In response to the enactment of the Jumpstart Our Business Startups Act (the “JOBS Act”), the New York Stock Exchange (“NYSE”) proposes to amend Sections 102.01C and 103.01B of the NYSE’s Listed Company Manual (the “Manual”) to permit the listing of companies on the basis of two years of reported financial data as permitted under the JOBS Act.

Specifically, these amendments provide that a company which qualifies as an emerging growth company (“EGC”) may choose to include only two years of audited financial data in the registration statement used in connection with the “first sale of common equity securities of the issuer pursuant to an effective registration statement under the Securities Act of 1933” (the “initial public offering date”), rather than the three years of audited financial data that had previously been required. In addition, for as long as a company remains an EGC, it is not required to file selected financial data for any period prior to the earliest period for which it had included audited financial statements in its initial public offering registration statement in (i) any subsequent registration statement filed under the Securities Act of 1933 or (ii) any Exchange Act of 1934 registration statement. 

An issuer that is an EGC will continue to be considered an EGC until the earliest of:

  • the last day of the fiscal year during which it had total annual gross revenues of at least $1 billion;
  • the last day of the fiscal year following the fifth anniversary of its initial public offering date;
  • the date on which it has, during the previous three-year period, issued more than $1 billion in non-convertible debt; or
  • the date on which it is considered to be a “large accelerated filer” under the Exchange Act.

The proposed NYSE Rule is similar to approach taken by Nasdaq with respect to the initial listing standards for its Nasdaq Global Select Market in Nasdaq Marketplace Rules 5310(g) and (h).  In adopting the proposed rule changes, the NYSE noted that the proposed amended listing standards would not establish lower initial listing requirements than all other national securities exchanges, as the amended standards would still be significantly more stringent than those applied by the Nasdaq Capital Market.