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Exchange Policy and Rule Changes and the Upcoming Meeting of the Advisory Committee on Small and Emerging Companies

I’m still playing a bit of catch up, but hopefully this is the week that I finally get back to a regular posting schedule … in the meantime, here are a few items from the week that was:

NYSE and Amex Changes to Broker Non-Votes

As has been widely reported, on Wednesday NYSE issued a Information Memo relating the the application of Rule 452, which governs when NYSE and Amex brokers may vote shares without specific shareholder instructions.

Under the new policy brokers will not be permitted to vote uninstructed shares on corporate governance proxy proposals, including proposals related to:

  • de-stagger boards;
  • majority voting in director elections;
  • the elimination of supermajority voting requirements;
  • use of consents;
  • the right to call special meetings; and
  • certain types of anti-takeover provision overrides.

The above list is meant to be illustrative, not exhaustive, and if you have any questions about a specific proposal you should speak to your counsel or contact the NYSE staff.

Additionally, you might recall that the Dodd-Frank Act required the national securities exchanges to adopt rules prohibiting members from voting uninstructed shares on matters related to the election of directors, executive compensation and “other significant matters” as determined by the Commission. The Commission hasn’t yet defined “other significant matters” and, according to its current Dodd-Frank Act implementation schedule, hasn’t yet determined when it will do so. As such, we may continue to see a narrowing of the matters over which broker have discretionary voting authority, which in turn requires that you plan to spend more time on shareholder analysis and voting outreach.

Finally remember that Rule 452 applies to NYSE and Amex member firms, not the companies whose securities are listed on the NYSE and Amex. Meaning that these changes also affect companies with their securities listed on Nasdaq and those that are quoted in the over the counter markets.

Nasdaq Reverts Back to its Two-Tier Fees Structure for Written Interpretations of Listing Rules

On Thursday the Commission published a rule change relating to the fees that Nasdaq charges for written interpretations of its listing rules.

Under the revised rule Nasdaq is reverting back to its previous two-tier fee structure, whereby a company that seeks a written interpretation of the listing rules will be required to submit a $5,000 non-refundable fee for a regular request or, alternatively, can submit a $15,000 non-refundable fee for an expedited request.

For regular requests Nasdaq will generally provide a written response within four weeks of the date that it receives all of the information necessary to respond.  For expedited requests Nasdaq will generally provide a written response by a date that is less than four weeks, but at least one week, after it receives all of the information necessary to respond.

Advisory Committee on Small and Emerging Companies Meets Again on Wednesday

Also on Thursday, the Advisory Committee on Small and Emerging Companies announced the agenda for its meeting this Wednesday and posted a number of useful background materials on the Commission’s website.

Up for discussion and consideration are recommendations related the triggers for public registration and reporting (the 500 shareholder rule) and the suspension of reporting requirements, crowdfunding, Regulation A and the IPO On-Ramp report.

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