Federal Register / Vol. 89, No. 1 / Tuesday, January 2, 2024 / Notices 113 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 98662 

(September 29, 2023), 88 FR 68675 (October 4, 

2023) (‘‘Notice’’). 

4See Securities Exchange Act Release No. 98967 

(November 16, 2023), 88 FR 81462 (November 22, 

2023) (extending the time period for Commission 

action to January 2, 2024). 

5 In Amendment No. 1, the Exchange revised the 

proposal to: (1) adopt a new definition of an 

‘‘Active Related Party’’ in Section 312.03(b)(i) of the 

NYSE Listed Company Manual (‘‘Manual’’) and to 

retain the current definition of Related Party for 

purposes of Section 312.03(b)(ii) of the Manual; (2) 

adopt in Section 312.04 of the Manual definitions 

of ‘‘control’’ and ‘‘group’’ for purposes of proposed 

amended Section 312.03(b)(i) of the Manual; (3) 

include additional explanation of why the 

Exchange is proposing the rule change and believes 

that it is appropriate; (4) explain that the proposal 

would not have any substantive effect on the 

application of Section 312.03(b)(ii) of the Manual 

and that a listed company selling securities to a 

Related Party under the circumstances set forth in 

312.03(b)(ii) of the Manual, as amended, would 

remain subject to the shareholder approval 

Continued 

subject to federal registration 

requirements as a lobbyist is not eligible 

for appointment. 

Advisory Committee members must 

have experience with employee 

organizations, employers who maintain 

defined benefit pension plans, the 

administration or advising of pension 

plans, or in related fields. Appointments 

are for 3-year terms. Reappointments are 

possible but are subject to the 

appointment process. 

The Advisory Committee’s prescribed 

duties include advising the Corporation 

as to its policies and procedures relating 

to investment of moneys, and other 

issues as the Corporation may request or 

as the Advisory Committee determines 

appropriate. The Advisory Committee 

meets at least six times each year. At 

least one meeting is a joint meeting with 

the PBGC Board of Directors. 

By February 19, 2024, the term of one 

of the Advisory Committee members, 

representing the general public, will 

have expired. Therefore, PBGC is 

seeking nominations for one seat. 

PBGC is committed to equal 

opportunity in the workplace and seeks 

a broad-based and diverse Advisory 

Committee. 

If you or your organization wants to 

nominate one or more people for 

appointment to the Advisory Committee 

to represent the general public, you may 

submit nominations to PBGC. 

Nominations may be in the form of a 

letter, resolution or petition, signed by 

the person making the nomination. 

PBGC encourages you to include 

additional supporting letters of 

nomination. PBGC will not consider 

self-nominees who have no supporting 

letters. Please do not include any 

information that you do not want 

publicly disclosed. 

Nominations, including supporting 

letters, should: 

• state the person’s qualifications to 

serve on the Advisory Committee 

(including any specialized knowledge or 

experience relevant to the nominee’s 

proposed Advisory Committee position 

to represent the general public); 

• state that the candidate will accept 

appointment to the Advisory Committee 

if offered; 

• include the nominee’s full name, 

work affiliation, mailing address, phone 

number, and email address; 

• include the nominator’s full name, 

mailing address, phone number, and 

email address; and 

• include the nominator’s signature, 

whether sent by email or otherwise. 

PBGC will contact nominees for 

information on their political affiliation 

and their status as registered lobbyists. 

Nominees should be aware of the time 

commitment for attending meetings and 

actively participating in the work of the 

Advisory Committee. Historically, this 

has meant a commitment of at least 15 

days per year. PBGC has a process for 

vetting nominees under consideration 

for appointment. 

Issued in Washington, DC. 

Gordon Hartogensis, 

Director, Pension Benefit Guaranty 

Corporation. 

[FR Doc. 2023–28803 Filed 12–29–23; 8:45 am] 

BILLING CODE 7709–02–P 

RAILROAD RETIREMENT BOARD 

Actuarial Advisory Committee With 

Respect to the Railroad Retirement 

Account; Notice of Public Meeting 

Notice is hereby given in accordance 

with Public Law 92–463 that the 

Actuarial Advisory Committee will hold 

a virtual meeting on January 19, 2024, 

at 9:30 a.m. (central standard time), on 

the conduct of the 29th Actuarial 

Valuation of the Railroad Retirement 

System. The agenda for this meeting 

will include a discussion of the 

assumptions to be used in the 29th 

Actuarial Valuation. A report containing 

recommended assumptions and the 

experience on which the 

recommendations are based will have 

been sent by the Chief Actuary to the 

Committee in advance of the meeting. 

The meeting will be open to the 

public. Persons wishing to submit 

written statements, make oral 

presentations, or attend the meeting 

should address their communications or 

notices to Patricia Pruitt 

(Patricia.Pruitt@rrb.gov) so that 

information on how to join the virtual 

meeting can be provided. 

Dated: December 27, 2023. 

Stephanie Hillyard, 

Secretary to the Board. 

[FR Doc. 2023–28821 Filed 12–29–23; 8:45 am] 

BILLING CODE 7905–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99238; File No. SR–NYSE– 

2023–34] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Amendment No. 1 and Order 

Granting Accelerated Approval of 

Proposed Rule Change, as Modified by 

Amendment No. 1, Amending Sections 

312.03(b) and 312.04 of the NYSE 

Listed Company Manual To Modify the 

Circumstances Under Which a Listed 

Company Must Obtain Shareholder 

Approval of a Sale of Securities Below 

the Minimum Price to a Substantial 

Security Holder of the Company 

December 26, 2023. 

I. Introduction 

New York Stock Exchange LLC 

(‘‘NYSE’’ or the ‘‘Exchange’’) filed on 

September 26, 2023, with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

modify the circumstances under which 

a listed company must obtain 

shareholder approval of a sale of 

securities to a substantial security 

holder of the listed company. The 

proposed rule change was published for 

comment in the Federal Register on 

October 4, 2023.3 On November 16, 

2023, the Commission designated a 

longer period for Commission action on 

the proposed rule change.4 On 

December 21, 2023, the Exchange filed 

Amendment No. 1 to the proposed rule 

change, which amended and superseded 

the original filing in its entirety.5 The 


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114 Federal Register / Vol. 89, No. 1 / Tuesday, January 2, 2024 / Notices 

requirements therein; and (5) make other clarifying 

and conforming changes. Amendment No. 1 is 

available at https://www.sec.gov/comments/sr-nyse2023-34/srnyse202334-320179-832762.pdf. 

6This Section II reproduces Amendment No. 1, 

as filed by the Exchange. 

7See SR–NYSE–2023–34 (September 26, 2023). 

8See Securities Exchange Act Release No. 98662 

(September 29, 2023), 88 FR 68675 (October 4. 

2023). 

9Section 312.03(b)(ii) provides that shareholder 

approval is required prior to the issuance of 

common stock, or of securities convertible into or 

exercisable for common stock, where such 

securities are issued as consideration in a 

transaction or series of related transactions in 

which a Related Party has a five percent or greater 

interest (or such persons collectively have a ten 

percent or greater interest), directly or indirectly, in 

the company or assets to be acquired or in the 

consideration to be paid in the transaction or series 

of related transactions and the present or potential 

issuance of common stock, or securities convertible 

into common stock, could result in an issuance that 

exceeds either five percent of the number of shares 

of common stock or five percent of the voting power 

outstanding before the issuance. 

10For example, if the transaction is signed after 

the close of the regular session at 4:00 p.m. Eastern 

Standard Time on a Tuesday, then Tuesday’s 

official closing price is used. If the transaction is 

signed at any time between the close of the regular 

session on Monday and the close of the regular 

session on Tuesday, then Monday’s official closing 

price is used. 

Commission has received no comment 

letters on the proposal. The Commission 

is publishing this notice to solicit 

comments on Amendment No. 1 from 

interested persons and is approving the 

proposed rule change, as modified by 

Amendment No. 1, on an accelerated 

basis. 

II. The Exchange’s Description of the 

Proposed Rule Change, as Modified by 

Amendment No. 1 6

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The NYSE previously filed a proposed 

rule filing to amend Section 312.03(b) of 

the Manual to modify the circumstances 

under which a listed company must 

obtain shareholder approval of a sale of 

securities to a substantial security 

holder of the listed company.7 The 

proposed rule change was published for 

comment in the Federal Register on 

October 4, 2023.8 This Amendment No. 

1 supersedes the original filing in its 

entirety. 

Amendment No. 1 includes in the 

Purpose and Statutory Basis sections 

additional explanation of why the 

Exchange is proposing the rule change 

and believes that it is appropriate, 

specifically discussing the Exchange’s 

belief that there is a lesser possibility 

that a substantial security holder may 

exercise influence over the terms of a 

transaction with the company if such 

substantial security holder does not 

have representation on the board or in 

management. In addition, Amendment 

No. 1 amends the rule text to adopt a 

new definition of an ‘‘Active Related 

Party’’ in Section 312.03(b)(i) and to 

retain the current definition of Related 

Party for purposes of Section 

312.03(b)(ii).9 The Purpose section is 

amended to describe these proposed 

amendments, as well as to explain that 

their purpose is to ensure that the 

proposal would not have any 

substantive effect on the application of 

Section 312.03(b)(ii). A listed company 

selling securities to a Related Party 

under the circumstances set forth in the 

rule as amended would remain subject 

to the shareholder approval 

requirements in 312.03(b)(ii). Finally, 

Amendment No. 1 amends the rule text 

to adopt in Section 312.04 definitions of 

‘‘control’’ and ‘‘group’’ for purposes of 

proposed amended Section 312.03(b)(i), 

providing clarity as to the meaning of 

the terms ‘‘controlling shareholder’’ and 

‘‘control group’’ in that provision as 

amended. The Purpose section is 

amended to describe the addition of 

those new defined terms and to include 

footnotes explaining how ‘‘control’’ is 

defined and the standards to be applied 

in determining whether or not a 

‘‘group’’ exists. 

Section 312.04(e) of the Manual 

provides that an interest consisting of 

less than either five percent of the 

number of shares of common stock or 

five percent of the voting power 

outstanding of a company or entity shall 

not be considered a substantial interest 

or cause the holder of such an interest 

to be regarded as a substantial security 

holder. 

Section 312.03(b)(i) of the Manual 

provides that shareholder approval is 

required prior to the issuance of 

common stock, or of securities 

convertible into or exercisable for 

common stock, in any transaction or 

series of related transactions, to a 

director, officer or substantial security 

holder of the company if the number of 

shares of common stock to be issued, or 

if the number of shares of common stock 

into which the securities may be 

convertible or exercisable, exceeds 

either one percent of the number of 

shares of common stock or one percent 

of the voting power outstanding before 

the issuance. 

The Manual provides an exception to 

the shareholder approval requirement if 

such transaction is a cash sale for a 

price that is at least the Minimum Price. 

Section 312.04(h) defines the Minimum 

Price as a price that is the lower of: (i) 

the Official Closing Price immediately 

preceding the signing of the binding 

agreement; or (ii) the average Official 

Closing Price for the five trading days 

immediately preceding the signing of 

the binding agreement. Section 312.04(i) 

defines the ‘‘Official Closing Price’’ of 

an issuer’s common stock as the official 

closing price on the Exchange as 

reported to the Consolidated Tape 

immediately preceding the signing of a 

binding agreement to issue the 

securities.10

Certain NYSE listed companies are 

significantly dependent on their ability 

to regularly raise additional capital to 

fund their operations or acquire new 

assets. For example, pre-revenue stage 

biotechnology companies regularly seek 

additional capital to fund their research 

and development activities and real 

estate investment trusts seek to fund the 

acquisition of new properties by selling 

equity securities in private placements 

or direct registered sales priced at a 

small discount to the prevailing market 

price. It is the Exchange’s understanding 

that, in many cases, existing 

shareholders of the listed company are 

willing purchasers of securities in such 

circumstances, as they already 

understand the company’s business and 

have a positive view of its future 

prospects. Sales to existing shareholders 

can also be advantageous to both the 

issuer and the shareholders because of 

the speed with which a direct sale to an 

existing shareholder can be completed if 

no shareholder approval is required. 

However, the benefits of low transaction 

costs and speed of execution that 

typically exist when conducting these 

transactions with existing shareholders 

face countervailing factors if the 

counterparty is deemed to be a 

substantial securityholder for purposes 

of Section 312.03(b)(i). In such cases, to 

mitigate potential conflicts of interest, 

Exchange rules require that any sale 

below the Minimum Price can relate to 

no more than one per cent of the shares 

of common stock or one percent of the 

voting power outstanding before the 

issuance. Any such transaction that 

relates to more than one per cent of the 


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Federal Register / Vol. 89, No. 1 / Tuesday, January 2, 2024 / Notices 115 

11The Exchange recognizes that substantial 

shareholders who are not represented on the board 

or in management are likely to vote their shares at 

shareholder meetings but believes that this in itself 

is generally not sufficient to create a relationship 

with the company that would give a substantial 

shareholder the ability to influence inappropriately 

the terms of any transaction it enters into with the 

company. 

12 In determining whether a person is an affiliated 

person for purposes of the definition of an Active 

Related Party, the Exchange will consider all 

relevant facts and circumstances, including, but not 

limited to, whether such person is an affiliate 

within the meaning of that term under provisions 

of the federal securities laws and the rules 

thereunder. 13Section 13(d)(3) or Section 13(g)(3) provide: 

‘‘When two or more persons act as a [ ] group for 

the purpose of acquiring, holding, or disposing of 

[equity] securities of an issuer, the group shall be 

deemed a ‘person’. . . .’’ The determination under 

Sections 13(d)(3) and 13(g)(3) as to whether two or 

more persons are acting as a group does not depend 

solely on the presence of an express agreement. 

Depending on the particular facts and 

circumstances, concerted actions by two or more 

persons for the purpose of acquiring, holding— 

which includes voting—or disposing of securities of 

an issuer are sufficient to constitute the formation 

of a group. 

14Rule 12b–2 under Regulation 12B of the 

Exchange Act provides that ‘‘[t]he term ‘control’ 

(including the terms ‘controlling,’ ‘controlled by’ 

and ‘under common control with’) means the 

possession, direct or indirect, of the power to direct 

or cause the direction of the management and 

policies of a person, whether through the 

ownership of voting securities, by contract, or 

otherwise.’’ 

15See note 9 supra for a description of Section 

312.03(b)(ii). 

16See, for example, Nasdaq Stock Market Rule 

5635. 

common stock is subject to shareholder 

approval, which imposes significant 

delay and additional costs on the issuer, 

thereby often making the sale 

impracticable. This one percent 

limitation is therefore a significant 

restriction on the ability of an NYSE 

listed company to raise capital from its 

existing shareholders. Notably, the 

NYSE is the only listing exchange in the 

United States that has such a limitation 

in its rules and NYSE companies are 

therefore at a disadvantage in raising 

additional capital when compared to 

their peers listed on other national 

securities exchanges. 

The Exchange believes there are 

significant benefits from the protection 

provided to a listed company’s investors 

by the shareholder approval 

requirements in Section 312.03(b)(i) 

when a purchaser of the securities in a 

transaction is an officer or director or 

other control person of the company. In 

such cases, the potential exists for a 

related party purchaser to use their 

influence within the company to obtain 

superior terms from the company to the 

detriment of the company’s 

shareholders as a whole. However, the 

current definition of substantial security 

holder used in the rule also applies to 

holders of a company’s common stock 

who do not participate in the 

governance or management of the 

company through board or management 

representation. The Exchange believes 

that transactions with these kinds of 

shareholders who do not participate in 

the governance or management of the 

company generally do not give rise to 

the potential conflicts of interest in the 

determination of transaction terms that 

exist where the purchaser has a role in 

the listed company’s board or 

management. The Exchange believes 

that these shareholders that do not 

participate actively in the company in 

this way generally do not have the same 

ability to participate in and influence 

decision making as is the case with a 

related party that directly participates in 

the governance or management of the 

company.11 As discussed below the 

Exchange will be adopting the 

definition contained in Rule 12b–2 

under Regulation 12B of the Exchange 

Act to define control for purposes of the 

proposed amended rule. 

In light of the foregoing, the Exchange 

proposes to amend Section 312.03(b)(i) 

to limit its application to related parties 

whose interest in the company is not 

passive in nature. As proposed, Section 

312.03(b)(i) would be limited in 

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 12 who is an officer 

or director of the company (each an 

‘‘Active Related Party’’). For purposes of 

determining the existence of a group, 

the Exchange proposes to rely on the 

filings on Schedule 13D or Schedule 

13G disclosing the existence of a group 

as determined under Section 13(d)(3) or 

Section 13(g)(3) of the Exchange Act, 

along with any additional follow-up 

inquiry that is needed.13 The Exchange 

proposes to amend Section 312.04 to 

include new definitions for purposes of 

Section 312.03, providing that: (i) a 

‘‘group’’ means a group as determined 

under Section 13(d)(3) or Section 

13(g)(3) of the Exchange Act; and (ii) 

‘‘control’’ has the same meaning as 

defined in Rule 12b–2 of Regulation 12B 

under the Exchange Act.14 The 

Exchange intends to revise its internal 

procedures in reviewing proposed 

transactions to the extent necessary to 

obtain the necessary information to 

make determinations with respect to 

whether shareholders participating in 

transactions are Active Related Parties. 

In addition to the proposed definition 

of Active Related Party in the proposed 

amended version of Section 312.03(b)(i), 

the Exchange proposes for purposes of 

Section 312.03(b)(ii) to retain the 

broader definition of a Related Party 

included in the current rule (i.e., ‘‘a 

director, officer or substantial security 

holder of the company’’). Consequently, 

this proposal would not have any 

substantive effect on the application of 

Section 312.03(b)(ii) and a listed 

company selling securities to a Related 

Party under the circumstances set forth 

in the rule as amended remains subject 

to the shareholder approval 

requirements in that provision.15

The Exchange also notes that any 

listed company selling securities in a 

private placement that does not meet 

the Minimum Price requirement will 

remain subject to the shareholder 

approval requirement of Section 

312.03(c) if such transaction relates to 

20 percent or more of the issuer’s 

common stock. In addition, if the 

securities in such financing are issued 

in connection with an acquisition of the 

stock or assets of another company, 

shareholder approval will be required if 

the issuance of such securities alone or 

when combined with any other present 

or potential issuance of common stock, 

or securities convertible into common 

stock in connection with such 

acquisition, is equal to or exceeds either 

20 percent of the number of shares of 

common stock or 20 percent of the 

voting power outstanding before the 

issuance. Sales of securities will also 

continue to be subject to all other 

shareholder approval requirements set 

forth in Section 312.03 (including 

limitations with respect to equity 

compensation under Section 312.03(a) 

and Section 303A.08) and the change of 

control requirement of Section 

312.03(d). The Exchange notes that 

Section 312.04(a) provides that 

shareholder approval is required if any 

of the subparagraphs of Section 312.03 

require such approval, notwithstanding 

the fact that the transaction does not 

require approval under one or more of 

the other subparagraphs. Finally, the 

Exchange notes that Section 312.03(b)(i) 

as proposed to be amended would 

continue to provide a significant 

protection to shareholders against 

conflicts of interest in sales of securities 

to Active Related Parties and that no 

other listing venue has such a protection 

in its rules. The Exchange notes that its 

shareholder approval requirements are 

as stringent in every respect as those of 

its competitor listing venues.16

Under the proposal the Exchange will 

continue to require shareholder 

approval for below market sales (i.e., 

below the Minimum Price) over one 


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17 15 U.S.C. 78f(b). 

18 15 U.S.C. 78f(b)(5). 

19 15 U.S.C. 78f(b). In approving this proposed 

rule change, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

20 15 U.S.C. 78f(b)(5). 21See, e.g., Securities Exchange Act Release Nos. 

91471 (Apr. 2, 2021), 86 FR 18362 (NYSE–2020–85) 

(revising the shareholder approval requirements in 

Sections 312.03 and 312.04 and the requirements 

for related party transactions in Section 314.00); 

85374 (Mar. 20, 2019) 84 FR 11354 (Mar. 26, 2019) 

(NYSE–2018–54) (modifying the price requirements 

that companies must meet to avail themselves of 

certain exceptions from the shareholder approval 

requirements in Section 312.03); 84287 (Sept. 26, 

2018) 83 FR 49599 (Oct. 2, 2018) (Nasdaq–2018– 

008) (approving a Nasdaq proposal to change to the 

definition of market value for purposes of the 

shareholder approval rule and eliminate the 

requirement for shareholder approval of issuances 

at less than book value but greater than market 

value); 76814 (Dec. 31, 2015), 81 FR 0820 (Jan. 7, 

2016) (NYSE–2015–02) (approving amendments to 

the NYSE Listed Company Manual to exempt early 

stage companies from having to obtain shareholder 

approval in certain circumstances). See also 

Securities Exchange Act Release Nos. 48108 (June 

30, 2003), 68 FR 39995 (Jul. 3, 2003) (approving 

equity compensation shareholder approval rules of 

both the NYSE and the National Association of 

Securities Dealers, Inc. n/k/a NASDAQ); and 65225 

(Aug. 30, 2011), 76 FR 55148 (Sept. 6, 2011) 

(approving rules for the qualification, listing and 

delisting of companies on BATS, noting that 

qualitative listing requirements including 

shareholder approval rules are designed to ensure 

that companies trading on a national securities 

exchange will adequately protect the interest of 

public shareholders). 

percent to Active Related Parties. 

However, as a consequence of the 

proposed amendment, below market 

sales over one percent to substantial 

securityholders who are not Active 

Related Parties will be permitted 

without shareholder approval under 

312.03(b)(i), but will continue to be 

subject to all the other applicable 

shareholder approval requirements 

under 312.03. 

1. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,17 in general, and 

furthers the objectives of Section 6(b)(5) 

of the Act 18 in particular, in that it is 

designed to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in regulating, clearing, settling, 

processing information with respect to, 

and facilitating transactions in 

securities, to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest and is 

not designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

The Exchange believes that proposed 

amended Section 312.03(b)(i) is 

consistent with the protection of 

investors and the public interest. 

Specifically, the amended rule 

continues to provide for shareholder 

approval of below-market sales of 

securities to Active Related Parties of a 

listed company where a potential 

conflict of interest exists that Active 

Related Parties could use their influence 

within the company to obtain superior 

terms from the company to the 

detriment of the company’s 

shareholders as a whole. The current 

definition of substantial security holder 

used in the rule extends to holders of a 

company’s common stock who do not 

participate in the governance or 

management of the company through 

board or management representation. 

The Exchange believes that transactions 

with these kinds of shareholders who do 

not participate in the governance or 

management of the company (except by 

voting at shareholder meetings) in and 

of themselves generally do not give rise 

to the potential conflicts of interest in 

the determination of transaction terms 

that exist where the purchaser has a role 

in the listed company’s board or 

management. The Exchange believes 

that these shareholders that do not 

participate actively in the company in 

this way do not generally have the same 

ability to participate in and influence 

decision making as is the case with a 

related party that directly participates in 

the governance or management of the 

company. The proposed rule only 

modifies the existing rule to permit 

sales to investors who are not a director, 

officer, a 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 and with respect to whom the 

Exchange therefore believes that the 

potential for such self-dealing does not 

exist. 

The Exchange proposes to use 

definitions of ‘‘control’’ and ‘‘group’’ in 

the proposed amended rule that are 

used in the federal securities laws and 

the rules thereunder and, consequently, 

the Exchange believes that the use of 

such definitions is consistent with the 

Act. 

The Exchange believes that the 

proposed amendment would promote 

competition among listing venues by 

removing a limitation on capital raising 

by listed companies that does not exist 

for their peers on other listing 

exchanges. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange believes that the proposed 

amendment increases competition 

among listing venues by removing a 

limitation on capital raising by listed 

companies that does not exist for their 

peers on other listing exchanges. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change, as 

modified by Amendment No. 1, is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.19 In particular, the 

Commission finds that the proposed 

rule change, as modified by Amendment 

No. 1, is consistent with Section 6(b)(5) 

of the Act,20 which requires, among 

other things, that the rules of a national 

securities exchange be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in securities, to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest; and 

are not designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

The development and enforcement of 

meaningful corporate governance listing 

standards for a national securities 

exchange is of substantial importance to 

financial markets and the investing 

public, especially given investor 

expectations regarding the nature of 

companies that have achieved an 

exchange listing for their securities. The 

corporate governance standards 

embodied in the listing standards of 

national securities exchanges, in 

particular, play an important role in 

assuring that exchange-listed companies 

observe good governance practices, 

including safeguarding the interests of 

shareholders with respect to certain 

potentially dilutive transactions.21

As discussed above, the Exchange 

proposes to amend Section 312.03(b)(i) 


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22 ‘‘Minimum Price’’ means a price that is the 

lower of: (i) the Official Closing Price immediately 

preceding the signing of the binding agreement; or 

(ii) the average Official Closing Price for the five 

trading days immediately preceding the signing of 

the binding agreement. See Section 312.04(h) of the 

Manual. 

23Section 312.04(e) of the Manual provides that 

‘‘[a]n interest consisting of less than either five 

percent of the number of shares of common stock 

or five percent of the voting power outstanding of 

a company or entity shall not be considered a 

substantial interest or cause the holder of such an 

interest to be regarded as a substantial security 

holder.’’ 

24See proposed amended Section 312.03(b)(i) of 

the Manual defining ‘‘Active Related Party.’’ 

25See Section 312.03(b)(i) of the Manual and 

proposed amended Section 312.03(b)(ii) of the 

Manual defining Related Party. In each case, 

‘‘Related Party’’ is defined as ‘‘a director, officer or 

substantial security holder of the company.’’ 

26See supra Section II.A. Shareholder approval is 

required if any of the subparagraphs of Section 

312.03 of the Manual apply notwithstanding the 

fact that the transaction does not require approval 

under on or more of the other subparagraphs. See 

Section 312.04(a). As discussed below, these other 

shareholder approval provisions require approval 

for certain sales of discounted stock (i.e., below the 

Minimum Price) in private placements as well as 

sales of stock under certain situations regardless of 

whether or not such sale is below the Minimum 

Price. 

27See supra Section II.A. 28Rule 12b–2 under Regulation 12B of the 

Exchange Act provides that ‘‘[t]he term ‘control’ 

(including the terms ‘controlling,’ ‘controlled by’ 

and ‘under common control with’) means the 

possession, direct or indirect, of the power to direct 

or cause the direction of the management and 

policies of a person, whether through the 

ownership of voting securities, by contract, or 

otherwise.’’ See supra note 14 and accompanying 

text. 

29Section 13(d)(3) or Section 13(g)(3) provide: 

‘‘When two or more persons act as a [ ] group for 

the purpose of acquiring, holding, or disposing of 

[equity] securities of an issuer, the group shall be 

deemed a ‘person’. . . .’’ The determination under 

Sections 13(d)(3) and 13(g)(3) as to whether two or 

more persons are acting as a group does not depend 

solely on the presence of an express agreement. 

Depending on the particular facts and 

circumstances, concerted actions by two or more 

persons for the purpose of acquiring, holding— 

which includes voting—or disposing of securities of 

an issuer are sufficient to constitute the formation 

of a group. See supra note 13 and accompanying 

text. 

30See supra Section II.A. 

31 In determining whether a person is an affiliated 

person, the Exchange will consider all relevant facts 

and circumstances, including, but not limited to 

whether such person is an affiliate within the 

meaning of that term under the federal securities 

laws and rules thereunder. See supra note 12. 

32See supra note 23. 

33See supra Section II.A and proposed Section 

312.03(b)(ii) of the Manual, as modified by 

Amendment No. 1. As discussed above, Section 

312.03(b)(ii) of the Manual provides that 

shareholder approval is required prior to the 

issuance of common stock, or of securities 

convertible into or exercisable for common stock, 

where such securities are issued as consideration in 

a transaction or series of related transactions in 

which a Related Party has a five percent or greater 

interest (or such persons collectively have a ten 

percent or greater interest), directly or indirectly, in 

the company or assets to be acquired or in the 

consideration to be paid in the transaction or series 

of related transactions and the present or potential 

issuance of common stock, or securities convertible 

into common stock, could result in an issuance that 

exceeds either five percent of the number of shares 

of common stock or five percent of the voting power 

outstanding before the issuance. 

of the Manual to modify its application. 

Specifically, the Exchange proposes to 

limit the shareholder approval 

requirements of Section 312.03(b)(i) of 

the Manual, which applies to issuances 

of common stock exceeding either one 

percent of the number of shares of 

common stock or one percent of the 

voting power outstanding before the 

issuance for a price below the Minimum 

Price,22 to require shareholder approval 

only for issuances to Active Related 

Parties, defined as directors, officers, 

controlling shareholders or members of 

a control group or any other substantial 

security holders 23 of the company that 

have an affiliated person who is an 

officer or director of the company,24 and 

to no longer require shareholder 

approval under this provision for such 

issuances to Related Parties 25 that are 

not Active Related Parties (i.e., 

substantial security holders that are not 

controlling shareholders or a member of 

a control group or that do not have an 

affiliated person who is an officer or 

director of the company). According to 

the Exchange, this change would allow 

substantial security holders who do not 

participate in the governance or 

management of the company (and who 

are thus not in the newly defined Active 

Related Party category) to acquire 

additional stock below the Minimum 

Price without the need for shareholder 

approval under Section 312.01(b(i), thus 

making it less burdensome for NYSE 

listed companies to raise additional 

capital quickly.26 The Exchange states 

its belief that transactions with 

substantial security holders that are not 

Active Related Parties generally do not 

give rise to the potential conflicts of 

interest in the determination of 

transaction terms that exist where the 

purchaser has a role in the listed 

company’s board or management, as 

there is a lesser possibility that a 

substantial security holder that is not an 

Active Related Party may exercise 

influence over the terms of a transaction 

with the company if such substantial 

security holder does not have 

representation on the board or in 

management.27 The Exchange also 

proposes to adopt two new definitions 

under the revised rule for purposes of 

defining ‘‘control’’ and ‘‘group.’’ 

‘‘Control’’ would be defined using the 

definition in Rule 12b–2 under the 

Act 28 and ‘‘group’’ (for purposes of 

control group) would be defined as a 

group as determined under Section 

13(d)(3) or Section 13(g)(3) of the Act.29

After careful consideration, the 

Commission finds that the proposed 

rule change is consistent with the Act. 

As stated by the Exchange, the 

shareholder approval requirement in 

Section 312.03(b)(i) of the Manual 

protects against a potential conflict of 

interest when the acquirer of additional 

stock may have enough influence within 

the company to obtain superior terms 

from the company to the detriment of 

the company’s shareholders as a 

whole.30 As amended, the shareholder 

approval requirement in Section 

312.03(b)(i) of the Manual would 

continue to apply to below market sales 

of securities of greater than 1% to 

Active Related Parties (i.e., directors, 

officers, controlling shareholders or 

members of a control group or any other 

substantial security holders of the 

company that have an affiliated 

person 31 who is an officer or director of 

the company). As a result, these Active 

Related Parties, that have a role in the 

listed company’s board or management 

or are substantial security holders that 

exercise control and thus have a 

potential conflict of interest in 

connection with the negotiation of any 

purchase of stock, will continue to be 

subject to the shareholder approval 

requirements under Section 312.03(b)(i) 

of the Manual. Moreover, even though 

substantial security holders that are not 

Active Related Parties will no longer be 

subject to the shareholder approval 

requirement in Section 312.03(b)(i) of 

the Manual, they will continue to be 

subject to the other shareholder 

approval requirements set forth in 

Section 312.03 of the Manual, to the 

extent applicable. 

To make it clear that there are no 

changes being made to the application 

of the other shareholder approval 

requirements in Section 312.03 of the 

Manual, the Exchange has specifically 

amended Section 312.03(b)(ii) of the 

Manual to retain the definition of 

Related Party in order to clarify that a 

listed company selling securities to a 

Related Party (that includes a 

substantial security holder) 32 under the 

circumstances set forth in that rule as 

amended would remain subject to the 

shareholder approval requirements set 

forth therein.33 By amending the 

proposal so that the substantive 

requirements of Section 312.03(b)(ii) of 

the Manual remain unchanged, the 

provision will continue to provide 

important investor protections for 

shareholders when a listed company is 

selling securities to a Related Party that 

has an interest, directly or indirectly, in 


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118 Federal Register / Vol. 89, No. 1 / Tuesday, January 2, 2024 / Notices 

34 In its proposal, the Exchange stated that it will 

revise its internal procedures in reviewing proposed 

transactions as necessary to obtain the information 

necessary to determine whether shareholders 

participating in transaction are Active Related 

Parties. In addition, the Exchange stated that it will 

rely on the filings on Schedule 13D or Schedule 

13G for purposes of determining the existence of a 

group, along with any additional follow-up inquiry 

that is needed. See supra Section II.A. The 

Commission believes this is reasonable and will 

help the Exchange ensure compliance with the 

revised rule. 

35See Securities Exchange Act Release No. 98704 

(Oct. 10, 2023), 88 FR 76896 (Nov. 7, 2023), 76933. 

36See id. 

37See Rule 12b–1, which sets forth the scope of 

Regulation 12B and provides that all rules 

contained in Regulation 12B, including Rule 12b– 

2, apply to such filings. For example, the 

Commission has enforced violations of Rule 12b– 

2 in Regulation 12B against beneficial owners for 

disclosure deficiencies in their Schedule 13D 

filings. 

38See, e.g., Section 312.03(a), (b)(ii), (b)(iii), (c) 

and (d) of the Manual. The Commission notes that 

if shareholder approval was not required under 

Section 312.03(b)(i) of the Manual, it could still be 

required under one of the other shareholder 

approval provisions in Section 312.03 of the 

Manual since these provisions apply independently 

of each other. See Section 312.04(a) of the Manual. 

39See Sections 312.03(a), 312.03(b)(iii) and 

303A.08 of the Manual. 

40See Section 312.03(c) of the Manual. 

41See Sections 312.03(d) and 312.03(b)(ii) of the 

Manual. See also, supra note 33 and accompanying 

text concerning Section 312.03(b)(ii). 

42See, e.g., Nasdaq Rule 5635; NYSE American 

LLC Company Guide, Section 711–713. 

43See supra Section II.A at note 16 and 

accompanying text. 

44See, for example, Section 312 (b)(ii), (c) and (d) 

and supra notes 39–42 and accompanying text. 

the company or assets to be acquired or 

consideration to be paid. 

The Commission also finds that the 

Exchange’s proposed definitions of 

‘‘group’’ and ‘‘control’’ in Sections 

312.04(k) and (l) of the Manual for 

purposes of Section 312.03 of the 

Manual are consistent with the Act.34

The Exchange’s proposed use of the 

standards under Sections 13(d)(3) and 

13(g)(3) to determine the existence of a 

group is consistent with the guidance 

given by the Commission that ‘‘[t]he 

appropriate legal standard for 

determining whether a group is formed 

is found in sections 13(d)(3) and 13(g)(3) 

[of the Act].’’ 35 The Commission further 

stated that ‘‘[t]he determination depends 

on an analysis of all the relevant facts 

and circumstances and not solely on the 

presence or absence of an express 

agreement, as two or more persons may 

take concerted action or agree 

informally.’’ 36 The Exchange’s 

proposed use of Rule 12b–2 to 

determine the existence of control also 

is reasonable and consistent with the 

Act given that definition applies to ‘‘all 

reports filed pursuant to section[ ] 13 [ ] 

of the Act. . . .’’ 37

The Commission notes, in approving 

the proposal to amend the shareholder 

approval requirement in Section 

312.03(b)(i) of the Manual, that the 

ability of listed companies to sell 

securities without shareholder approval 

continues to remain limited by other 

important Exchange rules.38 For 

example, the Commission notes that any 

discounted issuance of stock to a 

company’s officers, directors, 

employees, or consultants would 

require shareholder approval under the 

Exchange’s equity compensation 

rules.39 In addition, any listed company 

selling securities in a private placement 

that does not meet the Minimum Price 

requirement will remain subject to the 

shareholder approval requirement of 

Section 312.03(c) of the Manual if such 

transaction relates to 20 percent or more 

of the issuer’s common stock or voting 

power.40 Section 312.03(c) of the 

Manual also requires shareholder 

approval for issuances of 20% or more 

of the common stock or the voting 

power in connection with an acquisition 

of the stock or assets of another 

company irrespective of whether the 

price meets or exceeds the Minimum 

Price. Furthermore, shareholder 

approval would be required if the 

issuance resulted in a change of control 

and, as discussed above, for the 

acquisition of stock or assets of another 

company where the issuance increases 

voting power or common shares by 5% 

or more and a Related Party has a 5% 

direct or indirect interest (or collectively 

10%) in the company or assets to be 

acquired.41

Finally, the Exchange also states its 

belief that Section 312.03.(b)(i) as 

proposed to be amended would 

continue to provide a significant 

protection to shareholders against 

conflicts of interest in sales of securities 

to Active Related Parties and that no 

other listing exchange has such a 

requirement.42 The Exchange also 

represents that its shareholder approval 

requirements are as stringent as those of 

its competitor listing venues.43 The 

Commission is cognizant of the fact that 

the Exchange operates in a highly 

competitive environment including 

with respect to the listing of issuers. 

While the proposal would allow below 

market sales (i.e., below the Minimum 

Price) over one percent by listed 

companies to substantial security 

holders that are not Active Related 

Parties without shareholder approval, 

the other shareholder approval 

requirements remain unchanged and 

provide additional protections on the 

amount of shares that can be issued 

without a shareholder vote.44

Importantly, Active Related Parties, that 

have a role in the listed company’s 

board or management or are substantial 

security holders that exercise control 

and thus have a potential conflict of 

interest in connection with the 

negotiation of any purchase of stock, 

will continue to be subject to the 

shareholder approval requirements 

under Section 312.03(b)(i) of the 

Manual. The proposal also will promote 

fair competition among listing 

exchanges. For the reasons discussed 

above, the Commission believes that the 

proposed rule change, as modified by 

Amendment No. 1, is consistent with 

the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change, as modified by Amendment No. 

1, is consistent with the Act. Comments 

may be submitted by any of the 

following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

NYSE–2023–34 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–NYSE–2023–34. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 


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Federal Register / Vol. 89, No. 1 / Tuesday, January 2, 2024 / Notices 119 

45 15 U.S.C. 78f(b)(2). 

46 17 CFR 200.30–3(a)(12). 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–NYSE–2023–34 and should be 

submitted on or before January 23, 2024. 

V. Accelerated Approval of Proposed 

Rule Change, as Modified by 

Amendment No. 1 

The Commission finds good cause, 

pursuant to Section 19(b)(2) of the Act, 

to approve the proposed rule change, as 

modified by Amendment No. 1, prior to 

the 30th day after the date of 

publication of Amendment No. 1 in the 

Federal Register. As discussed above, 

Amendment No. 1, the Exchange 

revised the proposal to: (1) adopt a new 

definition of an ‘‘Active Related Party’’ 

in Section 312.03(b)(i) of the Manual 

and to retain the current definition of 

‘‘Related Party’’ for purposes of Section 

312.03(b)(ii) of the Manual; (2) adopt in 

Section 312.04 of the Manual 

definitions of ‘‘control’’ and ‘‘group’’ for 

purposes of proposed amended Section 

312.03(b)(i) of the Manual; (3) include 

additional explanation of why the 

Exchange is proposing the rule change 

and believes that it is appropriate; (4) 

explain that the proposal would not 

have any substantive effect on the 

application of Section 312.03(b)(ii) of 

the Manual and that a listed company 

selling securities to a Related Party 

under the circumstances set forth in 

312.03(b)(ii) of the Manual, as amended, 

would remain subject to the shareholder 

approval requirements therein; and (5) 

make other clarifying and conforming 

changes. The Commission believes that 

these revisions provide greater clarity 

on the application of the proposal and 

its scope and the circumstances under 

which shareholder approval is still 

required under Section 312.03 of the 

Manual. The additional explanation in 

support of the proposal as well as the 

amended rule language in Amendment 

No. 1 assist the Commission in 

evaluating the Exchange’s proposal and 

in determining that it is consistent with 

the Act. 

Accordingly, the Commission finds 

good cause for approving the proposed 

rule change, as modified by Amendment 

No. 1, on an accelerated basis, pursuant 

to Section 19(b)(2) of the Act. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act 45 that the 

proposed rule change (SR–NYSE–2023– 

34), as modified by Amendment No. 1, 

be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.46

Christina Z. Milnor, 

Assistant Secretary. 

[FR Doc. 2023–28796 Filed 12–29–23; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

Reporting and Recordkeeping 

Requirements Under OMB Review 

AGENCY: Small Business Administration. 

ACTION: 30-Day notice. 

SUMMARY: The Small Business 

Administration (SBA) is seeking 

approval from the Office of Management 

and Budget (OMB) for the information 

collection described below. In 

accordance with the Paperwork 

Reduction Act and OMB procedures, 

SBA is publishing this notice to allow 

all interested member of the public an 

additional 30 days to provide comments 

on the proposed collection of 

information. 

DATES: Submit comments on or before 

February 1, 2024. 

ADDRESSES: Written comments and 

recommendations for this information 

collection request should be sent within 

30 days of publication of this notice to 

www.reginfo.gov/public/do/PRAMain. 

Find this particular information 

collection request by selecting ‘‘Small 

Business Administration’’; ‘‘Currently 

Under Review,’’ then select the ‘‘Only 

Show ICR for Public Comment’’ 

checkbox. This information collection 

can be identified by title and/or OMB 

Control Number. 

FOR FURTHER INFORMATION CONTACT: You 

may obtain a copy of the information 

collection and supporting documents 

from the Agency Clearance Office at 

Curtis.Rich@sba.gov; (202) 205–7030, or 

from www.reginfo.gov/public/do/ 

PRAMain. 

SUPPLEMENTARY INFORMATION: Small 

Business Administration collects this 

information from lenders who 

participate in the secondary market 

program. The information is used to 

facilitate and administer secondary 

market transactions in accordance with 

15 U.S.C. 634(f)3 and to monitor the 

program for compliance with 15 U.S.C. 

639(h). 

Solicitation of Public Comments 

Comments may be submitted on (a) 

whether the collection of information is 

necessary for the agency to properly 

perform its functions; (b) whether the 

burden estimates are accurate; (c) 

whether there are ways to minimize the 

burden, including through the use of 

automated techniques or other forms of 

information technology; and (d) whether 

there are ways to enhance the quality, 

utility, and clarity of the information. 

OMB Control No. 3245–0185. 

Title: Secondary Participation 

Guaranty Agreement. 

Description of Respondents: Small 

Business Lending Companies. 

SBA Form Number: SBA Forms 1086, 

1502. 

Estimated Number of Respondents: 

4,000. 

Estimated Annual Responses: 4,000. 

Estimated Annual Hour Burden: 

60,000. 

Curtis Rich, 

Agency Clearance Officer. 

[FR Doc. 2023–28837 Filed 12–29–23; 8:45 am] 

BILLING CODE 8026–09–P 

SMALL BUSINESS ADMINISTRATION 

Data Collection Available for Public 

Comments 

ACTION: 60-Day notice and request for 

comments. 

SUMMARY: The Small Business 

Administration (SBA) intends to request 

approval, from the Office of 

Management and Budget (OMB) for the 

collection of information described 

below. The Paperwork Reduction Act 

(PRA) requires federal agencies to 

publish a notice in the Federal Register 

concerning each proposed collection of 

information before submission to OMB, 

and to allow 60 days for public 

comment in response to the notice. This 

notice complies with that requirement. 

DATES: Submit comments on or before 

March 3, 2023. 

ADDRESSES: Send all comments to 

Terrance Moultrie, Supervisor Business 

Operations Specialist, Government 

Contracting, Small Business 

Administration. 

FOR FURTHER INFORMATION CONTACT: 

Terrance Moultrie, Supervisor Business 

Operations Specialist, Government 

Contracting, 202–389–6644, 

terrence.moultrieSr@sba.gov or Curtis B. 

Rich, Agency Clearance Officer, 

curtis.rich@sba.gov. 


khammond on DSKJM1Z7X2PROD with NOTICES