Document ID: SEC-2020-0793-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2020-05-20T04:00Z

[Federal Register Volume 85, Number 98 (Wednesday, May 20, 2020)]
[Notices]
[Pages 30755-30759]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10818]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88875; File No. SR-NYSE-2020-43]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Adopt New Section 312.03T of the NYSE Listed Company Manual To Provide 
a Temporary Exception Through June 30, 2020 From the Application of 
Certain Shareholder Approval Requirements Set Forth in Sections 312.03 
and 303A.08 of the Manual

May 14, 2020.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on May 13, 2020, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to [sic] new Section 312.03T of the NYSE 
Listed Company Manual (the ``Manual'') to provide a temporary exception 
through June 30, 2020 from the application of certain of the 
shareholder approval requirements set forth in Sections 312.03 and 
303A.08 of the Manual. 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
    The Exchange proposes new Section 312.03T of the Manual to provide 
a temporary exception through June 30, 2020 from the application of 
certain of the shareholder approval requirements under Sections 312.03 
and 303A.08 as described below.
    The U.S. and global economies have experienced unprecedented 
disruption as a result of the ongoing spread of COVID-19, including 
severe limitations on companies' ability to operate their businesses, 
dramatic market declines and volatility in the U.S. and global equity 
markets, and severe disruption in the credit markets. Many listed 
companies are experiencing urgent liquidity needs during this period of 
crisis due to lost revenues and maturing debt obligations. In these 
circumstances, listed companies frequently need to access additional 
capital that may not be available in the public equity or credit 
markets.
    In response to this unprecedented emergency and to facilitate 
companies in quickly accessing necessary capital, the Exchange proposes 
to temporarily modify certain of its shareholder approval requirements 
for share issuances.\4\ Specifically, the Exchange proposes to adopt 
Section 312.03T to provide a limited temporary, exception to the 
shareholder approval requirements in Section (c) \5\ and, in certain 
narrow circumstances, a limited exception to 312.03(b) \6\ and the

[[Page 30756]]

requirements with respect to equity compensation set forth in Sections 
312.03(a) and 303A.08 of the Manual.\7\
---------------------------------------------------------------------------

    \4\ The Exchange waived certain of the requirements under 
Section 312.03 through June 30, 2020 pursuant to an earlier rule 
filing. Specifically, the Exchange waived: (i) The provision in 
Section 312.03(b) limiting a Related Party or other purchaser 
affiliated with a Related Party to purchasing securities 
representing no more than 5% of the company's then-outstanding 
shares or 5% of the company's voting power before the issuance in a 
transaction meeting the Minimum Price Test; and (ii) certain of the 
requirements for meeting the Bona Fide Financing exception to 
Section 312.03(c) (i.e., the requirements that there must be 
multiple purchasers in the transaction and that no purchaser may 
acquire securities representing more than 5% of the company's then-
outstanding shares or 5% of its voting power before the issuance). 
See Exchange Act Release No. 34-88572 (April 6, 2020); 85 FR 20323 
(April 10, 2020) (SR-NYSE-2020-30).
    \5\ Section 312.03(c) requires shareholder approval 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 if: (1) The common stock has, or will have upon 
issuance, voting power equal to or in excess of 20 percent of the 
voting power outstanding before the issuance of such stock or of 
securities convertible into or exercisable for common stock; or (2) 
the number of shares of common stock to be issued is, or will be 
upon issuance, equal to or in excess of 20 percent of the number of 
shares of common stock outstanding before the issuance of the common 
stock or of securities convertible into or exercisable for common 
stock. However, shareholder approval will not be required for any 
such issuance involving: Any public offering for cash; any bona fide 
private financing, if such financing involves a sale of: Common 
stock, for cash, at a price at least as great as the Minimum Price; 
or securities convertible into or exercisable for common stock, for 
cash, if the conversion or exercise price is at least as great as 
the Minimum Price.
    Section 312.04(i) defines the Minimum Price as follows: 
``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. Section 312.04(j) defines the Official Closing 
Price as follows: ``Official Closing Price'' of the issuer's common 
stock means 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. For 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 if 
the regular session on Tuesday, then Monday's official closing price 
is used.
    \6\ Section 312.03(b) of the Manual requires shareholder 
approval 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: (1) A director, officer or 
substantial security holder of the company (each a ``Related 
Party''); (2) a subsidiary, affiliate or other closely-related 
person of a Related Party; or (3) any company or entity in which a 
Related Party has a substantial direct or indirect interest; 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. However, if the Related Party involved in the 
transaction is classified as such solely because such person is a 
substantial security holder, and if the issuance relates to a sale 
of stock for cash at a price at least as great as the Minimum Price, 
then shareholder approval will not be required unless the number of 
shares of common stock to be issued, or unless the number of shares 
of common stock into which the securities may be convertible or 
exercisable, exceeds either five percent of the number of shares of 
common stock or five percent of the voting power outstanding before 
the issuance. Section 312.03(b) includes an exemption for companies 
that meet the Exchange's definition of an Early Stage Company.
    \7\ Section 303A.08 requires shareholder approval, with certain 
exceptions, prior to the issuance of securities when a stock option 
or purchase plan is to be established or materially amended or other 
equity compensation arrangement made or materially amended, pursuant 
to which stock may be acquired by officers, directors, employees, or 
consultants. Section 312.03(a) incorporates the requirements of 
Section 303A.08 into Section 312.03.
---------------------------------------------------------------------------

Difficulties Posed by Shareholder Approval Requirements in Current 
Crisis
    One unavoidable consequence of the actions being taken to reduce 
the spread of COVID-19 is a reduction, or complete interruption, in 
revenue for many companies. For example, many communities have mandated 
that all restaurants and entertainment facilities close for a period of 
time. Similarly, companies in the travel sector have seen significant 
declines in bookings even if they are allowed to continue to operate. 
Thus, these businesses have no or greatly reduced revenue to offset the 
operating costs or increased costs associated with the crisis. As such, 
investors may be reluctant to enter into new equity transactions, 
unless they are compensated for the risk through discounts to the 
trading price of a security, and companies may be forced by current 
circumstances to raise money through equity financings that require 
shareholder approval under the Exchange's rules. At the same time, 
other companies have sudden, unexpected cash needs as they undertake 
new or accelerated initiatives designed to address the loss of business 
and supply shortages caused by COVID-19.
    While an exception is currently available under Section 312.05 of 
the Manual for companies in financial distress where the delay in 
securing stockholder approval would seriously jeopardize the financial 
viability of the company, that exception is not helpful in most 
situations arising from the COVID-19 pandemic.\8\ For example, while a 
company may need additional cash so that it can continue to pay 
employees during a period of decreased or no revenue, the company's 
viability may not otherwise be in jeopardy. Further, the accelerated 
need for funds, as well as the significantly curtailed operations of 
many businesses, may make impractical the requirement to mail notice to 
all shareholders.
---------------------------------------------------------------------------

    \8\ Section 312.05 provides as follows: Exceptions may be made 
to the shareholder approval policy in Para. 312.03 upon application 
to the Exchange when (1) the delay in securing stockholder approval 
would seriously jeopardize the financial viability of the enterprise 
and (2) reliance by the company on this exception is expressly 
approved by the Audit Committee of the Board. A company relying on 
this exception must mail to all shareholders not later than 10 days 
before issuance of the securities a letter alerting them to its 
omission to seek the shareholder approval that would otherwise be 
required under the policy of the Exchange and indicating that the 
Audit Committee of the Board has expressly approved the exception.
---------------------------------------------------------------------------

Proposed COVID-19 Exception
    In light of the difficulties experienced by certain listed 
companies during the current crisis, the Exchange proposes a limited, 
temporary exception from the shareholder approval requirements in 
Section 312.03(c), accompanied, in certain narrow circumstances, by a 
limited exception from Sections 312.03(a) and (b) and Section 303A.08. 
This proposed exception in Section 312.03T would be available until and 
including June 30, 2020. To rely on this exception, the company must 
submit the related supplemental listing application and certification 
pursuant to Section 312.03T(b)(5)(A) (as described below) and obtain 
the Exchange's approval of its utilization of the exception pursuant to 
Section 312.03T(b)(5)(B) (as described below) and thereafter sign a 
binding agreement no later than June 30, 2020. If the company satisfies 
such conditions, the issuance of the securities governed by such 
agreement in reliance on the exception in Section 312.03T may occur 
after June 30, 2020, provided the issuance takes place no later than 30 
calendar days following the date of the binding agreement. If the 
company does not issue securities within 30 calendar days, as described 
above, it may no longer rely on the exception in Section 312.03T.
    Under proposed Section 312.03T, the exception would be limited to 
circumstances where the delay in securing shareholder approval would 
(i) have a material adverse impact on the company's ability to maintain 
operations under its pre-COVID-19 business plan; (ii) result in 
workforce reductions; (iii) adversely impact the company's ability to 
undertake new initiatives in response to COVID-19; or (iv) seriously 
jeopardize the financial viability of the enterprise. In addition to 
demonstrating that the transaction meets one of the foregoing 
requirements, the company would have to demonstrate to the Exchange 
that the need for the transaction is due to circumstances related to 
COVID-19, that the proceeds would not be used to fund any acquisition 
transaction, and that the company undertook a process designed to 
ensure that the proposed transaction represents the best terms 
available to the company. The Exchange also proposes, similar to the 
requirement for the financial viability exception, to require that the 
company's audit committee or a comparable committee comprised solely of 
independent, disinterested directors expressly approve reliance on this 
exception. The Exchange also proposes to require such committee or a 
comparable committee comprised solely of independent, disinterested 
directors to determine that the transaction is in the best interest of 
shareholders.\9\
---------------------------------------------------------------------------

    \9\ The Exchange notes that the proposed relief will not 
override any requirements arising under applicable laws or a 
company's own governance documents that would otherwise require a 
company to obtain shareholder approval for a transaction.
---------------------------------------------------------------------------

    The company must submit a supplemental listing application as 
required by Section 703.01(part one)(A) in relation to the applicable 
transaction along with a certification to the Exchange that it complies 
with all requirements of Section 312.03T(b) (and Section 312.03T(c) if 
applicable) and describing with specificity how it complies. In such 
certification, the Exchange expects such company to describe with 
specificity how it complies with Section 312.03T(b) and (c), if 
applicable. The Exchange must approve all transactions by countersigned 
application in advance of any issuance of securities in reliance on 
Section 312.03T and such approval of a company's reliance on the 
exception will be based on a review of whether the company has 
established that it complies with the requirements of Section 
312.03T(b) (and Section 312.03T(c) if applicable). Given the fact that 
the Exchange must undertake a detailed review before approving any use 
of this exception, the Exchange advises companies to commence 
discussions with the Exchange and provide the required documentation as 
far in advance of the proposed transaction as is possible.
    Section 312.03T(e) will provide that issuances pursuant to Section 
312.03T must comply with all other requirements of applicable Exchange 
rules, except as provided for therein.

[[Page 30757]]

Such requirements include the shareholder approval requirements in 
Sections 312.03(b) and (c) in relation to issuances other than sales of 
securities for cash, the change of control provision of Section 
312.03(d) and the equity compensation requirements set forth in 
sections 312.03(a) and 303A.08 subject to the limited exceptions set 
forth therein. In addition, funds raised from the issuance of 
securities pursuant to Section 312.03T may not be used to fund 
acquisition transactions.
    To provide shareholders with advance notice of the transaction, the 
Exchange proposes Section 312.03T(d), which would require a company 
relying on the proposed exception to make a public announcement by 
filing a Form 8-K, where required by SEC rules, or by issuing a press 
release disclosing as promptly as possible, but no later than two 
business days before the issuance of the securities:
     The terms of the transaction (including the number of 
shares of common stock that could be issued and the consideration 
received);
     that shareholder approval would ordinarily be required 
under Exchange shareholder approval rules; and
     that the audit committee or a comparable committee 
comprised solely of independent, disinterested directors expressly 
approved reliance on the exception and determined that the transaction 
is in the best interest of shareholders.\10\
---------------------------------------------------------------------------

    \10\ See Section 312.05 requiring similar disclosure, for a 
transaction for which a company relied on the financial viability 
exception, alerting shareholders to the omission to seek the 
shareholder approval that would otherwise be required.
---------------------------------------------------------------------------

    In addition to the limitations on issuances to related parties set 
forth in Section 312.03(b), the Exchange has long interpreted Section 
303A.08 to require shareholder approval for certain sales to officers, 
directors, employees, or consultants when such issuances could be 
considered a form of ``equity compensation.'' The Exchange has heard 
from market participants that investors often require a company's 
senior management to put their personal capital at risk and participate 
in a capital raising transaction alongside the unaffiliated investors. 
The Exchange believes that as a result of uncertainty related to the 
ongoing spread of the COVID-19 virus, listed companies seeking to raise 
capital may face such requests. Accordingly, the Exchange proposes that 
the temporary exception allow such investments under limited 
circumstances.
    To that end, the Exchange proposes Section 312.03T(c), which would 
provide for an exception from shareholder approval under Sections 
312.03(b) and Sections 312.03(a) and 303A.08 for participation in the 
transaction described in Section 312.03T(b) by any person whose 
participation would otherwise be subject to shareholder approval under 
Section 312.03(b) or Sections 312.03(a) and 303A.08 (an ``Affiliated 
Purchaser''), provided the Affiliated Purchaser's participation in the 
transaction was specifically required by unaffiliated investors. In 
addition, to further protect against self-dealing, proposed Section 
312.03T(c) would limit such participation to a de-minimis level--each 
Affiliated Purchaser's participation must be less than 5% of the 
transaction and all Affiliated Purchasers' participation collectively 
must be less than 10% of the transaction. Finally, any Affiliated 
Purchaser investing in the transaction must not have participated in 
negotiating the economic terms of the transaction.
    Finally, the Exchange proposes to aggregate issuances of securities 
in reliance on the exception in Section 312.03T with any subsequent 
issuance by the company, other than a public offering for cash, at a 
discount to the Minimum Price \11\ if the binding agreement governing 
the subsequent issuance is executed within 90 days of the prior 
issuance. Accordingly, if, following the subsequent issuance, the 
aggregate issuance (including shares issued in reliance on the 
exception) equals or exceeds 20% of the total shares or the voting 
power outstanding before the initial issuance, then shareholder 
approval would be required under Section 312.03(c) before the issuance 
can occur.
---------------------------------------------------------------------------

    \11\ See footnote 6 [sic] supra for the definition of Minimum 
Price.
---------------------------------------------------------------------------

2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\12\ in general, and furthers the objectives of Section 6(b)(5) of 
the Act,\13\ in particular, in that it is 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, and because it is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. As a result of uncertainty related to the ongoing 
spread of the COVID-19 virus, the prices of securities listed on U.S. 
exchanges are experiencing significant volatility. The Exchange 
believes that the proposed rule change is designed to remove an 
impediment to companies addressing certain immediate capital needs as a 
result of the COVID-19 pandemic and reduce uncertainty regarding the 
ability of companies to raise money quickly through equity financings 
during the current highly unusual market conditions and general 
economic disruptions. The Exchange believes that in this way, the 
proposed rule change will protect investors, facilitate transactions in 
securities, and remove an impediment to a free and open market. All 
companies listed on the Exchange would be eligible to take advantage of 
the proposed rule.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In addition, the Exchange believes the proposed rule change is 
designed to protect investors by limiting the exception from the 
shareholder approval requirements to situations where the need for the 
transaction is due to circumstances related to COVID-19 and the 
proceeds will not be used to fund any acquisition transactions [sic] 
that the company undertook a process designed to ensure that the 
proposed transaction represents the best terms available to the 
company. The exception is also limited to circumstances where the delay 
in securing shareholder approval would (i) have a material adverse 
impact on the company's ability to maintain operations under its 
preCOVID-19 business plan; (ii) result in workforce reductions; (iii) 
adversely impact the company's ability to undertake new initiatives in 
response to COVID-19; or (iv) seriously jeopardize the financial 
viability of the enterprise. Further, the proposed rule requires that 
the company's audit committee or a comparable committee comprised 
solely of independent, disinterested directors expressly approve 
reliance on this exception and determine that the transaction is in the 
best interest of shareholders.
    Notwithstanding the proposed exception from certain shareholder 
approval requirements, as described above, important investor 
protections will remain as the proposed exception would not be 
available for the shareholder approval requirements related to equity 
compensation in Section 312.03(a) and Section 303A.08 (except for the 
limited circumstances described above for insider participation in 
transactions covered by the proposed exception), transactions other 
than sales

[[Page 30758]]

of securities for cash under Sections 312.03(b) and (c) and a change of 
control under Section 312.03(d). In addition, funds raised from the 
issuance of securities pursuant to Section 312.03T may not be used to 
fund acquisition transactions.
    Finally, the Exchange notes that the proposed rule is a temporary 
exception from certain shareholder approval requirements, as described 
above, operative through, and including, June 30, 2020.

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 not necessary or appropriate in 
furtherance of the purposes of the Act. All companies listed on the 
Exchange would be eligible to take advantage of the proposed rule. In 
addition, the proposed rule change is not designed to have any effect 
on intermarket competition but instead seeks to address concerns the 
Exchange has observed surrounding the application of the shareholder 
approval requirements, as described above, to companies listed on the 
Exchange. Other exchanges can craft relief based on their own rules and 
observations.\14\
---------------------------------------------------------------------------

    \14\ Nasdaq has already adopted relief under its comparable 
shareholder approval requirements. See SR-NASDAQ-2020-025.
---------------------------------------------------------------------------

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \15\ and Rule 19b-
4(f)(6) thereunder.\16\
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally 
does not become operative for 30 days after the date of the filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\18\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative immediately upon filing. The Exchange 
stated that waiver of the operative delay would allow companies to 
quickly raise money through equity financings to maintain operations, 
avoid jeopardizing its financial viability, compensate its workforce, 
or undertake new initiatives in response to COVID-19 during the current 
highly unusual market and economic conditions and ongoing uncertainty 
relating to the global spread of the COVID-19 virus. In addition, the 
Exchange stated that the proposed exception from the shareholder 
approval requirements is limited to situations where the need for the 
transaction is due to circumstances related to COVID-19, the proceeds 
will not be used to fund any acquisition transactions, and the company 
undertook a process designed to ensure that the proposed transaction 
represents the best terms available to the company. The Exchange stated 
that the proposed exception is further limited to circumstances where 
the delay in securing shareholder approval would (i) have a material 
adverse impact on the company's ability to maintain operations under 
its pre-COVID-19 business plan; (ii) result in workforce reductions; 
(iii) adversely impact the company's ability to undertake new 
initiatives in response to COVID-19; or (iv) seriously jeopardize the 
financial viability of the enterprise. The Exchange also noted that the 
proposed rule requires that the company's audit committee or a 
comparable committee comprised solely of independent, disinterested 
directors expressly approve reliance on this exception and determine 
that the transaction is in the best interest of shareholders. Finally, 
the Exchange stated that the proposed exception would not be available 
for the shareholder approval requirements related to equity 
compensation in in Sections 312.02(a) and 303A.08 (except for the 
limited circumstances described above for insider participation in 
transactions covered by the proposed exception), transactions other 
than sales of securities for cash under Sections 312.03(b) and (c) and 
a change of control under Section 312.03(d). In addition, funds raised 
from the issuance of securities pursuant to Section 312.03T may not be 
used to fund acquisition transactions.
---------------------------------------------------------------------------

    \17\ 17 CFR 240.19b-4(f)(6).
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Commission notes that while the proposed rule change would 
provide a temporary exception to certain shareholder approval 
requirements, it is limited to situations where the need for the 
transaction is related to COVID-19 circumstances and the proceeds will 
not be used to fund any acquisition transaction, and only where the 
delay in obtaining shareholder approval meets one of the four specified 
conditions for the transaction set forth in the temporary rule and 
described above. In addition, the Commission notes that there are 
important investor protections built into the proposed temporary rule. 
For example, the Exchange must approve all transactions in advance of 
any issuance of securities in reliance on Section 312.03T and the 
Exchange has stated that it will undertake a detailed review of whether 
the company has established that it complies with the requirements of 
Section 312.03T(b) (and Section 312.03T(c) if applicable) before 
approving any use of the exception. Additionally, the exception from 
the shareholder approval requirements is limited to situations where 
the company undertook a process designed to ensure that the proposed 
transaction represents the best terms available to the company. The 
proposed rule change also requires that the company's audit committee 
or a comparable committee comprised solely of independent, 
disinterested directors expressly approve reliance on the exception and 
determine that the transaction is in the best interest of shareholders. 
Further, the Commission notes that shareholder approval would continue 
to be required for transactions that do not qualify for the proposed 
temporary exception, such as for equity compensation (Sections 
312.02(a) and 303A.08), except for the limited circumstances described 
above for insider participation in transactions covered by the proposed 
exception); transactions other than sales of securities for cash under 
Sections 312.03(b) and (c); a change of control under Section 
312.03(d). In addition, funds raised from the issuance of securities 
pursuant to Section 312.03T may not be used to fund acquisition 
transactions. Therefore, securities issued to raise capital to fund an 
acquisition would be subject, as such transactions currently are, to 
any applicable Exchange shareholder approval requirements. The 
Commission also notes that the proposal

[[Page 30759]]

is a temporary measure designed to allow companies to raise necessary 
capital quickly in response to current, unusual market conditions. For 
these reasons, the Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Accordingly, the Commission hereby waives the 30-day 
operative delay and designates the proposal operative upon filing.\19\
---------------------------------------------------------------------------

    \19\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \20\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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:

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-2020-43 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-2020-43. 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-2020-43 and should be submitted on 
or before June 10, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-10818 Filed 5-19-20; 8:45 am]
 BILLING CODE 8011-01-P