Client Alert
SEC Approves NYSE Temporary Reduction of Minimum Market Cap Standard
January 28, 2009
On January 27, 2009, the SEC approved a rule change proposed by the New York Stock Exchange, LLC (“NYSE”) to temporarily lower, from $25 million to $15 million, the minimum global market capitalization required of listed companies under Section 802.01B of the NYSE Listed Company Manual.1 Under the temporary reduction, which lasts through April 22, 2009, the NYSE will promptly delist any company if it is determined that the company has an average global market capitalization over a consecutive 30 trading-day period of less than $15 million, regardless of the original listing standard under which it is listed.2 All of the other NYSE continued listing criteria will continue to apply.
The NYSE proposed the rule change in response to the extreme volatility in U.S. and global equities markets, and an overall decline in the trading prices of many securities. As a result of these conditions, the number of companies on the NYSE whose average global market capitalization has fallen below $25 million over a 30 trading-day period has been significantly higher than the historical norm. The NYSE believes that temporarily lowering the average global market capitalization requirement will facilitate the continued listing of those companies which have experienced precipitous declines in stock prices due to a general decline in investor confidence and other unusual circumstances affecting the broad market, rather than company-specific issues. The NYSE’s relief lowering the minimum market cap requirement differs somewhat from recent action taken by The NASDAQ Stock Market LLC ("Nasdaq"), which suspended (rather than lowered) its minimum bid price and market cap requirements through April 19, 2009. 3
If you have any questions regarding the recent NYSE actions, please contact Sudhir Shenoy, the principal drafter of this client alert, or you may contact the Womble Carlyle attorney with whom you usually work or one of our Corporate and Securities attorneys.
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