On May 12, the New York Stock Exchange LLC filed an immediately effective rule amendment with the Securities and Exchange Commission that temporarily reduced from $75 million to $50 million the 30 trading day average market capitalization and stockholders’ equity requirements for continued listing of certain companies. The decreased market capitalization and stockholders’ equity requirements apply to companies that initially qualified for listing under the “Earnings Test”, “Asset and Equity Test” or “Initial Listing Standard for Companies Transferring from NYSE Arca” provisions of the NYSE Listed Company Manual. The NYSE rule amendment was adopted on a “pilot program” basis and is scheduled to expire after October 31, 2009.
Listed companies that are above the $50 million market capitalization and stockholders’ equity compliance thresholds under the amendment will be deemed to have returned to compliance as of May 12.
The NYSE believes the reduction of market capitalization and stockholders’ equity thresholds is appropriate given the current market environment, which has resulted in significant declines in stock prices and market capitalizations, increases in volatility and significant write-downs in the value of their assets or significant impairment charges. Consequently, a far greater number of listed companies have fallen below the continued listing standards in the past 18 months than since June 2005, when the NYSE increased the standards to $75 million from $50 million. The NYSE also acknowledged that the stock prices and stockholders’ equity for many of these companies may not return to pre-recession levels for a considerable period of time.