Earlier this month, the Securities and Exchange Commission approved amendments (the Amendments) to New York Stock Exchange (NYSE) rules that require listed companies to obtain shareholder approval of certain private placements and equity issuances to “related parties,” as well as requirements related to transactions between a listed company and certain related parties. In particular, the Amendments, which were initially proposed in December 2020 and subsequently modified, modified Sections 312.03, 312.04 and 314.00 of the NYSE Listed Company Manual. According to NYSE, the Amendments to Sections 312.03 and 312.04 are intended to more closely align shareholder approval requirements applicable to NYSE listed companies with comparable requirements for companies listed on Nasdaq or NYSE American and, in doing so, provide greater flexibility to NYSE-listed companies seeking to raise capital. The flexibility provided by such Amendments tracks, in various respects, the flexibility provided through temporary rules adopted by NYSE in response to the COVID-19 pandemic, which are being terminated by the Amendments. The amendments to Section 314.00 clarify the role of the audit committee in approving related party transactions, and expand the scope of transactions to which related party transaction rules apply.
Continue Reading SEC Approves Amendments to NYSE Shareholder Approval Rules for Certain Equity Issuances and Requirements for Related Party Transactions

On May 14, the Securities and Exchange Commission announced the adoption and immediate effectiveness of Section 312.03T of the NYSE Listed Company Manual. Recognizing that existing exceptions to the shareholder approval requirements in the NYSE Listed Company Manual are “not helpful in most situations arising from the COVID-19 pandemic,” Section 312.03T provides a temporary exception to shareholder approval requirements applicable to certain issuances of equity securities (or convertible or other securities that may result in the issuance of equity securities) representing 20 percent or more of a New York Stock Exchange (NYSE)-listed company’s common stock or voting power, as well as narrow exceptions from shareholder approval requirements in connection with issuances to a related party or equity compensation. Section 312.03T is scheduled to expire on June 30, 2020.
Continue Reading NYSE Provides Temporary Relief From Shareholder Approval Requirements Due to COVID-19

On May 21, the Securities and Exchange Commission adopted final rules related to the financial disclosure requirements for acquisitions and dispositions of businesses (i.e., M&A transactions). The SEC’s release adopting the final rules is available here. These rules will be discussed in an upcoming edition of the Corporate & Financial Weekly Digest.

On April 6, the Securities and Exchange Commission issued a release (the Release) announcing that the New York Stock Exchange (NYSE) had issued temporary and partial waivers from the requirement that NYSE-listed companies obtain stockholder approval in connection with certain related party and 20 percent equity issuances (the Waiver). In the Release, the NYSE acknowledged the “unprecedented disruption” caused by the COVID-19 pandemic and the great likelihood that many listed companies will “have urgent liquidity needs in the coming months due to lost revenues and maturing debt obligations,” which may mean that listed companies will “need to access additional capital that may not be available in the public equity or credit markets.” The Waiver provides NYSE-listed issuers with greater flexibility to engage in capital raising transactions, such as private investment in public equity (PIPE) transactions and registered direct offerings, that may otherwise be constrained by the NYSE’s existing stockholder approval rules. The Waiver remains in effect through June 30, 2020.
Continue Reading SEC Approves Temporary NYSE Waiver of Stockholder Approval Rules to Facilitate Capital Raising in the Wake of COVID-19

On February 19, the Securities and Exchange Commission proposed Rule 163B under the Securities Act of 1933, which would permit any issuer, and any underwriter or other person acting on an issuer’s behalf, to communicate with qualified institutional buyers (QIBs) and institutional accredited investors (IAIs) regarding a potential public offering prior to or following the filing of a registration statement for the offering. These so-called “test-the-waters” communications are intended to help issuers gauge interest in possible public offerings before issuers incur the costs of filing a registration statement with the SEC.
Continue Reading SEC Proposes To Expand “Test-the-Waters” Reforms to All Issuers

On December 8, the staff (Staff) of the Securities and Exchange Commission’s Division of Corporation Finance issued 35 new Compliance and Disclosure Interpretations (C&DIs) with respect to foreign private issuers, qualified institutional buyers and offshore offerings.
Continue Reading SEC Division of Corporation Finance Issues 35 New C&DIs Regarding Foreign Private Issuers, QIBs and Offshore Offerings

On September 27, the staff (Staff) of the Securities and Exchange Commission’s Division of Corporation Finance issued three no-action letters relating to proxy access proposals. In two of the no-action letters, the Staff stated that it would not recommend enforcement action if the company seeking no action relief omitted proposals to adopt proxy access bylaws in reliance upon Rule 14a-8(i)(10) under the Securities Exchange Act of 1934, where the company adopted “standard” proxy access bylaws. In the third no-action letter, however, the Staff was unable to concur with a company’s view that a proposal to amend existing proxy access bylaw provisions could be excluded from the company’s proxy statement in reliance upon Rule 14a-8(i)(10). 
Continue Reading SEC Staff Issues Three No-Action Letters Regarding Proxy Access Proposals

As noted in the May 13 edition of Corporate and Financial Weekly Digest, SEC Chair Mary Joe White, Deputy Chief Accountant Wesley R. Bricker and other high-ranking members of the staff of the SEC have expressed concerns regarding non-GAAP disclosure practices. Correspondingly, on May 17, the Securities and Exchange Commission’s Division of Corporation Finance issued 12 new and revised Compliance and Disclosure Interpretations (C&DIs) relating to the use of non-GAAP financial measures.
Continue Reading SEC Division of Corporation Finance Issues 12 New and Revised C&DIs Regarding Non-GAAP Measures

In a May 5 speech at the 2016 Baruch College Financial Reporting Conference, Wesley Bricker, deputy chief accountant at the Securities and Exchange Commission, discussed his observations regarding the use of non-generally accepted accounting principles (GAAP) financial measures, the transition to new standards for revenue recognition and leases, and the Financial Accounting Standards Board’s (FASB) financial instruments’ credit impairment proposal. Mr. Bricker’s sentiments regarding certain non-GAAP disclosure practices echo concerns expressed by others at the SEC, including Chair Mary Joe White, Chief Accountant Jim Schnurr and Director of the Division of Corporation Finance Keith Higgins.
Continue Reading SEC Deputy Chief Accountant Discusses Use of Non-GAAP Measures