TheCorporateCounsel.net

The SEC recently posted a notice & request for comment for a proposed NYSE rule change that would amend the listing standards in the NYSE Listed Company Manual to “provide additional emphasis of the existing relationship between the domestic and international listing standards as already articulated in Section 103.00.” The NYSE notes in its submission:

Notwithstanding the existence of separate listing standards for foreign private issuers, Section 103.00 of the Manual provides that foreign private issuers may list their common equity securities either under the quantitative standards for foreign private issuers set forth in Section 103.01 or the Exchange’s domestic listing criteria set forth in Section 102.01. As stated in Section 103.00, the foreign private issuer must meet all of the criteria within the standards under which it qualifies for listing, but is not required to meet the requirements of both of those sections in order for its common equity securities to qualify for listing. 4 Section 103.00 (“Foreign Private Issuers”) provides that, for purposes of the Manual, the terms “foreign private issuer” and “non-U.S. company” have the same meaning and are defined in accordance with the SEC’s definition of foreign private issuer set out in Rule 3b-4(c) of the Securities Exchange Act of 1934.

It has been the Exchange’s experience in recent years that almost all foreign private issuer applicants whose common equity securities qualify for listing on the Exchange do so by meeting the domestic listing requirements of Section 102.01. However, the Exchange has become aware that there is a certain level of confusion in the marketplace about how to understand the listing standards as they apply to foreign private issuer applicants. To provide greater clarity as to how the domestic and international listing standards relate to each other with regard to the listing of common equity securities, the Exchange proposes to adopt proposed new Section 101.01 (“Domestic and Foreign Private Issuer Quantitative Listing Standards”).
As proposed, Section 101.01 would read as follows:

“101.01 Domestic and Foreign Private Issuer Quantitative Listing Standards Section 102.01 (“Minimum Numerical Standards—Domestic Companies—Equity Listings”) sets forth the minimum quantitative standards for the listing of common equity securities of domestic companies. In addition, the Exchange also lists applicants that are foreign private issuers (as defined in Section 103.00 (“Foreign Private Issuers”)) under Section 102.01 where such applicants are qualified for listing thereunder. However, if a foreign private issuer applicant does not meet all of the requirements for the listing of common equity securities applicable to domestic issuers under Section 102.01, the Exchange will determine whether such foreign private issuer qualifies for listing under the quantitative standards for common equity securities set forth in Section 103.01 (“Minimum Numerical Standards Non-U.S. Companies Equity Listings”). It is important to note that a foreign private issuer applicant must meet all of the requirements for common equity securities of either Section 102.01 or Section 103.01 in their 4 entirety but is not required to meet the requirements of both of Section 102.01 and Section 103.01 in order to qualify for listing. Foreign private issuers that list under either Section 102.01 or Section 103.01 will be subject to Section 103.00 and all of the subsections thereunder (except that foreign private issuers that list under Section 102.01 are not required to comply with Section 103.01), including Sections 103.02 (“Securities Exchange Act of 1934”), 103.03 (“Sponsorship by an Exchange Member Firm”) and 103.04 (“Sponsored American Depository Receipts or Shares (‘ADRs’)”). All listed foreign private issuers must also comply with the applicable corporate governance requirements set forth in Section 303A hereof.”

The NYSE also proposes to amend Section 103.00 to include a cross-reference to proposed Section 101.01, to make certain non-substantive changes and to revise the language of Section 103.00 to conform to proposed Section 101.01. The NYSE notes that the proposed amendments would not make any substantive change to the initial listing standards, rather these changes are just emphasizing of the existing relationship between the domestic and international listing standards as specified in Section 103.00 of the listing standards.

– Dave Lynn