20 Percent Rule

Each of the national securities exchanges, the NYSE, the NYSE American, and the Nasdaq, provide that listed companies are required to obtain shareholder approval in connection with certain transactions, including private placement transactions effected at a discount to the market price of the company’s voting securities if the private placement will result in the issuance of (or issuance upon the exercise of, or conversion of) securities that exceed 20% of the pre-transaction total shares outstanding.

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