On August 26, the New York Stock Exchange proposed amendments modifying certain of the corporate governance disclosure requirements contained in Section 303A of the NYSE Listed Company Manual in order to clarify disclosure requirements, codify certain interpretations and replace certain disclosure requirements by incorporating applicable Securities and Exchange Commission standards.
First, the proposed amendments would require that any waiver of an issuer’s code of business conduct and ethics granted to an executive officer or director be reported to shareholders within four business days of such waiver (rather than the current two to three days) via a press release or on Form 8-K. The proposed amendments will also permit issuers to hold regular executive sessions of independent directors in place of the currently required annual meetings of non-management directors. The amendments propose that companies that cease to qualify as foreign private issuers under SEC rules be granted a limited transition period with respect to shareholder approval of equity compensation plans that were in place prior to the issuer ceasing to qualify as a foreign private issuer and subsequently becoming subject to Section 303A.08 of the NYSE Listed Company Manual. That section requires shareholder approval of equity compensation plans. Such transition period would end upon the later of (i) six months following the date as of which the issuer fails to qualify for foreign private issuer status pursuant to SEC Exchange Act Rule 3b-4 (the test of which is conducted annually at the end of an issuer’s second fiscal quarter) or (ii) the issuer’s first annual meeting following such Rule 3b-4 determination; provided, however, that such transition period lasts no more than one year.
The proposed amendments would also require an issuer to determine whether a member of the issuer’s audit committee who serves on the audit committee of two or more issuers would impair such director’s ability to serve on the issuer’s audit committee and to disclose to shareholders whether the issuer limits the number of audit committees upon which its directors may serve. Finally, the proposed amendments would revise the corporate governance disclosure requirements contained in the NYSE Listed Company Manual to conform with the corporate governance disclosure requirements of Item 407 of the SEC’s Regulation S-K.