TheCorporateCounsel.net

Yesterday, the SEC posted an order designating a longer period within which to take action on a proposed rule change by the NYSE to limit the ability of companies with a low stock price to achieve compliance with the continued listing standards by engaging in a reverse split. As Liz noted back in October, the NYSE proposal would, if approved, make it harder for penny stocks to linger around as listed companies. These proposed rule changes to the NYSE Listed Company Manual would provide that: (i) a listed company that falls below the price criteria set forth therein and effects a reverse stock split to regain compliance will not be eligible for a compliance period in certain circumstances; and (ii) a listed company may not effectuate a reverse stock split if it would result in the company falling below continued listing requirements.

In the order, the SEC designates January 15, 2025, as the date by which the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change. As Meredith noted last week, the SEC posted an order instituting proceedings under Section 19(b)(2)(B) of the Exchange Act with respect to Nasdaq’s proposed changes addressing situations where listed companies utilize a reverse split to achieve compliance with the exchange’s bid price requirement, after the SEC had extended the time for considering those rule changes.

– Dave Lynn