NYSE Proposes Changes to Initial Listing Standards for Operating Companies | Practical Law

NYSE Proposes Changes to Initial Listing Standards for Operating Companies | Practical Law

The NYSE has proposed amendments to Section 102.01C of its Listed Company Manual to adopt a new initial listing standard, and to eliminate all but one of the current initial listing standards, for US operating companies.

NYSE Proposes Changes to Initial Listing Standards for Operating Companies

Practical Law Legal Update 7-582-0585 (Approx. 3 pages)

NYSE Proposes Changes to Initial Listing Standards for Operating Companies

by Practical Law Corporate & Securities
Published on 23 Sep 2014 • USA (National/Federal)
The NYSE has proposed amendments to Section 102.01C of its Listed Company Manual to adopt a new initial listing standard, and to eliminate all but one of the current initial listing standards, for US operating companies.
On September 19, 2014, the NYSE proposed amendments to Section 102.01C of its Listed Company Manual (Manual). The amendments:
  • Set out a new initial listing standard for US operating companies.
  • Eliminate all but one of the current initial listing standards for US operating companies.
The amendments take effect on filing with the SEC.
Update: On September 30, 2014, the SEC published the amendments on its website.

New Initial Listing Standard

The proposal sets out the global market capitalization test (GMCT), a new initial listing standard for US operating companies that requires a listing applicant to have a minimum total global market capitalization of $200 million at the time of initial listing. Under the GMCT, if a company is already publicly traded at the time it applies to list on the NYSE, it must meet the $200 million global market capitalization requirements for at least the 90 consecutive trading days immediately preceding the date on which it receives clearance to submit an application to list on the NYSE.
Companies listing under the GMCT must also meet both the:
  • Existing distribution requirements of Section 102.01A of the Manual.
  • Stock price and market value of publicly-held shares requirements of Section 102.01B of the Manual.
In addition, companies listing under the GMCT must comply with all other applicable NYSE listing rules, including the NYSE's corporate governance requirements. The NYSE's continued listing standard in Section 802.01B of the Manual that requires a listed company to maintain an average global market capitalization over a consecutive 30 trading-day period of at least $50 million or stockholders' equity of at least $50 million in order to remain in compliance with NYSE rules will also be applicable to companies that list under the GMCT.

Elimination of Current Initial Listing Standards

The proposal eliminates four of the NYSE's five current initial listing standards for US operating companies:
  • The valuation/revenue with cash flow test.
  • The pure valuation/revenue test.
  • The affiliated company test.
  • The assets and equity test.
Of the five current initial listing standards, the proposal leaves only the earnings test in effect for US operating companies.
To learn about the NYSE's current initial listing standards, see Initial Listing Requirements Chart: New York Stock Exchange.