The Securities and Exchange Commission gave the go-ahead to a number of changes to the NYSE's corporate governance rules, effective Jan. 1, 2010.

The changes, proposed in August, mostly aim to bring the exchange's requirements for its listed companies in line with current SEC requirements.

"For the most part, the changes should be welcome and fairly easy to comply with as they largely conform the NYSE corporate governance requirements to those in Item 407 of Regulation S-K," Ning Chiu and Janice Brunner of the law firm Davis Polk & Wardwell note in a recent client alert.

In many cases, the changes eliminate "yet another set of rules to follow in proxy statements and other corporate governance disclosure," Chiu, counsel at DPW, tells Compliance Week.

However, she reminds companies that the NYSE "does review proxy statement disclosure and may send comments if they believe companies are not fully compliant."

Chiu says the most significant change under the amended rules is one that requires the CEO of a listed company to notify the NYSE in writing after any executive officer of the listed company becomes aware of "any non-compliance" with the NYSE corporate governance requirements in Section 303A. Previously, the alert notes, such notification was required only in the event of "any material non-compliance."

Given the change regarding reporting of all non-compliant matters, Chiu says companies should re-examine their current process and procedures for following listing standards.

They should also review any of their current proxy statement disclosures that were previously made in compliance with the NYSE requirement. "In some cases those requirements were eliminated," she says. "In other cases, companies can choose to make the disclosure on their Website."

Among other things, the alert notes that the amended rules maintain a current requirement to assess a director's independence in light of the NYSE's general independence definition and bright-line tests, but replace the related disclosure requirements with a requirement to provide the director independence disclosures mandated by Item 407(a) of Regulation S-K. Accordingly, the NYSE rules will no longer refer to categorical standards. However, Chiu and Brunner note that, during a recent NYSE Webcast, a NYSE staff member suggested that companies may continue to find categorical standards useful in assessing director relationships.

Additionally, the amended rules give companies a choice of providing certain currently required disclosures through their corporate Website instead of in their annual proxy statement or annual report, as long as they disclose that fact in their annual report or proxy statement and provide the Website address.

The rules also eliminate a requirement that companies provide paper copies of applicable charters, corporate governance guidelines, and codes of business conduct and ethics upon request, and instead require them only to disclose in their annual proxy statement or Form 10-K that those documents are available on the company's Website and provide the Website address.

The complete text of the changes can be found in the SEC's notice of approval.

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