TheCorporateCounsel.net

On Friday, the SEC posted notices and orders to solicit comments and approve, on an accelerated basis, proposed rule change filings (as amended) by NYSE and NYSE American regarding the exchanges’ stock price continued listing standards. The rule changes by NYSE and NYSE American would codify and increase the closing price at which they will take immediate delisting action.

Currently, regardless of where an issuer stands in its six-month price criteria cure period, NYSE will promptly initiate suspension and delisting procedures if a stock trades below $0.10 per share. Due to recent increases in trading of companies that have a very low trading price per share and concerns over manipulative trading activity, NYSE’s proposal would amend Section 802.01C of the Listed Company Manual to specify that if a closing price per share is less than $0.25 on any trading day, the exchange will immediately suspend trading and commence delisting proceedings. This change will not be effective until July 1, 2027, to allow listed companies time to implement reverse splits before the rule change takes effect. The amendments would also specify that NYSE’s general authority to suspend trading in the event of any condition that “makes further dealings on the Exchange unwarranted” includes the authority to suspend trading or delist a security where it believes the trading price has experienced a “precipitous decline and is at an abnormally low level from which it is unlikely to recover,” even when the closing price has not fallen below $0.25.

In the NYSE American order, the exchange proposes to amend Section 1003 of the NYSE American Company Guide to reflect similar changes. Both of these rule changes are part of a broader effort by both NYSE and Nasdaq to tighten listing standards. Some significant changes have impacted NYSE American specifically this year, with this order following a March approval of a proposal, after amendment, that made multiple NYSE American initial listing standards more rigorous.

– Meredith Ervine