NYSE Voting Requirements: NYSE Eliminates 50% Quorum Requirement

Sullivan & Cromwell LLP - July 19, 2013

On July 11, 2013, the Securities and Exchange Commission published a proposal by the New York Stock Exchange to amend Section 312.07 of the Listed Company Manual, which became effective immediately. Section 312.07 has been revised to remove the requirement that the total votes cast on proposals requiring shareholder approval under the NYSE rules must represent over 50% in interest of all securities entitled to vote on the proposal. The release notes that listed companies are subject to quorum requirements under the laws of their states of incorporation and their governing documents and that requiring companies to comply with a separate NYSE quorum requirement causes confusion and is not necessary for investor protection. In addition, neither NASDAQ nor NYSE MKT has a similar quorum requirement and the removal eliminates a long-standing difference in the treatment of broker non-votes for quorum purposes.

The NYSE rules continue to provide that matters requiring shareholder approval under NYSE rules must receive the support of a majority of votes cast (that is, votes cast “for” must exceed votes cast “against” plus abstentions); the recent change eliminates only the separate quorum requirement.