Among other proposed changes, NYSE would require management to address concerns raised by the investing public at large irrespective of whether they are shareholders of the company. NYSE also proposes the elimination of certain “materiality” thresholds regarding the disclosure of variances from the company’s code of conduct and the reporting of non-compliance with NYSE corporate governance standards.
On June 8, 2007, the New York Stock Exchange filed Amendment No. 1 to its proposal to modify the corporate governance listing standards set forth in Section 303A of the Listed Company Manual with the Securities and Exchange Commission (SEC) (SR-NYSE-2005-81). The original proposal, filed on November 23, 2005, provided clarifications to the current standards and codified certain NYSE and SEC interpretations.
The majority of the proposed changes are designed to conform the NYSE rules with the disclosure and filing rules of the SEC, thereby eliminating redundancy. These rules changes, therefore, will not have a material effect on the manner in which NYSE-listed companies currently complete their proxy statements and annual reports. However, there are at least three proposed changes that merit a listed-company’s consideration.
In accordance with the new rules, the NYSE will require the following:
- That all interested parties, and not only shareholders, must be able to communicate their concerns regarding the listed company to the presiding directors or the non-management/independent directors as a group.
- That any waiver, and not only material waivers, of the code of business conduct and ethics granted to executive officers and directors must be disclosed to shareholders within four business days of such determination, and that disclosure must be made by distributing a press release, providing website disclosure, or filing a current report on Form 8-K with the SEC.
- That a listed company must notify the Exchange in writing after any executive officer of the listed company becomes aware of any noncompliance with NYSE corporate governance standards, as opposed to requiring notification only in the event of any material noncompliance.
At this time, the NYSE does not have an estimated approval or effective date for these proposed changes.
By Steve Kronengold and David C. Zuckerbrot. © March, 2007. All rights reserved.
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