On March 20, 2019, the Securities and Exchange Commission ("SEC") approved a New York Stock Exchange ("NYSE") rule modifying the price requirements that companies must meet to avail themselves of certain exceptions from the NYSE shareholder approval requirements. Shareholder approval was not previously required if an issuance of securities was made at a price at least as great as each of the book and market value of an issuer's common stock. The new NYSE rule replaces this "market value" test with a "minimum price" test. Minimum price is defined as the lower of (i) the closing price of the issuer's common stock immediately before the execution of the transaction agreement and (ii) the average closing price of the issuer's common stock during the five days immediately preceding the transaction agreement. The five-day average closing price formulation is meant to avoid unanticipated and inequitable results that may occur if there is unexpected price volatility. Shareholder approval is required for transactions that are priced below the minimum price. The NYSE rule eliminates the requirement for shareholder approval of issuances at a price less than book value but greater than market value. The NYSE does not believe book value is a meaningful measure of whether a transaction is dilutive or should otherwise require shareholder approval. The changes align with Nasdaq's recent amendments. The new NYSE rule may be found here.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2019. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.