Listing

Requirements

What eligibility and disclosure requirements apply for primary listing of equity securities on recognised exchanges in your jurisdiction (eg, aggregate share value, free float requirements, trading record, working capital)?

While the specific listing standards vary depending on the securities exchange, exchanges typically require a company to meet one or more financial standards, including:

  • a minimum adjusted pre-tax income or minimum cash flows for the prior two to three years;
  • a minimum revenue in the previous year;
  • a minimum market capitalisation;
  • a minimum shareholders’ equity (taking into account securities issued in the offering); and
  • a minimum market value of publicly held equity securities.

An issuer must also meet certain liquidity standards, which may include:

  • a minimum number of shareholders;
  • a minimum number of shares held by the public; and
  • a minimum per share price.

An issuer is also required to have certain governance features in place at the time of listing or, with respect to certain features, within a certain period after listing, including:

  • a board consisting of a majority of independent directors or trustees;
  • a committee of the board consisting of independent directors or trustees responsible for audit functions; and
  • independent directors or committees responsible for executive compensation and director nominations.

At the time of listing, national exchanges will also require the issuer to post its governing documents – including charters of board committees – on its corporate website. Each exchange has ongoing listing standards and rules that issuers must comply with, including requirements to disclose certain corporate events to the New York Stock Exchange (NYSE) or to shareholders.

Exemptions

Are there any exemptions from the listing requirements?

The NYSE and the National Association of Securities Dealers Automated Quotations (Nasdaq) have certain requirements that must be met, although there are limited exceptions to some requirements. For example, while the NYSE and Nasdaq do not generally provide exceptions to their financial standards, Nasdaq offers three different US markets – the Nasdaq Global Select Market, the Nasdaq Global Market and the Nasdaq Capital Market – which have different minimum financial standards requirements. The Nasdaq Global Select Market requires the highest initial listing requirements.

National securities exchanges offer exemptions from, and phase-in periods for, some of their corporate governance requirements. For example, issuers in an initial public offering (IPO) may have up to one year to attain a majority of independent directors or trustees and may take advantage of a phase-in period in which the issuer will attain board committees consisting of independent directors or trustees. In addition, a controlled company (ie, a company in which more than 50% of the voting power to elect directors is held by an individual, group or another company) and foreign private issuers (ie, certain non-US companies) following the relevant rules of their home countries need not comply with certain corporate governance requirements.

Procedure and timeframe

What is the procedure and typical timeframe for listing?

The listing process typically includes the following stages:

  • The issuer contacts the exchange’s listing department.
  • The issuer selects and reserves a stock exchange symbol for the security.
  • After review of certain limited company materials, the exchange issues a clearance letter to the issuer permitting it to submit a listing application.
  • The issuer provides draft corporate documents and governance information, and submits the initial listing application or agreement to the exchange.
  • The exchange begins or continues to review the documents.
  • The issuer completes and submits the final governance documents and certifications, certifications from the underwriters and other ancillary documents, and may select a market maker for the security.
  • The issuer makes certain filings with the Securities and Exchange Commission (SEC) in connection with the offering of the securities.
  • The exchange approves the listing.
  • The issuer provides any additional documents that the exchange requests after the listing date.

While timings vary, the listing process typically takes four to six weeks.

Fees

What fees apply for an application to list equity securities?

Typically, exchanges charge an initial listing fee followed by an annual fee based on the number of shares to be listed. The NYSE’s initial listing fees range from $150,000 to $295,000, subject to exceptions. Nasdaq fees range from $50,000 to $225,000 depending on the specific market. Once an issuer has a class of securities listed on the NYSE, the NYSE will charge a limited amount for a supplemental listing application, starting at $10,000. Nasdaq does not charge an application fee for listing additional shares.

Listing versus admission to trading

Is there a distinction between listing and admission to trading in your jurisdiction?

No.

Secondary listing

Are there any differences in the rules, restrictions and procedures for secondary listings of equity securities?

The listing of additional shares of the same class of securities is generally much simpler than the initial listing. Because exchanges require issuers to maintain certain financial and governance standards and to notify the exchange of the failure to meet some of these standards, and because issuers also have disclosure obligations under US securities laws, exchanges do not typically require issuers to provide the detailed financial and governance information required in an initial listing application. National exchanges typically require the issuer to submit only:

  • a short, one to two-page application;
  • copies of the offering documents; and
  • certain ancillary documents (including possibly a legal opinion regarding the validity of the shares being listed).

The exchanges typically approve these applications within a few days.

Foreign issuers

Are there any differences in the listing rules and procedures for foreign issuers?

Although the general procedures for listing on an exchange are the same for US and non-US issuers, the listing standards differ. Non-US issuers must meet one or more of the financial standards similar to those of US issuers; however, the specific minimum thresholds may differ for non-US issuers and may, in some respects, be higher.

An issuer generally is required to have certain governance features in place at the time of listing or, with respect to certain features, within a certain period after listing, including:

  • a board consisting of a majority of independent directors or trustees;
  • a committee of the board consisting of independent directors or trustees responsible for audit functions; and
  • independent directors or committees responsible for executive compensation and the nomination of directors or trustees.

Exemptions from certain corporate governance requirements are available for some non-US issuers that instead follow the relevant rules of their home country.

Delisting

Under what circumstances can a company be delisted? What rules and procedures apply?

An exchange will consider suspending trading and delisting a company that fails to meet the minimum quantitative thresholds, including if:

  • the company fails to maintain a minimum number of shareholders or average monthly trading volume;
  • the global market capitalisation falls below a minimum threshold over a 30-trading day period;
  • the average closing price per share is below a set minimum (eg, $1 over a 30-trading day period); or
  • the company fails to comply with other listing requirements, such as the corporate governance requirements.

For example, the NYSE will promptly initiate the suspension and delisting of a company if the company’s average global market capitalisation over a 30-trading day period is less than $15 million.

The delisting process begins with the exchange notifying the issuer of non-compliance and can result in immediate delisting. For example, Nasdaq will immediately delist a company that fails to solicit proxies and hold an annual shareholder meeting in a timely manner. For non-compliance that does not require immediate delisting, the company will have an opportunity to submit a compliance plan to the exchange. For example, if the potential delisting is due to the company failing to file periodic reports with the SEC or failing to have a majority independent board or independent committees of the board, a compliance plan may be established. The company must disclose in a filing with the SEC that it has received the non-compliance notice from the exchange. The exchange will review the proposed compliance plan and may delist the company or issue a public reprimand letter.