On June 6, 2024, the New York Stock Exchange (NYSE) filed an application with the SEC pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder, proposing a rule change that, if approved by the SEC, would exempt closed-end funds (CEFs) registered under the Investment Company Act of 1940 and listed on the NYSE from the requirement to hold annual shareholder meetings.

Section 302.00 of the NYSE Listed Company Manual currently requires companies listing common stock or voting preferred stock and their equivalents, which includes CEFs, to hold an annual shareholders’ meeting for the holders of such securities each fiscal year.  In its application, the NYSE stated its belief that an exemption from this requirement for CEFs is appropriate in light of the “significant statutory protections under the [Investment Company Act] provided to the shareholders of CEFs,” including requirements related to the election of directors by shareholders, the approval of certain significant actions by disinterested directors and the approval of a number of material matters by shareholders, noting that “there are no parallel legal protections for the shareholders of public operating companies.”  The NYSE also highlighted that all other categories of listed investment companies (e.g., exchange-traded funds) are already explicitly exempted from the annual shareholder meeting requirement.

The proposed rule change is subject to a public comment period through July 30, 2024.  The notice of the proposed rule change was published in the Federal Register on July 9, 2024 and the SEC is required to approve or disapprove the proposed rule change, or institute proceedings to determine whether the proposed rule change should be disapproved, within 45 days of that publication date, which period may be extended up to 90 days under certain circumstances.

The NYSE’s proposed rule change is available here.