NYSE Proposes to Expand Permitted Use of Direct Listings: Proposal Would Permit Companies to Raise Capital in Direct Listings and Modify Distribution Requirements

Sullivan & Cromwell LLP - December 2, 2019
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On November 26, 2019, New York Stock Exchange LLC filed notice of a proposed rule change with the Securities and Exchange Commission to modify its listing rules relating to direct listings. The proposed rule change would allow companies to raise capital and sell new shares in a direct listing, in contrast to the current rules, which only permit secondary sales by existing shareholders. In addition, the proposed rule would modify the distribution requirements for direct listings, thereby expanding the number of private companies that would be eligible for direct listings. If adopted, the proposed rules would significantly increase the number of IPOs that would occur via a direct listing. If the SEC approves the proposed rule change, it is not expected to become effective until at least 45 days after the publication of the notice in the Federal Register.