Yesterday, the SEC approved a rule change that amended the NYSE Manual to require listed companies to provide notice to the NYSE at least ten minutes before making any public announcement with respect to a dividend or stock distribution, irrespective of the time of day, even when the notice is outside of NYSE trading hours (rather than limited to the hours of 7:00 A.M. and 4:00 P.M. as in the prior rule). Bring your sleeping bags, NYSE staff: the NYSE indicated that “it intends to have its staff available at all times to review dividend or stock distribution notices immediately upon receipt, regardless of the time or date the notices are received….The Exchange staff will contact a listed company immediately if there is a problem with its notification.” Update: the NYSE has now proposed to amend the rule to delay its implementation to be “no later than February 1, 2018,” and will provide reasonable advance notice of the new implementation date by email to listed companies. (See this PubCo post.)
The NYSE’s “immediate news release policy” already requires companies to provide ten minutes’ advance notice of material news during regular hours of operation. More specifically, under Section 202.06 of the NYSE Manual, in releasing material news, listed companies are required to notify NYSE Market Watch by telephone, between 7:00 A.M. and 4:00 P.M. E.T., at least ten minutes prior to issuing the announcement and, when the announcement is in writing, to send a copy to Market Watch through specified web-based notification methods, at least ten minutes prior its release. This notice enables the NYSE to determine whether to temporarily halt trading. With regard to Section 202.06, the only change effected by the new amendment is to make explicit that, for all announcements relating to a dividend or stock distribution during the hours above, listed companies are required to comply with this immediate news release policy. According to the NYSE, this change to the Manual is intended to emphasize the NYSE’s consistent interpretation of its immediate news release policy with regard to dividends and stock distributions.
The amendments do affect the timing of the notices related to dividends or stock distributions required under two other sections of the Manual. Under Section 204.00 of the NYSE Manual, listed companies are required to give prompt notice to the NYSE, at least ten days in advance of the record date, as to any action relating to a dividend or stock distribution (for a listed stock), including the omission or postponement of a dividend at the customary time as well as the declaration of a dividend. Under prior Section 204.12, in addition to immediate publicity, listed companies were also required to give the dividend or stock distribution notice to the NYSE as soon as possible after declaration but no later than simultaneously with the announcement to the news media. Under the new amendment to Section 204.12, the notice should be given to the NYSE as soon as possible after declaration and, in any event, no later than 10 minutes before the announcement to the news media (including when the notice is to be issued outside of NYSE trading hours).
Section 204.21 also requires listed companies to give prompt notice to the NYSE of the fixing of a record date or for the closing of transfer books (in respect of a listed security), for any purpose. Under Section 204.21 as amended, in the event of the fixing of a record date with respect to a dividend or stock distribution, the notice must be provided to the NYSE at least ten minutes before any public announcement, even if the announcement is being made outside of NYSE trading hours.
The NYSE previously indicated it
“believes there are significant benefits to requiring listed companies to provide all announcements of dividends and stock distributions to the Exchange prior to their public dissemination. In particular, if the Exchange is provided dividend information prior to its public availability, Exchange staff will be able to address any issues that may arise in relation to any announcement of a dividend or stock distribution. The proposed advance notice requirement would enable Exchange staff to ensure that a listed company’s proposed dividend schedule complied with applicable Exchange requirements, including the requirement to provide 10 days advanced notice of the record date, and that the company’s disclosure of the application of the Exchange’s ‘ex’-dividend trading policy was accurate.”