NYSE Conforms Related Party Transaction Definition – Corporate/Commercial Law

United States:

NYSE complies with the definition of related party transactions

August 31, 2021

Mayer Braun

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On August 26, 2021, the US Securities and Exchange Commission approved an amendment to rule 314 of the NYSE-Listed Company’s Manual relating to the review and approval of related party transactions. As noted earlier this year, the NYSE changed some of its shareholder consent rules, including those relating to the issuance of common stock to directors, officers and material security holders (“related parties”) of a publicly traded company. As part of these changes, Rule 314 required that a company’s audit committee perform appropriate prior review and monitoring of all transactions involving related parties for potential conflicts of interest and prohibit such a transaction if it determines that the transaction is inconsistent with its interests of the company and its shareholders. Regarding public disclosure, Item 404 of Ordinance SK and Item 7.B of Form 20-F set out the SEC’s requirements for disclosing transactions involving related parties of domestic issuers and foreign private issuers, respectively. However, the NYSE changes, as adopted earlier this year, did not affect the transaction value or materiality threshold set out in the SEC’s disclosure requirements. The newly approved NYSE rule now addresses this inconsistency with a further amendment to rule 314 to ensure that the review and approval requirements of the audit committee only apply to transactions that have been taken into account after taking into account the transaction value and the materiality thresholds according to point. must be disclosed 404 of Regulation SK or Item 7.B of Form 20-F, as applicable.

See the NYSE change here.

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