On April 25, 2014, the NYSE proposed amendments to Section 902.02 of its Listed Company Manual to revise how it calculates annual fees for issuers in their first year of listing.

Under Section 902.02, listed companies are charged an annual fee for each listed class or series of securities. The annual fee is calculated based on the number of shares issued and outstanding. A company's annual fee in its first year of listing is prorated from the date of initial listing through the calendar year end. Listed companies also pay other NYSE fees, including fees associated with initial and supplemental listing applications. Section 902.02 provides, however, that in any given calendar year the NYSE may bill a listed company no more than $500,000 (the "Total Maximum Fee").

Under existing Section 902.02, the NYSE determines a newly-listed company's prorated annual fee by calculating what its total annual fee would be if it were listed for the entire calendar year and then prorating that fee. If the resulting prorated annual fee exceeds the Total Maximum Fee, it is automatically reduced to the Total Maximum Fee.

Under the proposed amendments to Section 902.02, for purposes of calculating a prorated fee during a company's first year of listing, the NYSE would use the lesser of the annual fee and the Total Maximum Fee as a starting point before proration. For companies whose total annual fee (before proration) would exceed the Total Maximum Fee, the NYSE would instead use the Total Maximum Fee as the starting point and prorate that $500,000 amount for the period of time a company is listed on the NYSE during its first year. However, for smaller companies whose total annual fee would not exceed the Total Maximum Fee, the prorated annual fee would continue to be calculated as a percentage of the company's total annual fee (not the Total Maximum Fee). All listed companies will also continue to incur other fees, such as supplemental listing fees, during the year until reaching the Total Maximum Fee.

The NYSE notice filing describing the proposed amendment to Section 902.02 includes hypotheticals illustrating how the pre-amendment and post-amendment proration methods would apply in certain fact patterns.

The practical effect of this proposed amendment is that larger companies listing on the NYSE should expect to pay lower prorated annual fees in their first year of listing than would have been payable under the pre-amendment proration method. The proposed amendment will have no impact on the prorated annual fees payable by smaller companies whose first year total annual fees would be below the Total Maximum Fee.

This amendment to the Listed Company Manual will become effective on filing with the SEC.

The NYSE previously issued a similar proposal in March 2014 but withdrew the proposal shortly after its release (see Legal Update, NYSE Proposes Amendments to its Annual Fee Calculation Method for Newly-listed Companies).

Update: On May 6, 2014, the NYSE re-filed this proposal (with insignificant changes).

To learn more about the listing requirements for the NYSE and other exchanges, see Practice Note, Selecting a US Securities Exchange.