Notice2021-21623
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
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 5, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 190 (Tuesday, October 5, 2021)</title>
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[Federal Register Volume 86, Number 190 (Tuesday, October 5, 2021)]
[Notices]
[Pages 55071-55073]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[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
<a href="http://www.nyse.com">www.nyse.com</a>, 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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#552720393078363a3838303b2126152630367b323a23"><span class="__cf_email__" data-cfemail="83f1f6efe6aee0eceeeee6edf7f0c3f0e6e0ade4ecf5">[email protected]</span></a>. Please include
File Number SR-NYSE-2021-53 on the subject line.
Paper Comments
<bullet> 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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
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