On December 21, 2018, the Securities and Exchange Commission (the “SEC”) appointed Martha Legg Miller as the Advocate for Small Business Capital Formation. As the first individual appointed to the new role, Miller will assist small businesses in accessing and navigating capital markets and identify the challenges that they face in doing so. Additionally, Miller will suggest regulatory changes to better accommodate the interests of small businesses. The position was created along with the Office of the Advocate for Small Business Capital Formation under the SEC Small Business Advocate Act of 2016. The SEC created the new role and office to better represent the needs of small businesses in accessing capital, while continuing to ensure investor protection. The SEC press release covering the appointment can be found here.
On October 31, 2018, the NYSE filed a proposed amendment to the Listed Company Manual to modify the price requirements for purposes of determining whether shareholder approval is required for certain issuances of securities. These proposed amendments mirror the recent Nasdaq changes. The new NYSE rule would replace the “market value” test with a new definition known as “Minimum Price.” The Minimum Price would be defined as the lower of (i) the closing price of the issuer’s common stock immediately before the execution of the transaction agreement and (ii) the average closing price of the issuer’s common stock during the five days immediately preceding the transaction agreement. Under the proposal, shareholder approval would be required for transactions that are priced below the Minimum Price. The NYSE proposal eliminates the requirement for shareholder approval of issuances at a price less than book value but greater than market value. The proposed change aligns with Nasdaq’s recent amendment that eliminates “book value” in the determination of whether shareholder approval is needed. A copy of the proposed NYSE rule can be found here.
On November 6, 2018, the NYSE proposed a rule change that conforms the definition of smaller reporting company (“SRC”) to the recent amendments made by the Securities and Exchange Commission (“SEC”) earlier this year. Under the SEC’s amendments a company with a public float of less than $250 million now qualifies as a SRC. Additionally, a company with no public float or with a public float of less than $700 million will qualify as an SRC if it had annual revenues of less than $100 million during its most recently completed fiscal year. The NYSE’s proposed rule change relates to the exemption from the compensation committee requirements applicable to SRCs. Under current NYSE rules, SRCs benefit from certain exemptions and are not required to comply with various compensation committee requirements. However, the current NYSE rule references the outdated SEC definition of SRC. The NYSE’s proposed rule aligns the amended definition of SRC by eliminating the $75 million threshold in the NYSE rule and follows the SEC’s recently amended definition. A copy of the proposed rule can be found here.