TheCorporateCounsel.net

In addition to the welcome new Liz shared last week about NYSE reducing fees that apply during the first five years of an initial listing, the SEC also recently approved an amendment to the NYSE Listed Company Manual (Section 102.01) that makes it easier for companies organized outside North America to meet the exchange’s minimum stockholder distribution standards.

Section 102.01A sets forth distribution criteria for the initial listing of domestic companies based on number of stockholders, number of publicly held shares, and/or average monthly trading volume, as applicable. Section 102.01B currently provides that, when considering a listing application from a company organized under the laws of Canada, Mexico, or the United States (“North America”), the Exchange will include all North American holders and North American trading volume in applying the minimum stockholder and trading volume requirements of Section 102.01A.11 Section 102.01B further provides that when listing a company from outside North America, the Exchange may, in its discretion, include holders and trading volume in the company’s home country or primary trading market outside the United States in applying the applicable listing standards, provided that such market is a regulated stock exchange.

Under the revised version, when a company from outside North America not listed on any other regulated stock exchange is seeking initial listing in connection with its IPO, NYSE will include all holders on a global basis.  NYSE posited that the old rule did not reflect the “speed and reliability of links that enable investors who hold securities in brokerage accounts in countries outside North America to trade in the U.S. listing markets.”

Given the ease of transfer of securities between different countries in the contemporary securities markets, there is no reason why the holders of a listed company’s securities outside of North America cannot be active real time participants in the U.S. trading market . . . [T]his is particularly relevant to the listing of a foreign company listed on the Exchange when it does not have an exchange listing in its home market because the Exchange will be the only exchange trading market for such company and any investor wishing to trade in such company’s securities on a regulated exchange market will have to do so on the Exchange.

This Ropes & Gray blog notes, “The new rule is intended to enhance the NYSE’s competitiveness in attracting non-U.S. company listings, particularly relative to Nasdaq, which already permits worldwide stockholder counts.”

– Meredith Ervine