Tag: NYSE

NYSE takes another crack at primary direct listings—will it succeed?

In late November last year, the NYSE filed with the SEC a proposed rule change that would have allowed companies going public to raise capital through a primary direct listing. Under current NYSE rules, only secondary sales are permitted in a direct listing.  As a result, thus far, companies that have embarked on direct listings have looked more like well-heeled unicorns, where the company was not necessarily in need of additional capital.  The new proposal seemed to be a potential game changer for the traditional underwritten IPO. (See this PubCo post.)  However, as reported by CNBC and Reuters, a little over a week later, the SEC rejected the NYSE’s proposal, and it was removed from the NYSE website, causing a lot of speculation about the nature of the SEC’s objection and whether the proposal could be resurrected. At the time, an NYSE spokesperson confirmed to CNBC that the proposal had been rejected, but said that the NYSE remained “‘committed to evolving the direct listing product…This sort of action is not unusual in the filing process and we will continue to work with the SEC on this initiative.’” (See this PubCo post.) The NYSE did persevere, and the proposal was refiled in December with some clarifications and corrections. But then—silence. In January and February, the NYSE had four meetings with SEC staff, including folks in Chair Clayton’s office, presumably to make the case for the proposal.  A number of public comment letters, of divided opinion, were submitted. Apparently, the SEC remained unconvinced, designating a longer period to decide, and then in late March, issued an Order instituting proceedings to determine whether to approve or disapprove the proposed rule change.  Undaunted, the NYSE is giving it another go and has just filed Amendment No. 2.   Will it be enough to convince the SEC?

NYSE tolls compliance period for certain continued listing requirements

Like Nasdaq (see this Pubco post), the NYSE has filed with the SEC, and the SEC has declared immediately effective, a rule change providing relief to listed companies that, in light of market conditions resulting from the impact of COVID-19, have fallen out of compliance with two of the NYSE continued listing standards. The relief will provide listed companies with a longer period to regain compliance with the Dollar Price Standard (i.e., when the average closing price of the security is less than $1.00 over a consecutive 30 trading-day period) and the $50 Million Standard (i.e., when a company’s average global market cap over a consecutive 30 trading-day period is less than $50 million and, at the same time, stockholders’ equity is less than $50 million) by tolling the compliance periods through June 30, 2020. Since the last week of February 2020, the NYSE has witnessed an unusually high number of listed companies that have fallen out of compliance with these continued listing standards. The NYSE “believes that it is undesirable to impose on companies in the midst of this crisis the additional burden of attempting to return to compliance with these market price-based standards while the crisis is ongoing, which may be unrealistic for many companies in the immediate term whereas their prospects may be better once the current extraordinary conditions have passed.”

It’s baaack—NYSE refiles (and then amends) proposal for primary direct listings

In late November, the NYSE filed with the SEC a proposed rule change that would have allowed companies going public to raise capital through a primary direct listing. Under current NYSE rules, only secondary sales are permitted in a direct listing.  As a result, thus far, companies that have embarked on direct listings have been more of the unicorn variety, where the company was not necessarily in need of additional capital.  The new proposal looked like it could be a game changer for the traditional underwritten IPO. (See this PubCo post.)  But then, as reported by CNBC and Reuters, a little over a week later, the SEC rejected the NYSE’s proposal, and it was removed from the NYSE website, causing a lot of speculation about the nature of the SEC’s objection and whether the proposal could be resurrected. At the time, an NYSE spokesperson confirmed to CNBC that the proposal had been rejected, but said that the NYSE remained “‘committed to evolving the direct listing product…This sort of action is not unusual in the filing process and we will continue to work with the SEC on this initiative.’” (See this PubCo post.) Apparently, the NYSE meant what it said: the proposal was just refiled with some clarifications and corrections, and then, on Friday afternoon, the NYSE filed an amendment to the refiled proposal, which supersedes the earlier filing in its entirety. So now we’re back at the starting gate.

SEC fast tracks a “no” to NYSE primary direct listing proposal

You’d have to assume that the SEC didn’t spend a whole lot of time agonizing over the rule proposal—as reported by CNBC and Reuters, it took only a little over a week for the SEC to reject the NYSE’s proposed rule change that would have allowed companies going public to raise capital through primary direct listings. (See this PubCo post.)  It remains to be seen whether the SEC is opposed to the concept in general, making rehabilitation of the proposal unlikely, at least in the near term, or whether the proposal could be quickly resurrected after some fixes to the proposal (or to other rules to accommodate the proposal).

NYSE proposes allowing primary direct listings—will the rule change also be a game changer?

The NYSE has filed with the SEC a proposed rule change that would allow companies going public to raise capital through a primary direct listing. Under current NYSE rules, only secondary sales are permitted in a direct listing.  As a result, thus far, companies that have embarked on direct listings have been more of the unicorn variety, where the company was not necessarily in need of additional capital.  If approved by the SEC, will the new proposal be a game changer for the traditional underwritten IPO? 

Time to catch up on recent proposals at the Exchanges

Time to catch up on some of the recent proposals at the Exchanges.

NYSE proposes to amend shareholder approval requirements

No, it’s not Groundhog Day. (In fact, it’s election day.  Go vote!) But this proposal from the NYSE to amend Sections 312.03 and 312.04 of the Listed Company Manual sounds remarkably similar to the one that the SEC has just approved for Nasdaq—modifications to the price requirements for purposes of determining whether shareholder approval is required for certain issuances.  (See this PubCo post.)  Just like the new Nasdaq rule, the NYSE proposal would

change the definition of market value for purposes of the shareholder approval rule and
eliminate the requirement for shareholder approval of issuances at a price less than book value but greater than market value.

It takes a unicorn? SEC approves NYSE rule change to facilitate direct listings

The chatter has it that some unicorns are considering skipping the standard underwritten IPO in favor of a “direct listing.”  Essentially, this process involves a registered sale by selling shareholders directly into the public market with no intermediary underwriter and—imagine this—no underwriting commissions and no roadshow or similar expenses.  Of course, there’s also the small matter of no proceeds to the company. What’s more, companies may be on their own when it comes to any marketing effort, otherwise typically provided by the bankers, and there may be only limited banker support of the stock price in the aftermarket.   And what about that first day pop in the stock that can breed so much excitement? Of course, many companies have taken advantage of the fertile territory for capital raising provided by the private markets—after all, that’s how they got to be unicorns—and may have no need of additional capital at this point. Their motivation for becoming public may have more to do with shareholder liquidity and obtaining the “currency” that publicly traded stock can provide in the context of acquisitions and similar transactions.  Whether the “direct listing” route to going public catches fire remains to be seen.

NYSE proposes changes regarding delivery to NYSE of proxy materials; SEC approves NYSE restriction on timing of issuance of material news after NYSE close

Two changes—one proposed, one approved—in the NYSE Manual: first, the NYSE is proposing to modify its requirements with respect to delivery to the NYSE of hard copies of proxy materials. Second, the SEC has approved the NYSE’s proposal, as amended, related to a limitation on the issuance of material news in the period immediately after the NYSE close.

NYSE proposes rule changes related to material news and dividend notices

The NYSE is proposing two changes with regard to material news: the first relates to a limitation on the issuance of material news in the period immediately after the NYSE close, and the second relates to a delay in the effective date of the NYSE’s recent rule change regarding notice to the NYSE of dividends and stock distributions.