On February 2, 2018, the SEC approved a New York Stock Exchange (NYSE) rule change to allow companies to directly list their securities on NYSE without first offering them to the public in an initial public offering (IPO). Prior to the new rule, the NYSE could on a case-by-case basis use its rule-based discretion to allow companies to list securities without conducting an IPO, generally in connection with the registered resale by selling shareholders so long as the value of their non-affiliated shares was at least $100 million based on the lesser of an independent third-party valuation and the most recent share trading price in a trading system for unregistered securities operated by a national securities exchange or a registered broker-dealer. The new rule allows companies to directly list their securities without an IPO if the value of the publicly-held shares is at least US$250 million based on an independent third-party valuation. For such direct listing, the NYSE also generally requires companies to otherwise have to meet the distribution requirements (e.g., 400 beneficial holders of round lots of 100 shares and 1,100,000 publicly-held shares), the minimum price requirements (which includes a US$4.00 price requirement at initial listing time) and a financial standard requirement (i.e., the earnings test or global market capitalization test), as well as comply with all other applicable NYSE rules, including the corporate governance requirements. Spinoffs and transfers from other markets (including uplistings) are not impacted by the new rules.
For more information, see: https://www.sec.gov/rules/sro/nyse/2018/34-82627.pdf.
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