Publications

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The New York Stock Exchange has proposed to amend NYSE Rule 452, which permits brokers to cast discretionary votes in uncontested director elections.

Acting on February 25, 2009, the NYSE also filed a rule change that would temporarily suspend the application of the $1 stock price requirement of Section 802.01C of the NYSE Listed Company Manual and extend the time period during which the NYSE market capitalization continued listing standard is reduced.

The NYSE proposal is subject to the approval of the Securities and Exchange Commission. If the proposal is approved by the SEC on or prior to August 31, 2009, the proposal will be effective for shareholder meetings held on and after January 1, 2010.

Broker Discretionary Voting

The NYSE first proposed an amendment to NYSE Rule 452 in October 2006 and amended its initial filing in 2007. Rule 452 currently lists 18 items that are considered “non-routine,” including contested matters and instances that may affect substantially the rights or privileges of stockholders.

The proposed amendment would add “the election of directors” to the list of matters on which member organizations are NOT permitted to give a proxy to vote without instruction from the beneficial owner. This means that director elections would become a “non-routine” matter and eliminate broker discretionary voting for the election of directors. If adopted, this amendment is expected to make it more difficult for companies with “majority voting” provisions to achieve successful elections.

Share Price and Market Capitalization

The NYSE also proposed a rule change that would temporarily suspend the application of the $1 stock price requirement of Section 802.01C of the NYSE Listed Company Manual. Section 802.01C provides that a company will be considered to be below compliance standards if the average closing price of a security is less than $1 over a consecutive 30–trading-day period. The proposed rule change would suspend the application of this standard until June 30, 2009.

The NYSE also proposed to extend until June 30, 2009 its previous temporary suspension of the NYSE’s average global market capitalization standard. Section 802.01B of the NYSE Listed Company Manual provides that companies whose average global market capitalization over a consecutive 30-trading-day period falls below $15 million risk delisting. The NYSE previously suspended this standard until April 22, 2009. The rule change filed on February 25, 2009 extends this period until June 30, 2009.

Read the proposed rule change here.