January 31, 2022

NYSE Proposes Listing Standard for Rights

Last week, the NYSE proposed a new listing standard to rights. Currently, Section 703.03 of the NYSE Listed Company Manual provides for the unlisted trading of short-term rights, but it does not enable an issuer to list such rights on the exchange and there is mechanism for the trading or listing of rights with a life of 90 days or longer. For this purpose, the NYSE would define “rights” to refer to the privilege offered to holders of record of issued equity securities to subscribe (usually on a pro rata basis) for additional securities of the same class. Issuers are currently able to list rights on Nasdaq.

Under proposed NYSE listing standard, rights must be issued to purchase or receive a security that is already listed on the exchange or that will be listed concurrent with the rights. The rights holders would not be entitled to any privileges of the holders of common stock (e.g., dividends, preemptive rights, or voting rights). If the rights are exercisable into listed common stock, the listing of the rights and the underlying common stock would be subject to the NYSE shareholder approval policy. For initial listing, rights would need to meet the following requirements: (i) at least 400,000 issued; (ii) the underlying security must be listed on the Exchange; and (iii) at least 100 public holders of round lots. The proposed listing standard would provide that the continued listing of rights is contingent on the underlying security remaining listed on the NYSE.

The NYSE’s proposal to list rights is out for public comment, and comments are due 21 days after publication in the Federal Register.

– Dave Lynn