchange notes that these temporary emergency waivers would
simply continue to provide NYSE listed companies with the flexibility
on a temporary emergency basis to consummate transactions without
shareholder approval that would not require shareholder approval under
the rules of the NASDAQ Stock Market, as the specific limitations the
Exchange is proposing to waive do not exist in the applicable NASDAQ
rules.\13\
---------------------------------------------------------------------------
\13\ See NASDAQ Marketplace Rule 5635, including specifically
subsections (a) and (d) thereof.
---------------------------------------------------------------------------
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\14\ in general, and furthers the objectives of Section 6(b)(5) of
the Act,\15\ in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, to
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general, to protect the
public interest and the interests of investors, and because it is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
As a result of the economic disruption related to the ongoing
spread of the COVID-19 virus, certain listed companies may experience
urgent liquidity needs that they are unable to meet by raising funds in
the public equity or credit markets. The proposed rule change is
designed to provide temporary relief from certain of the NYSE's
shareholder approval requirements in relation to stock issuances to
provide companies with additional flexibility to raise funds by selling
equity in private placement transactions during the current unusual
economic conditions provided such transactions meet certain conditions,
such as the Minimum Price as defined in Section 312.04(i). The proposed
waivers are consistent with the protection of investors because any
transaction benefiting from the waivers will not, in the Exchange's
view, be dilutive to the company's existing shareholders as it will be
subject to a minimum market price requirement and because the audit
committee or a comparable committee comprised solely of independent
directors will review and approve any transaction benefitting from a
waiver that involves a Related Party or affiliates of a Related Party.
In addition, as provided by Section 312.03(a), any transaction
benefitting from the proposed waiver will still be subject to
shareholder approval if required under any other applicable rule,
including the equity compensation requirements of Section 303A.08 and
the change of control requirements of
[[Page 2715]]
Section 312.03(d). All companies listed on the Exchange would be
eligible to take advantage of the proposed temporary waivers.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
not designed to address any competitive issues but rather is designed
to provide temporary relief from certain of the NYSE's shareholder
approval requirements in relation to stock issuances to provide
companies with additional flexibility to raise funds by selling equity
in private placement transactions during the current unusual economic
conditions. In addition, the proposed waivers will simply temporarily
conform the treatment of transactions benefitting from the waivers to
their treatment under the comparable NASDAQ rules.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \16\ and Rule 19b-4(f)(6) thereunder.\17\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \18\ and Rule 19b-
4(f)(6)(iii) thereunder.\19\
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78s(b)(3)(A)(iii).
\17\ 17 CFR 240.19b-4(f)(6).
\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has complied with this requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \20\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\21\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing.
---------------------------------------------------------------------------
\20\ 17 CFR 240.19b-4(f)(6).
\21\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
The Exchange believes that the Waiver of the operative delay would
be consistent with the protection of investors and the public interest
because, in the Exchange's view, the economic disruption caused by the
global spread of the COVID-19 virus may give rise to companies
experiencing urgent liquidity needs which they may need to meet by
undertaking transactions that would benefit from the proposed relief.
In support of its request to waive the 30-day operative delay, the
Exchange stated, among other things, its belief that the proposed
Waiver does not give rise to any novel investor protection concerns, as
the proposed rule change conforms the NYSE's shareholder approval
requirements temporarily to those of NASDAQ and would not permit any
transactions without shareholder approval that are not permitted on
another exchange. In addition, the Exchange stated that all
transactions utilizing the Waiver would have to satisfy the Minimum
Price requirement contained in the rule and be reviewed and approved by
the issuer's audit committee or comparable committee of the board
comprised entirely of independent directors if any transactions
benefitting from the Waiver involve a Related Party or affiliates of a
Related Party, as described above.\22\ Furthermore, the Exchange has
stated that, as provided by Section 312.04(a) of the Manual, any
transaction benefitting from the proposed Waiver will still be subject
to shareholder approval if required under any other applicable rule,
including the equity compensation requirements of Section 303A.08 of
the Manual and the change of control requirements of Section 312.03(d)
of the Manual. The Exchange also noted that the proposed Waiver is
temporary in nature and will only be applied through and including
March 31, 2021.
---------------------------------------------------------------------------
\22\ The Commission notes that, as described in the purpose
section above, all transactions utilizing the Waiver for purposes of
Section 312.03(b) would be subject to review and approval by an
audit committee or comparable body of independent directors. As to
transactions utilizing the temporary Waiver under Section 312.03(c)
all transactions involving Related Parties or other persons subject
to Section 312.03(b), as described above, must be reviewed and
approved by the company's audit committee or a comparable committee
comprised solely of independent directors.
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The Commission notes that the proposed rule change would provide a
temporary waiver of certain shareholder approval requirements under
certain conditions in light of current economic conditions due to
COVID-19. As noted by NYSE, the Waiver is consistent with NASDAQ's
shareholder approval rules and would not permit any transactions
without shareholder approval that is not permitted on another
exchange.\23\ In addition, all transactions utilizing the Waiver would
have to satisfy the Minimum Price requirement which is a market related
price, as defined above.\24\ Further, all transactions subject to the
Waiver that involve Related Parties or affiliates of Related Parties
would have to be approved by the listed company's audit committee or
comparable committee of the board comprised entirely of independent
directors. In addition, the Commission notes that the Waiver of the
shareholder approval provisions only applies to the specific provisions
in Sections 312.03(b) and (d) of the Manual discussed above and any
transaction utilizing the Waiver would still be subject to all other
shareholder approval requirements including, for example, the equity
compensation requirements of Section 303A.08 and the change of control
requirements of Section 312.03(d). The Commission also notes that the
proposal is a temporary measure designed to allow companies to raise
necessary capital at market related prices without shareholder approval
under the limited conditions discussed above in response to current,
unusual economic conditions. For these reasons, the Commission believes
that waiver of the 30-day operative delay is consistent with the
protections of investors and the public interest. According, the
Commission hereby waives the 30-day operative delay and designates the
proposal operative upon filing.\25\
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\23\ In addition, as noted above, if a company is raising
capital through a transaction, or series of transactions, via the
Waiver, they cannot use such capital to fund an acquisition.
\24\ See supra note 8.
\25\ For purposed only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of
[[Page 2716]]
investors, or otherwise in furtherance of the purposes of the Act. If
the Commission takes such action, the Commission shall institute
proceedings under Section 19(b)(2)(B) \26\ of the Act to determine
whether the proposed rule change should be approved or disapproved.
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\26\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSE-2020-108 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2020-108. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSE-2020-108, and should be submitted
on or before February 3, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-00465 Filed 1-12-21; 8:45 am]
BILLING CODE 8011-01-P
