Yesterday, the SEC approved a NYSE rule change that amends Section 703.12(II) of the NYSE Listed Company Manual to expand the circumstances under which rights may be listed on the exchange. Here’s an excerpt from the SEC order:

As described in more detail in the February 11, 2026 Notice, the Exchange proposes to amend Section 703.12(II) of the Manual to provide that for purposes of the Exchange’s listing standards, “rights” will refer to the privilege offered to recipients of such rights to subscribe for shares of a class of securities of such issuer that is listed or to be listed on the Exchange, regardless of whether the recipients of the rights are existing shareholders of record of such issuer.

The Exchange also proposes to permit the listing of a right where the security into which such right is exercisable will be listed on the Exchange upon the exercise of the rights and such exercise is pursuant to a registration statement filed under the Securities Act of 1933 (“Securities Act Registration Statement”) that has been declared effective by the Commission prior to or simultaneous with the listing of such rights (“Prospective Listing Rights”).

The Exchange further proposes related changes, among other things, to specify that listed rights may be issued to the initial recipient of such rights either with or without the payment of consideration by such initial recipients, to set forth numerical requirements for listing of Prospective Listing Rights, to provide that funds paid upon exercise of Prospective Listing Rights must be held in a trust account, and to establish a maximum listing period and specify conditions for delisting of Prospective Listing Rights.

This isn’t the first time the NYSE has proposed expanding the circumstances under which rights can be listed on the exchange – but prior iterations didn’t make it across the finish line. The exchange expects the update will “give issuers greater flexibility in structuring a rights offering as a capital raising tool” and will “provide a source of capital for the acquisition of assets.” Here are a few other details from the Notice:

The proposed provisions relating to Prospective Listing Rights mean that some listed rights may list and trade on the Exchange prior to the listing and trading of the securities for which such rights are exercisable. The Exchange believes that this amendment will give issuers greater flexibility in structuring a rights offering as a capital raising tool.

Specifically, the Exchange believes that the requirement that there be an effective Securities Act Registration Statement in relation to the exercise of the Prospective Listing Rights prior to or simultaneous to the listing of the Prospective Listing Rights would provide a significant investor protection as it would ensure that investors trading or exercising the Prospective Listing Rights would have access to the appropriate level of disclosure to enable them to make informed investment decisions. The Exchange notes that the issuer of the Prospective Listing rights will be required by law to update this Securities Act Registration Statement to reflect any material changes in the information required to be included therein that arise between the time of effectiveness of the Securities Act Registration Statement and the exercise of the Prospective Listing Rights, thereby ensuring that investors trading the Prospective Listing Rights on the Exchange will have access to current information about the issuer on a continuous basis.

Any security underlying a Prospective Listing Right will be required to meet applicable initial listing standards set forth in Section 102.00 or Section 103.00. Prospective Listing Rights would only be eligible for initial listing if, at the time of initial listing, such Prospective Listing Rights meet the following initial listing requirements: (i) at least 1,000,000 rights issued; (ii) an opening trading price of at least $1.00 per Prospective Listing Right; (iii) market value of publicly-held securities of at least $10 million, and (iv) at least 400 public holders of round lots.

The Exchange notes that the proposed distribution requirements are identical to those required
for securities to be listed under the “equity” standards (i.e., for trading on the NYSE’s trading floor) under Section 703.19 (“Other Securities”) of the Manual. The required $10 million in market value of publicly-held securities proposed initial listing requirement for Prospective Listing Rights exceeds the $4 million total market value for securities listed under the “equity” standards for securities listed under Section 703.19.

As proposed, any funds paid upon exercise of Prospective Listing Rights by the holders thereof must be held in a trust account controlled by an independent custodian until consummation of the transaction in connection with which such Prospective Listing Rights are being exercised. The Prospective Listing Rights must provide by their terms that the funds held in trust will promptly be returned to the holders who have submitted the required exercise price in the event that the transaction agreement is terminated or is not consummated within one year of the initial listing of such Prospective Listing Rights.

– Liz Dunshee