The New York Stock Exchange (NYSE), like other exchanges, has requirements in order for a company to be listed on the exchange. In other words, not just any American company can list itself on the NYSE. As of present, the initial requirements for any corporation that wants its stock listed on the NYSE are as follows:
1. The market value of its publicly held shares must be at least $40 million.
2. At least 1.1 million shares must be publicly held.
3. There must be at least 400 round lot owners. Round lot is any investor that holds 100 shares or shares that can be divided by 100.
4. Corporate earnings before federal income tax must be at least $10 million for the last three years.
According to the NYSE:
“(c) If a company either has a significant concentration of stock or changing market forces have adversely impacted the public market value of a company that otherwise would qualify for an Exchange listing, such that its public market value is no more than 10 percent below the minimum, the Exchange will consider stockholders’ equity of $60 million or $100 million, as applicable, as an alternate measure of size.
(d) Pre-tax income is adjusted for various items as defined in Section 102.01C of the NYSE Listed Company Manual.
(e) Represents net cash provided by operating activities excluding the changes in working capital or in operating assets and liabilities, as adjusted for various items as defined in Section 102.01C of the NYSE Listed Company Manual.
(f) Global market capitalization for already existing public companies is represented by the most recent three months of trading history in the case of Pure Valuation with Revenues. For all other standards, the measurement is “point in time” for existing public companies. For IPOs, spin-offs and carve-outs, it is represented by the valuation of the company as represented by, in the case of a spin-off, the distribution ratio as priced, or, in the case of an IPO/carve-out, the as-priced offering in relation to the total company’s capitalization.
In addition to meeting the minimum numerical standards listed above, there are other factors which must necessarily be considered. The company must be a going concern or be the successor to a going concern.
The Exchange has broad discretion regarding the listing of a company. The Exchange is committed to list only those companies that are suited for auction market trading and that have attained the status of being eligible for trading on the Exchange. Thus, the Exchange may deny listing or apply additional or more stringent criteria based on any event, condition, or circumstance that makes the listing of the company inadvisable or unwarranted in the opinion of the Exchange. Such determination can be made even if the company meets the standards set forth above.”
Delisting: The NYSE reserves the right to delist companies. For example, the exchange might stop trading the securities of a company if the number of stockholders, shares outstanding or total market value of outstanding shares falls below certain levels. The exchange may also delist companies that engage in activities adverse to investors’ interests, including failure to disclose financial statements or to solicit proxies for all meetings.
Quote of the Week: “I’ve never been poor, only broke. Being poor is a frame of mind. Being broke is only a temporary situation.” — Mike Todd, Newsweek, March 31, 1958
Bart Ward is the chief executive officer of Ward & Co. Ltd., an Anoka-based registered investment adviser – specializing in the management of stock and bond portfolios in companies which are listed on the NYSE.