On May 14, 2020, the Securities and Exchange Commission (“SEC”) approved, with immediate effectiveness, a rule filing from the New York Stock Exchange (“NYSE”) granting temporary relief from the shareholder approval requirements under Section 312.03 and 303A.08 through June 30, 2020.  The relief is made available to any NYSE-listed company that would incur a material adverse impact relating to the COVID-19 pandemic in the event it is required to delay a transaction in order to secure the required shareholder approval under the applicable NYSE rules.  As we previously blogged, in order to be afforded relief, the company needs to demonstrate that the transaction is due to circumstances related to the COVID-19 pandemic and the company undertook a process designed to ensure that the transaction represents the best terms available to the company.  The audit committee, or another committee comprised solely of independent directors, must also expressly approve the company’s reliance on the exception and determine that the transaction is in the best interest of shareholders.  The SEC also granted relief from the NYSE’s requirement to obtain shareholder approval for certain issuances to officers, directors, employees or consultants as part of a transaction when such issuances could be considered a form of equity compensation.  The issuances to such parties must be specifically required by unaffiliated investors in the transaction, individually limited to less than 5% of the transaction and collectively limited to less than 10% of the transaction.  Importantly, any such party that participates must not have participated in negotiating the terms of the transaction.

Here is a link to the SEC’s approval.