NYSE Conforms Related Celebration Deal Meaning

United States: NYSE Conforms Related Party Deal Meaning

31 August 2021

Mayer Brown

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On August 26, 2021, the United States Securities and Exchange Commission (“SEC”) approved a modification to Rule 314 of the NYSE Listed Company Manual in connection with the review and approval of related celebration deals. As we formerly blogged, previously this year the NYSE changed specific of its investor approval rules, consisting of those connecting to issuances of common stock to a listed business’s directors, officers, and significant security holders (“Associated Celebrations”). As part of those changes, Rule 314 needed a company’s audit committee to carry out a sensible prior review and oversight of all deals involving Related Parties for potential conflicts of interest and restrict any such transaction if it determined the deal to be inconsistent with the interests of the company and its investors. With respect to public disclosure, Item 404 of Guideline S-K and Item 7. B of Form 20-F stated the SEC’s requirements for disclosures of deals including Associated Celebrations of domestic issuers and foreign private companies, respectively. However, as embraced earlier this year, the NYSE’s changes did not address the transaction value or the materiality limit stated in the SEC’s disclosure guidelines. The recently approved NYSE rule now corrects that inconsistency by more modifying Guideline 314 to supply that the audit committee’s evaluation and approval requirement will apply just to transactions that are required to be revealed after taking into consideration the deal value and materiality limits set forth in Item 404 of Regulation S-K, or Item 7. B of Form 20-F, as relevant.

See the NYSE’s modification here.

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