NYSE Issues Proposed Rule to Allow Listing Without an IPO
On March 13, the New York Stock Exchange (NYSE) issued a proposed rule to amend the provisions related to the qualification of companies listing without a prior registration under the Securities Exchange Act of 1934 (Exchange Act). This proposed rule amends Footnote (E) of Section 102.01B of the NYSE Listed Company Manual (Footnote (E)) and would allow companies to be listed on the NYSE without an initial public offering or other registration statement under the Securities Act of 1933 (Securities Act).
The NYSE generally lists companies in connection with a firm-commitment underwritten initial public offering (IPO), a transfer from another market, or a spin-off. Companies seeking to be listed in connection with an IPO must demonstrate that they have $40 million in market value of publicly held shares. Other companies must demonstrate they have $100 million in market value of publicly held shares. For a company that has not previously had its common equity securities registered under the Exchange Act (and is seeking to list without a related underwritten offering upon effectiveness of a registration statement registering only the resale of shares sold by the company in earlier private placements), the current rule provides that the NYSE will, on a case-by-case basis, exercise discretion to list such company and determine whether it has satisfied the $100 million market value requirement based upon the lesser of (1) an independent third-party valuation of the company, and (2) the most recent trading price of the company’s common stock in a trading system for unregistered securities (a so-called “private placement market”).
The proposed rule would amend Footnote (E) to allow it to apply to companies listing on the effectiveness of (1) a registration statement under the Exchange Act without a simultaneous registration statement under the Securities Act, or (2) a resale registration statement under the Securities Act. The proposed rule would also provide an exception to the private placement market trading requirement for a company with a recent valuation of at least $250 million in market value of publicly held shares. Consistent with the current rule, any such valuation would need to be provided by an independent third party with “significant experience and demonstrable competence in the provision of such valuations.”
The proposed rule will be effective within 45 days of the date of publication of the Securities and Exchange Commission’s notice of filing of proposed rule change in the Federal Register, or up to 90 days as the SEC may designate, if it deems appropriate.
The SEC’s notice of proposed rule is available here.