Although I often write about initial listing standards, I realized that I have not yet blogged about the reduced ongoing listing standards for national exchanges. Last week I wrote about the Nasdaq continued listing requirements (see HERE) and this week I will cover the NYSE and NYSE American. For a review of the initial listing requirements for the NYSE American see HERE.
NYSE American
The NYSE American prefaces it continued listing qualitative minimum standards with it high level discretionary authority. The basis for continued listing is summed up in Section 1001 of the NYSE Company Guide as follows:
In considering whether a security warrants continued trading and/or listing on the Exchange, many factors are taken into account, such as the degree of investor interest in the company, its prospects for growth, the reputation of its management, the degree of commercial acceptance of its products, and whether its securities have suitable characteristics for auction market trading. Thus, any developments which substantially reduce the size of a company, the nature and scope of its operations, the value or amount of its securities available for the market, or the number of holders of its securities, may occasion a review of continued listing by the Exchange. Moreover, events such as the sale, destruction, loss or abandonment of a substantial portion of its business, the inability to continue its business, steps towards liquidation, or repurchase or redemption of its securities, may also give rise to such a review.
Moreover, the process and procedures for providing notice of deficiencies and review is much different on the NYSE American. Although the NYSE American does provide for such processes and procedures, these are tempered by the overarching principal that the Board of Directors of the NYSE American has the authority to suspend or delist the securities of a traded company, in its discretion, at any time, without notice.
The NYSE American will also consider a trading suspension or delisting when, in its opinion: (i) the financial condition and/or operating results of the issuer appear to be unsatisfactory; or (ii) the extent of public distribution or aggregate market value of the security has become reduced as to make further trading inadvisable; or (iii) the issuer has sold or otherwise disposed of its principal operating assets, or has ceased to be an operating company; or (iv) the issuer has filed to comply with its listing agreements; or (v) any other event or condition shall occur that makes continued trading unwarranted.
Qualitative Standards
The following are the published minimum qualitative standards for continued trading on the NYSE American:
- Financial Condition and/or Operating Results: (i) stockholders equity of $2 million if the company has sustained losses from continuing operations or net losses in two of its most recent three fiscal years; or (ii) stockholders equity of $4 million if the company has sustained losses from continuing operations or net losses in three of its most recent four fiscal years; or (iii) stockholders equity of $6 million if the company has sustained losses from continuing operations or net losses in its five most recent fiscal years; or (iv) no particular minimum if the company has sustained substantial losses in relation to its overall operations or its existing resources, or its financial condition is so impaired as to question its continued operations.
Provided however, a company will not be delisted as a result of (i) – (iii) above if: (y) its total market capitalization is at least $50 million; or total assets and revenue is at least $50 million in two of the last three fiscal years; and (z) the company has at least 1,100,000 shares publicly held with a market value of at least $15 million and a minimum of 400 round lot shareholders.
- Market Value: (i) unaffiliated market value of $200,000; or (ii) 300 public shareholders; or (iii) aggregate market value of publicly held shares falls below $1,000,000 for 90 consecutive days.
Trading warrants may be delisted if the total number of publicly held warrants falls below 50,000. Likewise trading preferred stock may be delisted if the total number of publicly held shares falls below 50,000 or the aggregate market value is less than $1 million.
- Disposal of Assets – Reduction of Operations: The NYSE American will consider a suspension or delisting if: (i) the company has sold or otherwise disposed of its principal operating assets or has ceased to be an operating company or has discontinued a substantial portion of its operations or business for any reason whatsoever; (ii) a liquidation has been authorized; or (iii) the NYSE American receives advise from an authoritative third party that the security has no value.
- Failure to Comply with Listing Agreement and/or SEC Requirements – this is all encompassing as to all NYSE American rules (including notice requirements, annual shareholder meetings, soliciting proxies, etc..) and all SEC reporting requirements. Where the deficiency is related to the failure to timely file a report with the SEC, the NYSE American will provide prompt notice and the company will be required to engage in discussions with the NYSE American. A company will be given a conditional six-month cure period with the potential for an additional six month cure period. The Exchange will consider all facts and circumstances including, but not limited to, allegations of fraud, the termination or resignation of the company’s independent auditor, resignation of members of the audit committee or other board members, resignation or termination of key officers, and the company filing history.
- Other Events – suspension or delisting can occur where: (i) registration under the Exchange Act is no longer effective; (ii) an entire outstanding call, issue or series of securities is retired through payment, redemption, reclassification, or otherwise; (iii) operations contrary to public interest; (iv) failure to pay listing fees; (v) common stock selling for a substantial period of time at a low price per share and the company does not complete a reverse split after being notified by the Exchange; (v) any components of a unit do not meet the applicable listing requirements; or (vi) non-compliance with executive compensation clawback rules (see HERE).
NYSE (Big Board)
The NYSE is more prescriptive in its continued listing requirements. The following are the minimum qualitative standards for continued trading on the NYSE:
- Distribution of Capital Stock: (i) total stockholders of 400; or (ii) total stockholders of 1,200 and an average monthly trading volume of less than 100,000 shares; or (iii) total non-affiliated publicly held shares of 600,000.
- Market Value: (i) average global market capitalization of less than $50 mil and stockholders equity is less than $50 mil for 30 consecutive trading days.
- Disposal of Assets – Reduction of Operations: The NYSE will consider a suspension or delisting if: (i) the company has sold or otherwise disposed of its principal operating assets or has ceased to be an operating company or has discontinued a substantial portion of its operations or business for any reason whatsoever; (ii) a bankruptcy or liquidation has been authorized; or (iii) the NYSE receives advise from an authoritative third party that the security has no value.
- Failure to Comply with Listing Agreement and/or SEC Requirements – this is all encompassing as to all NYSE rules (including notice requirements, annual shareholder meetings, soliciting proxies, etc..) and all SEC reporting requirements. Where the deficiency is related to the failure to timely file a report with the SEC, the NYSE will provide prompt notice and the company will be required to engage in discussions with the NYSE. A company will be given a conditional six-month cure period with the potential for an additional six-month cure period. The Exchange will consider all facts and circumstances including, but not limited to, allegations of fraud, the termination or resignation of the company’s independent auditor, resignation of members of the audit committee or other board members, resignation or termination of key officers, and the company filing history.
- Other Events – suspension or delisting can occur where: (i) registration under the Exchange Act is no longer effective; (ii) an entire outstanding call, issue or series of securities is retired through payment, redemption, reclassification, or otherwise; (iii) operations contrary to public interest; (iv) failure to pay listing fees; (v) common stock selling for a substantial period of time at a low price per share and the company does not complete a reverse split after being notified by the Exchange; (v) any components of a unit do not meet the applicable listing requirements; or (vi) non-compliance with executive compensation clawback rules (see HERE).
The Author
Laura Anthony, Esq.
Founding Partner
Anthony L.G., PLLC
A Corporate Law Firm
Securities attorney Laura Anthony and her experienced legal team provide ongoing corporate counsel to small and mid-size private companies, public companies as well as private companies going public on the Nasdaq, NYSE American or over-the-counter market, such as the OTCQB and OTCQX. For more than two decades Anthony L.G., PLLC has served clients providing fast, personalized, cutting-edge legal service. The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker-dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions, securities token offerings and initial coin offerings, Regulation A/A+ offerings, as well as registration statements on Forms S-1, S-3, S-8 and merger registrations on Form S-4; compliance with the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers; applications to and compliance with the corporate governance requirements of securities exchanges including Nasdaq and NYSE American; general corporate; and general contract and business transactions. Ms. Anthony and her firm represent both target and acquiring companies in merger and acquisition transactions, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. The ALG legal team assists Pubcos in complying with the requirements of federal and state securities laws and SROs such as FINRA for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the small-cap and middle market’s top source for industry news, and the producer and host of LawCast.com, Corporate Finance in Focus. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.
Ms. Anthony is a member of various professional organizations including the Crowdfunding Professional Association (CfPA), Palm Beach County Bar Association, the Florida Bar Association, the American Bar Association and the ABA committees on Federal Securities Regulations and Private Equity and Venture Capital. She is a supporter of several community charities including the American Red Cross for Palm Beach and Martin Counties, Susan Komen Foundation, Opportunity, Inc., New Hope Charities, the Society of the Four Arts, the Norton Museum of Art, Palm Beach County Zoo Society, the Kravis Center for the Performing Arts and several others.
Ms. Anthony is an honors graduate from Florida State University College of Law and has been practicing law since 1993.
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