TheCorporateCounsel.net

On Tuesday, the SEC approved a proposed NYSE rule that will require companies facing delisting for noncompliance with a listing standard to be current in their fees before the Exchange will review their compliance plans.  This excerpt from the SEC’s order approving the rule change provides more detail:

The Exchange proposes to require listed companies that have been identified to be below the Exchange’s continued listing standards and are submitting a plan to regain compliance under Sections 802.02 and 802.03 of the Manual to pay any unpaid listing or annual fees due to the Exchange prior to the Exchange expending resources to initially review a plan, periodically review a plan, or deem a company has demonstrated a return to compliance under a plan.

The Exchange will disclose to these listed companies the amount of all unpaid listing and annual fees in the Non-Compliance Letter and at the beginning of the quarterly or semi-annual review period, as applicable. The Exchange also proposes that it will commence suspension and delisting procedures if such companies fail to pay the disclosed fees in full within a certain time period following such disclosure.

The NYSE’s rationale for the rule change is the significant amount of resource-intensive and costly work its staff must undertake in initially and periodically reviewing and analyzing plans submitted by noncompliant companies.

Although the SEC’s order acknowledges that the NYSE already has the authority to delist companies for failing to pay required fees, it says that the new rule will provide greater transparency to listed companies about how the Exchange will handle unpaid fees in circumstances where companies seek to use or are using a compliance plan.

– John Jenkins