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SEC approves amendments to the NYSE’s substantial stockholder issuance rule and 20 per cent rule for shareholder approval of certain private offerings

Justin Hoffman (Baker Botts LLP, Houston, Texas, USA)
Jude Dworaczyk (Corporate, Baker Botts LLP, Houston, Texas, USA)

Journal of Investment Compliance

ISSN: 1528-5812

Article publication date: 24 June 2019

Issue publication date: 23 July 2019

Abstract

Purpose

To explain recent amendments by the US Securities and Exchange Commission (the SEC) to Sections 312.03(b) relating to issuances of securities to substantial stockholders (the Substantial Stockholder Issuance Rule) and 312.03(c) (the 20 Per cent Rule) of the New York Stock Exchange’s (the NYSE) Listed Company Manual to change the definition of “market value” for purposes of the 20 Per cent Rule and eliminate the requirement for shareholder approval of certain private issuances at a price less than book value but greater than market value.

Design/methodology/approach

This article provides background on the purpose and policy behind the Substantial Stockholder Issuance Rule and the 20 Per cent Rule and summarizes the provisions of each rule, both before and after the recent SEC amendments thereto. This article then highlights the most important changes to the Substantial Stockholder Issuance Rule and the 20 Per cent Rule and explains the implications thereof for NYSE-listed issuers.

Findings

The amended Substantial Stockholder Issuance Rule and the 20 Per cent Rule provide NYSE-listed issuers greater flexibility in structuring transactions involving private placements of equity and will likely reduce the number of such transactions requiring a shareholder vote.

Originality/value

Practical guidance from experienced corporate finance and capital markets lawyers.

Keywords

Citation

Hoffman, J. and Dworaczyk, J. (2019), "SEC approves amendments to the NYSE’s substantial stockholder issuance rule and 20 per cent rule for shareholder approval of certain private offerings", Journal of Investment Compliance, Vol. 20 No. 2, pp. 16-19. https://doi.org/10.1108/JOIC-04-2019-0020

Publisher

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Emerald Publishing Limited

Copyright © 2019, Baker Botts LLP.