Document ID: SEC-2021-1346-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2021-10-05T04:00Z

[Federal Register Volume 86, Number 190 (Tuesday, October 5, 2021)]
[Notices]
[Pages 55071-55073]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-21623]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93192; File No. SR-NYSE-2021-53]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change To Amend the Shareholder 
Voting Requirement Set Forth in Section 312.07 of the NYSE Listed 
Company Manual

September 29, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on September 16, 2021, New York Stock Exchange LLC 
(``NYSE'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I and II below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt an amendment to the shareholder 
voting requirement set forth in Section 312.07 of the NYSE Listed 
Company Manual.

[[Page 55072]]

The proposed rule change is available on the Exchange's website at 
www.nyse.com, at the principal office of the Exchange, and at the 
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    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
    Section 312.07 of the NYSE Listed Company Manual (``Manual'') 
provides that, where shareholder approval is a prerequisite to the 
listing of any additional or new securities of a listed company, or 
where any matter requires shareholder approval, the minimum vote which 
will constitute shareholder approval for such purposes is defined as 
approval by a majority of votes cast on a proposal in a proxy bearing 
on the particular matter. Section 312.07 is currently applicable to 
shareholder approval of stock issuances under Sections 303A.08 (equity 
compensation) and 312.03 of the Manual.\4\
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    \4\ Item 21(b) of Schedule 14A requires companies soliciting 
proxies to disclose the method by which votes will be counted, 
including the treatment and effect of abstentions and broker non-
votes under applicable state law as well as the company's charter 
and bylaw provisions.
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    The text of Section 312.07 does not specifically address the 
treatment of abstentions. However, the Exchange has historically 
advised companies that abstentions should be treated as votes cast for 
purposes of Section 312.07. Under that approach, a proposal is deemed 
approved under Section 312.07 only if the votes in favor of the 
proposal exceed the aggregate of the votes cast against the proposal 
plus abstentions. The Exchange has observed that this approach has 
caused confusion among listed companies. The corporate laws of many 
states, including Delaware, allow companies to include in their 
governing documents that votes cast for purposes of a shareholder vote 
includes yes and no votes (but not abstentions), such that a proposal 
succeeds if the votes in favor exceed the votes cast against. The 
Exchange understands that, consistent with those state laws, many 
public companies have bylaws indicating that abstentions are not 
treated as votes cast.
    The Exchange proposes to amend Section 312.07 to provide that a 
company must calculate the votes cast with respect to a proposal that 
is subject to Section 312.07 in accordance with its own governing 
documents and any applicable state law. The Exchange believes that this 
treatment of abstentions will avoid any complications engendered among 
issuers and shareholders when different voting standards are applied 
under the Exchange rule, a company's governing documents, and/or 
applicable state laws.
    The Exchange notes that Nasdaq has a rule requiring that proposals 
receive a majority of ``the votes cast,'' \5\ but is silent on the 
question as to whether abstentions should be treated as votes cast. 
Nasdaq has published an FAQ on its website that clearly states:
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    \5\ See Nasdaq Marketplace Rule 5635(e)(4).
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    Nasdaq does not define the term ``votes cast''. As such, a company 
must calculate the ``votes cast'' in accordance with its governing 
documents and any applicable state law.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Securities Exchange Act of 1934 (the ``Act'') generally.\6\ 
Section 6(b)(5) \7\ requires, among other things, that exchange rules 
are 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 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 the public interest and the interests of 
investors, promote just and equitable principles of trade and that they 
are not designed to permit unfair discrimination between issuers, 
brokers or dealers.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposal is designed to protect the 
public interest and the interests of investors. The proposed approach 
to calculations of ``votes cast'' in Section 312.07 would not prescribe 
a particular interpretation under Exchange rules. Rather, a listed 
company would calculate votes cast in accordance with the company's 
governing documents and applicable state laws. In doing so, the 
proposal will reduce confusion among issuers and shareholders. The 
proposed amendment would also help ensure that shareholders properly 
understand the implications of choosing to abstain on a proposal 
subject to approval under Exchange rules.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposal would impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act. There would be no effect on the competition 
among issuers listed on the NYSE resulting from the proposed amendment, 
because all issuers would calculate votes cast in accordance with their 
own governing documents and applicable state laws. The proposed 
amendment is consistent with the existing interpretation of the 
comparable rule of the other primary listing exchange, so the proposed 
amendment would have no effect on the competition for listings among 
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. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

[[Page 55073]]

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2021-53 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-2021-53. 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 (http://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 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSE-2021-53, and should be submitted on 
or before October 26, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-21623 Filed 10-4-21; 8:45 am]
BILLING CODE 8011-01-P