312.00 Shareholder Approval
Policy 
312.01
Shareholders' Interest
Last
Modified: 8.01.99Shareholders' interest and
participation in corporate affairs has greatly increased.
Management has responded by providing more extensive and frequent
reports on matters of interest to investors. In addition, an
increasing number of important corporate decisions are being
referred to shareholders for their approval. This is especially
true of transactions involving the issuance of additional
securities.
Good business practice is frequently the controlling factor in the
determination of management to submit a matter to shareholders for
approval even though neither the law nor the company's charter
makes such approvals necessary. The Exchange encourages this growth
in corporate democracy. For example, due to the recent growth of
officer and director equity - based compensation arrangements and
the increased interest of shareholders in this area, companies may
determine to submit stock option and similar plans to shareholders
for approval, whether or not the Exchange requires such
approval. 312.02
Companies Are Urged
Last
Modified: 8.01.99Companies are urged to discuss
questions relating to this subject with their Exchange
representative sufficiently in advance of the time for the calling
of a shareholders' meeting and the solicitation of proxies where
shareholder approval may be involved. All relevant factors will be
taken into consideration in applying the policy expressed in this
Para. 312.00 and the Exchange will advise whether or not
shareholder approval will be required in a particular case.312.03
Shareholder Approval
Last
Modified: 5.22.07Shareholder approval is a prerequisite
to issuing securities in the following situations:
(a) Shareholder approval is required for equity compensation plans.
See Section 303A.08.
(b) Shareholder approval is required prior to the issuance of
common stock, or of securities convertible into or exercisable for
common stock, in any transaction or series of related transactions, to:
(1) a director, officer or substantial security holder of the
company (each a "Related Party");
(2) a subsidiary, affiliate or other closely-related person of a
Related Party; or
(3) any company or entity in which a Related Party has a
substantial direct or indirect interest;
if the number of shares of common stock to be issued, or if the
number of shares of common stock into which the securities may be
convertible or exercisable, exceeds either one percent of the
number of shares of common stock or one percent of the voting power
outstanding before the issuance.
However, if the Related Party involved in the transaction is
classified as such solely because such person is a substantial
security holder, and if the issuance relates to a sale of stock for
cash at a price at least as great as each of the book and market
value of the issuer's common stock, then shareholder approval will
not be required unless the number of shares of common stock to be
issued, or unless the number of shares of common stock into which
the securities may be convertible or exercisable, exceeds either
five percent of the number of shares of common stock or five
percent of the voting power outstanding before the issuance.
(c) Shareholder approval is required prior to the issuance of
common stock, or of securities convertible into or exercisable for
common stock, in any transaction or series of related transactions
if:
(1) the common stock has, or will have upon issuance, voting power
equal to or in excess of 20 percent of the voting power outstanding
before the issuance of such stock or of securities convertible into
or exercisable for common stock; or
(2) the number of shares of common stock to be issued is, or will
be upon issuance, equal to or in excess of 20 percent of the number
of shares of common stock outstanding before the issuance of the
common stock or of securities convertible into or exercisable for
common stock.
However, shareholder approval will not be required for any such
issuance involving:
- any public offering for cash;
- any bona fide private financing, if such financing involves a
sale of:
- common stock, for cash, at a price at least as great as each of
the book and market value of the issuer's common stock; or
- securities convertible into or exercisable for common stock,
for cash, if the conversion or exercise price is at least as great
as each of the book and market value of the issuer's common
stock.
(d) Shareholder approval is required prior to an issuance that will
result in a change of control of the issuer.
(e) Sections 312.03 (b), (c) and (d) shall not apply to issuances by
limited partnerships.
Limited Transition Period
Prior to December 21, 2006, this rule included an exception from the
required calculations for issuances of treasury stock. In light of
companies' need for certainty when planning a transaction involving the
issuance of shares, if a company has executed a binding contract prior
to October 23, 2006 with respect to the issuance of common stock, the
existing treasury share exception will continue to be available for the
transaction even though the transaction does not close until after the
date the SEC approval of this proposed rule change.
312.04 For
the Purpose of Section 312.03
Last
Modified: 12.21.06For the purpose of Section 312.03:(a) Shareholder approval is required if any of the subparagraphs of Section 312.03 require such approval, notwithstanding the fact that
the transaction does not require approval under one or more of the
other subparagraphs.
(b) Pursuant to Sections 312.03 (b) and (c),
shareholder approval is required for the issuance of securities
convertible into or exercisable for common stock if the stock that can
be issued upon conversion or exercise exceeds the applicable
percentages. This is the case even if such convertible or exchangeable
securities are not to be listed on the Exchange.
(c) The
Exchange's policy regarding the need to apply to list common stock
reserved for issuance on the conversion or the exercise of other
securities is described in Section 703.07.
(d) Only shares
actually issued and outstanding (excluding treasury shares or shares
held by a subsidiary) are to be used in making any calculation provided
for in Sections 312.03 (b) and (c). Shares reserved for issuance upon
conversion of securities or upon exercise of options or warrants will
not be regarded as outstanding.
(e) An interest consisting of less than either five percent of the
number of shares of common stock or five percent of the voting power
outstanding of a company or entity shall not be considered a substantial
interest or cause the holder of such an interest to be regarded as a
substantial security holder. (f) "Voting power outstanding"
refers to the aggregate number of votes that may be cast by holders of
those securities outstanding that entitle the holders thereof to vote
generally on all matters submitted to the company's security holders for
a vote. (g) "Bona fide private financing" refers to a sale in which
either:
- a registered broker-dealer purchases the securities from the issuer with a
view to the private sale of such securities to one or more purchasers; or
- the issuer sells the securities to multiple purchasers, and no one such
purchaser, or group of related purchasers, acquires, or has the right to acquire
upon exercise or conversion of the securities, more than five percent of the
shares of the issuer's common stock or more than five percent of the issuer's
voting power before the sale.
(h) "Officer" has the same meaning as defined by the Securities and
Exchange Commission in Rule 16a-1(f) under the Securities Exchange Act
of 1934, or any successor rule. (i) "Market value" of the issuer's
common stock means the official closing price on the Exchange as
reported to the Consolidated Tape immediately preceding the entering
into of a binding agreement to issue the securities. For example, if the
transaction is entered into after the close of the regular session at
4:00 pm Eastern Standard Time on a Tuesday, then Tuesday's official
closing price is used. If the transaction is entered into at any time
between the close of the regular session on Monday and the close if the
regular session on Tuesday, then Monday's official closing price is
used. Please note that an average price over a period of time is not
acceptable as "market value" for purposes of Section 312.03.
(j) The issuance of shares from treasury is considered an issuance of
shares for purposes of Section 312.03. (See Section 703.01, Part 1, of
the Listed Company Manual regarding required notice to the Exchange of
issuance of shares from treasury.)
312.05
Exceptions Last
Modified: 8.01.99Exceptions may be made to the
shareholder approval policy in Para. 312.03 upon application to the
Exchange when (1) the delay in securing stockholder approval would
seriously jeopardize the financial viability of the enterprise and
(2) reliance by the company on this exception is expressly approved
by the Audit Committee of the Board.
A company relying on this exception must mail to all shareholders
not later than 10 days before issuance of the securities a letter
alerting them to its omission to seek the shareholder approval that
would otherwise be required under the policy of the Exchange and
indicating that the Audit Committee of the Board has expressly
approved the exception. 312.06 In the
Event
Last
Modified: 8.01.99In the event that some or all of the
shares to be issued in a transaction subject to shareholder
approval under Para. 312.03 must be listed, Exchange procedures
will ordinarily permit the filing of applicable listing
applications and Exchange approval to precede the shareholder vote
subject to notice to the Exchange of the results of the shareholder
vote and the issuance of the shares to be listed.312.07 Where
Shareholder
Last
Modified: 8.01.99Where shareholder approval is a
prerequisite to the listing of any additional or new securities of
a listed company, the minimum vote which will constitute
shareholder approval for listing purposes is defined as approval by
a majority of votes cast on a proposal in a proxy bearing on the
particular matter, provided that the total vote cast on the
proposal represents over 50% in interest of all securities entitled
to vote on the proposal. |
