NYSE Proposal Suspends Certain Shareholder Approvals and Listing Requirements as a Result of COVID-19

On April 3, 2020, the New York Stock Exchange submitted two proposals with the U.S. Securities and Exchange Commission that would temporarily suspend: (1) certain shareholder approval requirements for private placements; and (2) listing requirements regarding a company’s market capitalization and share price. 

Citing the use of private placements and purported “barriers” resulting from shareholder approval rules during the 2008 Financial Crisis, the NYSE has proposed a waiver of shareholder approval rules in order to provide companies with the ability to raise cash quickly regardless of the amount being raised or the number of private investors, including related parties.  Notably, the waiver would only be available if the private placements were approved by the company’s audit committee or a committee of independent directors.

Additionally, the NYSE has proposed suspending its listing requirements, which require companies to have a $50 million market capitalization and a 30-day average share price above $1.  If approved, companies would not be required to file disclosures regarding their non-compliance nor would the companies be required to develop a compliance plan.  In support of this proposal, the NYSE noted that the very same $1 share price waiver was utilized during the 2008 Financial Crisis.

As proposed, the temporary suspensions would remain in place until June 30, 2020.

For more information, the proposals can be found here.