NYSE Proposes Rule Change to SEC to Revise Initial Listing Requir

On January 8, 2026, the New York Inventory Change (“NYSE” or “Change”) submitted a proposed rule change to the Securities and Change Fee that might revise the preliminary itemizing necessities detailed in Sections 101 and 102 of the NYSE American Company Guide.

The Change is proposing the next amendments:

• Any firm searching for to listing in reference to an preliminary public providing (“IPO”), together with listings by way of American Depository Receipts or different underwritten public choices, should have a market worth of unrestricted publicly-held shares of at the very least $15 million which should be glad from the providing proceeds based mostly upon the low finish of the worth vary for such providing.
• Rising the minimal market worth to $4.00 per share for Preliminary Itemizing Requirements 1 by way of 4 set forth in Rule 101 of the NYSE American Firm Information, per the requirement to fulfill the exception from the definition of “penny inventory” set forth in Rule 3a51-1(a)(2) of the Securities Change Act of 1934, as amended (the “Change Act”).
• Firms which are already publicly traded on the OTC Markets or transferring from one other nationwide securities change should have a complete market capitalization that meets the relevant requirement for 90 consecutive buying and selling days previous to making use of to listing and should additionally meet the proposed $4.00 worth requirement as set forth above over the identical interval when making use of to listing beneath Preliminary Itemizing Customary 3 or 4 set forth in Rule 101 of the NYSE American Firm Information.

The foregoing amendments are designed to, amongst different issues, improve liquidity for securities listed on the change whereas addressing considerations associated to cost manipulation and inventory volatility.

Unrestricted Publicly-Held Shares

Unrestricted Publicly-Held Shares Necessities for Preliminary Listings

In its current proposal, the NYSE is proposing to revise all market worth of publicly-held shares necessities for preliminary listings set forth in Section 101 of the NYSE American Firm Information such that the requirement could be met solely on the premise of unrestricted publicly-held shares.

To assist this variation, the NYSE is proposing to introduce new definitions for “publicly-held shares,” “restricted securities,” “unrestricted securities,” and “unrestricted publicly-held shares.” These proposed definitions are considerably equivalent to these already in place for Nasdaq listings.

At present, when figuring out the market worth of publicly-held shares for preliminary listings on the NYSE American, securities which are topic to resale restrictions—that means they aren’t freely transferable—are included out there worth of publicly-held shares calculation. In consequence, restricted securities, or securities which are topic to “lockup” agreements, could also be counted towards assembly itemizing necessities although they might not contribute to precise market liquidity.

In its proposal, the Change emphasised that securities topic to restrictions don’t contribute to an organization’s liquidity on the time of itemizing, which can lead to a much less liquid—or probably illiquid—itemizing. “The Change is worried as a result of illiquid securities might commerce occasionally, in a extra risky method and with a wider bid-ask unfold, all of which can lead to buying and selling at costs that won’t replicate the safety’s true market worth. Much less liquid securities additionally could also be extra inclined to cost manipulation, as a comparatively small quantity of buying and selling exercise can have an inordinate impact on market costs.”

To handle considerations about liquidity, the Change is proposing to introduce a brand new definition of “restricted securities.” Beneath this definition, restricted securities would come with any shares topic to resale restrictions for any motive. Examples offered by the Change embrace securities (1) acquired instantly or not directly from an organization or an affiliate of an organization in unregistered choices similar to personal placements, together with these pursuant to Regulation D of the Securities Act of 1933, as amended (“Securities Act”); (2) acquired by way of worker inventory plans or as compensation for companies; (3) acquired exterior of america in reliance on Regulation S of the Securities Act and which can’t be resold inside america; (4) topic to lockup agreements or related contractual restrictions; and/or (5) thought-about “restricted securities” beneath Rule 144 of the Securities Act. The Change intends to amend the definition of “unrestricted securities” to incorporate securities that aren’t “restricted securities”, and “unrestricted publicly-held shares” to incorporate publicly held shares excluding the newly outlined “unrestricted securities.”

The Change proposes that all the current publicly-held shares necessities in Preliminary Itemizing Requirements 2 by way of 4 get replaced with numerically equivalent necessities that might be measured based mostly on unrestricted publicly-held shares. Moreover, with respect to Preliminary Itemizing Customary 1, the Change is proposing that the prevailing publicly-held shares requirement get replaced with a minimal normal of $15 million.

On account of these proposed modifications, solely securities which are freely transferable will likely be included within the calculation of publicly-held shares when figuring out whether or not an organization meets the NYSE American’s preliminary itemizing necessities.

Unrestricted Publicly-Held Shares Necessities for Firms Itemizing in Reference to an Underwritten Public Providing

For corporations itemizing on the NYSE American in reference to a public providing, shares excellent previous to such providing held by non-affiliates (i.e. officers, administrators or 10% or larger stockholders) are at present counted as publicly-held shares for preliminary itemizing functions and are added to the shares being offered within the public providing.

The Change has noticed that corporations that should depend on excellent shares held by non-affiliates to fulfill the market worth of publicly-held shares requirement “typically have skilled greater volatility on the date of itemizing than these of equally located corporations that meet the requirement solely on the premise of providing proceeds.” In consequence, the Change is proposing that any firm searching for to listing in reference to an IPO, together with listings by way of American Depository Receipts or different underwritten public choices, should have a market worth of unrestricted publicly-held shares of at the very least $15 million which should be glad from the providing proceeds. Moreover, just like Nasdaq Capital Market necessities, the NYSE is proposing {that a} itemizing in reference to an IPO or different underwriting providing ought to be required to have proceeds of at the very least $15 million based mostly upon the low finish of the worth vary for such providing.

Minimal Inventory Worth for Preliminary Listings

At present, the NYSE requires a minimal market worth between $2.00 to $3.00 per share for corporations qualifying for itemizing pursuant to Sections 101(a) by way of (d) of the NYSE American Firm Information. The Change is proposing to amend this requirement to extend the minimal market worth to $4.00 per share per guidelines for corporations itemizing on The Nasdaq Capital Market(1). The proposed $4.00 worth can be per the requirement to fulfill the exception from the definition of “penny inventory” set forth in Rule 3a51-1(a)(2) of the Securities Change Act. It’s because “

Market Capitalization and Inventory Worth Necessities

NYSE’s Preliminary Itemizing Customary 3 requires a complete market capitalization of $50,0000,000 whereas Preliminary Itemizing Customary 4 requires corporations to have both (i) $75,000,000 in complete market capitalization or (ii) complete property and complete income of $75,000,000 every in its final fiscal 12 months, or in two of its final three fiscal years. When making use of complete market capitalization requirements for corporations itemizing by way of an IPO or different underwritten public providing, the Change bases its calculation on the general public providing worth to find out if an organization meets the market capitalization requirement; nevertheless, the Preliminary Itemizing Requirements don’t make clear how complete market capitalization ought to be calculated beneath Requirements 3 and 4 for corporations which are already publicly traded on the over-the-counter markets (“OTC Markets”) or these transferring from one other nationwide securities change.

The NYSE is proposing to amend such Preliminary Itemizing Requirements to offer that corporations which are already publicly traded on the OTC Markets or transferring from one other nationwide securities change should have a complete market capitalization that meets the relevant requirement for 90 consecutive buying and selling days previous to making use of to listing and should additionally meet the proposed $4.00 worth requirement as set forth above over the identical interval.

Key Takeaways

• IPO & Public Providing Necessities: Firms itemizing in reference to an IPO or different underwritten public providing should have a market worth of unrestricted publicly-held shares of at the very least $15,000,000 which should be glad from the providing proceeds. Moreover, corporations ought to be required to have proceeds of at the very least $15,000,000 based mostly upon the low finish of the worth vary.
• Larger Minimal Share Worth: The Change is proposing to extend the minimal market worth to $4.00 per share, aligning with Nasdaq requirements and SEC guidelines on penny shares.
• Market Capitalization Requirements: Firms which are already publicly traded on the OTC Markets or transferring from one other nationwide securities change should have a complete market capitalization that meets the relevant requirement for 90 consecutive buying and selling days previous to making use of to listing and should additionally meet the proposed $4.00 worth requirement as set forth above over the identical interval when making use of to listing beneath Preliminary Itemizing Customary 3 or 4.

The brand new proposed necessities are meant to take impact instantly and can apply to any firm that has not been permitted for itemizing by the NYSE on the time the foundations take impact. Whereas these modifications are designed to handle considerations round worth manipulation, volatility, and to reinforce total liquidity, they might additionally create further hurdles for corporations searching for to listing on NYSE American.

FOOTNOTES

(1) See Nasdaq Inventory Market Guidelines 5505(a)(1)(A) and (B).

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