Recently, the Securities and Exchange Commission (the “SEC”) approved1 proposed amendments to the New York Stock Exchange LLC (the “NYSE”) Listed Company Manual (the “Manual”)2 requiring listed companies to provide the NYSE with notice at least ten minutes before making any public announcement regarding a dividend or stock distribution, even when the public announcement is made outside of the NYSE's trading hours. The amendments to the Manual were effective as of August 14, 2017.
The SEC order approving the proposed amendments stated that these amendments will allow the NYSE’s staff to identify any “rule compliance issues” with a company’s dividend schedule prior to its public announcement and will reduce investor confusion as a result of “the dissemination of inaccurate or misleading” information.
Companies with securities listed on the NYSE will need to be mindful of these rule changes when announcing a dividend or stock distribution or fixing a record date, regardless of the time of day or day of the week that they make their announcement. As part of a listed company’s compliance with these new amendments, it would be prudent to notify its investor relations department and outside public relations firm that they will have to wait at least ten minutes after the company notifies the NYSE before publically announcing a dividend or stock distribution, and to update its internal communications policy accordingly.
Dividend and Stock Distribution Notice Requirements
Previously, Section 204.12 of the Manual required listed companies to notify the NYSE of a dividend or stock distribution no later than simultaneously with their public announcement if the announcement was made outside of the hours of 7:00 a.m. and 4:00 p.m. Eastern Time (“Market Hours”), and in no event less than ten days in advance of the record date. If a dividend or stock distribution announcement will be made during Market Hours, a listed company is also required to comply with the Material News Policy discussed below.3 Similarly, Section 204.21 of the Manual requires a listed company to promptly notify the NYSE when it fixes a record date or for the closing of transfer books (in respect of a listed security), for any reason.
As a result of these amendments, Section 204.12 of the Manual now requires listed companies to notify the NYSE at least ten minutes before any dividend or stock distribution announcement, including when the announcement is made outside of the Market Hours and Section 204.21 of the Manual now provides for the same ten minute advance notice requirement with respect to a listed company fixing a record date for any dividend or stock distribution, even if the public announcement is outside Market Hours. According to the SEC’s order approving the proposed amendments, the NYSE “intends to have staff available at all times to review dividend or stock distribution notices immediately upon receipt, regardless of the time or date the notices are received” and will immediately contact a listed company if there are any issues with its notification. These amendments do not change a listed company’s obligation to comply with the Material News Policy if a dividend or stock distribution announcement will be made during Market Hours, or alter the requirement to notify the NYSE of the setting of a record date no less than ten days in advance of the record date. Both of these obligations are strictly monitored by the NYSE and the Material News Policy allows the NYSE to halt trading in certain circumstances, including when it believes it needs to obtain additional information about a listed company’s press release.
The NYSE indicated that when listed companies provide advance notice regarding a dividend or stock distribution, they will not have to wait for NYSE approval before issuing a public announcement at least ten minutes after they provide notice. The NYSE also noted that listed companies should not make a public announcement regarding a dividend or stock distribution until they notify the NYSE using one of the prescribed methods contained in Section 204.00 of the Manual, such as calling the NYSE’s Market Watch & Proxy Compliance team, using the NYSE’s listing manager or emailing an address specified by the NYSE4.
Section 202.06 of the Manual requires listed companies that announce material news or issue a statement dealing with a rumor that requires an immediate release during Market Hours to notify the NYSE at least ten minutes prior to the announcement or release (the “Material News Policy”). As a result of these amendments, Section 202.06 of the Manual now clarifies that listed companies must comply with the Material News Policy when announcing a dividend or stock distribution, even outside Market Hours.