The New York Stock Exchange (“NYSE”), through the NYSE Regulation staff, has issued its annual Listed Company Compliance Guidance Memo for 2024 (“Memo”), which informs NYSE-listed companies of new matters, including the following:
- Recovery of Erroneously Awarded Compensation. NYSE Listed Company Manual’s (“LCM”) Sections 303A.14 and 802.01F require listed companies to have in place policies and procedures for recovery of erroneously awarded compensation, subject to limited exceptions. The Memo clarifies that, under the U.S. Securities and Exchange Commission’s (“SEC”) Rule 10D-1 and LCM Section 303A.14, all debt-only issuers listed on the NYSE are required to adopt a recovery policy, including, without limitation, those with guarantees from listed parents and those that are exempt from disclosure requirements pursuant to Rule 12h-5 of the Securities Exchange Act of 1934, as amended (“Exchange Act”).
- Sales of Securities to Passive Shareholders. LCM Section 312.03(b)(i) has been amended to limit its application to sales to a director, officer, controlling shareholder or member of a control group or any other substantial security holder of the company that has an affiliated person who is an officer or director of the company (each, an “Active Related Party”) and is no longer applicable to passive shareholders that do not meet the definition of an Active Related Party. Prior to the amendments, shareholder approval was required prior to the issuance of common stock or of securities convertible into or exercisable for common stock in a transaction to a related party if the number of shares to be issued (or into which the securities might be convertible or exercisable) exceeded either one percent of the number of shares of common stock or one percent of the voting power outstanding before the issuance.
- Shortened Settlement Cycle (T+1). The transition to a T+1 settlement cycle pursuant to SEC Rule 15c6-1(a) will occur on May 28, 2024. The NYSE will adopt new rules to reflect regular way settlement as occurring on a T+1 basis and also will change the Exchange’s rules with respect to ex-dividend and ex-rights trading. Ex-dividend trading dates will be set during the transition period as follows:
- securities paying a dividend with a record date of May 28 will be traded ex-dividend on May 24; and
- securities paying a dividend with a record date of May 29 will be traded ex-dividend on May 29.
The Memo reminds listed issuers, to the extent practicable, to avoid consummation of corporate actions during the time of transition from T+2 to T+1.
The NYSE holidays and trading hours for 2024 to 2026 have also been uploaded.