On August 26, 2021, the US Securities and Exchange Commission (“SEC”) approved an amendment to Rule 314 of the NYSE Listed Company Manual in connection with the review and approval of related party transactions. As we previously blogged, earlier this year the NYSE amended certain of its shareholder approval rules, including those relating to issuances of common stock to a listed company’s directors, officers, and substantial security holders (“Related Parties”). As part of those amendments, Rule 314 required a company’s audit committee to conduct a reasonable prior review and oversight of all transactions involving Related Parties for potential conflicts of interest and prohibit any such transaction if it determined the transaction to be inconsistent with the interests of the company and its shareholders. With respect to public disclosure, Item 404 of Regulation S-K and Item 7.B of Form 20-F set forth the SEC’s requirements for disclosures of transactions involving Related Parties of domestic issuers and foreign private issuers, respectively. However, as adopted earlier this year, the NYSE’s amendments did not address the transaction value or the materiality threshold set forth in the SEC’s disclosure rules. The newly approved NYSE rule now rectifies that inconsistency by further amending Rule 314 to provide that the audit committee’s review and approval requirement will be applicable only to transactions that are required to be disclosed after taking into account the transaction value and materiality thresholds set forth in Item 404 of Regulation S-K, or Item 7.B of Form 20-F, as applicable.
See the NYSE’s amendment here.