B-10
Latham & Watkins – US IPO Guide
ENDNOTES
1
See generally NYSE Listed Company Manual, § 103.00 (NYSE Manual).
2
Both affiliated companies and companies listing following emergence from bankruptcy have different listing standards.
3
When considering a listing application from a company organized under the laws of Canada, Mexico or the US (North America), the NYSE
will include all North American holders and trading volume in applying the minimum stockholder and trading volume requirements. When
listing a company from outside North America, the Exchange may, in its discretion, include holders and trading volume in the company’s
home country or primary trading market outside the United States in applying the applicable listing standards, provided that such market
is a regulated stock exchange. In exercising this discretion, the Exchange will consider all relevant factors including: (i) whether the
information is derived from a reliable source, preferably either a government- regulated securities market or a transfer agent that is subject
to governmental regulation; (ii) whether there exist efficient mechanisms for the transfer of securities between the company’s non-US
trading market and the United States; and (iii) the number of shareholders and the extent of trading in the company’s securities in the
United States prior to the listing. For securities that trade in the format of American Depositary Receipts ("ADR's"), volume in the ordinary
shares will be adjusted to be on an ADR-equivalent basis. See NYSE Manual §102.01.
4
See NYSE Manual § 102.01. In addition, in certain circumstances, the NYSE will take into account certain other qualitative factors,
including: the company must be a going concern or the successor to a going concern, the degree of national interest in the company, the
character of the markets for its products, its relative stability and position in its industry, and whether it is engaged in an expanding industry
with prospects for maintaining its position. Higher minimum standards might apply if there is a lack of public interest in the securities
of a company as evidenced, for example, by low trading volume on another exchange, lack of dealer interest in the over-the-counter
market, unusual geographic concentration of holders of shares, slow growth in the number of shareholders, and a low rate of transfers.
See NYSE Manual § 102.01C. A company formed by a reverse merger is subject to additional initial listing requirements. See NYSE
Manual § 1-02.01F. In order to qualify for initial listing a reverse merger company must also: (i) have been trading for at least one year
on the US over-the-counter market, on another national securities exchange or on a regulated foreign exchange, and, in the case of a
domestic issuer, have filed a Form 8-K containing all required information under Item 2.01(f) including audited financial statements or, in
the case of a foreign private issuer, have filed all such information on Form 20-F; (ii) have maintained a minimum closing price of $4 per
share for at least 30 of the most recent 60 trading days preceding the filing of the initial listing application; and (iii) have filed all periodic
financial reports required by the SEC or other regulatory authority during the year preceding the initial listing, including one annual report
containing audited financial statements for a full fiscal year after the filing of the initial Form 8-K or 20-F, as applicable. In addition, in
order to qualify for listing, the reverse merger company must (i) have timely filed all periodic financial reports required by the SEC or other
regulatory authority during the year preceding the listing date, including one annual report containing audited financial statements for a full
fiscal year; and (ii) have maintained a minimum closing price of $4 per share for at least 30 of the most recent 60 trading days prior to the
listing date. However, a reverse merger company will not be required to meet the above additional conditions if it lists in connection with a
firm-commitment underwritten public offering with gross proceeds of at least $40 million.
5
See NYSE Manual § 102.01A. If the issuer has less than 100 shares, the requirement relating to the number of publicly held shares will be
reduced proportionately.
6
See id. If the unit of trading is less than 100 shares, the requirement relating to the number of publicly held shares will be reduced
proportionately. Shares held by directors, officers, or their immediate families and other concentrated holdings of 10% or more are
excluded in calculating the number of publicly held shares.
7
See NYSE Manual § 102.01B. For IPOs, the NYSE will rely on a written commitment from the underwriter regarding the anticipated
value of the offering. Under certain limited circumstances, the NYSE may allow an issuer to list without conducting a public offering
(a “direct listing”). For a selling shareholder direct listing, the exchange will determine whether the company has met the $100 million
market value requirement based on the lesser of (i) the value calculable based on the valuation and (ii) the value calculable based on the
most recent trading price in a private placement market. In the absence of recent trading in a private placement market, the NYSE will
determine that the company has met the market value of publicly-held shares requirement if the company provides a valuation showing a
market value of publicly-held shares of at least $250 million. For a primary direct listing, the NYSE will determine that the company has met
the market value of publicly-held shares requirement if the company will sell at least $100 million in market value of shares in the opening
auction on the first day of trading on NYSE. For this purpose, market value will be calculated using a price per share equal to the lowest
price of the price range in the registration statement minus an amount equal to 20% of the highest price of such price range.
8
See NYSE Manual § 102.01C(I).
9
As defined in Section 2(a)(19) of the Securities Act and Section 3(a)(80) of the Exchange Act.
10
See NYSE Manual § 102.01C(II).
11
In addition, a foreign private issuer listing its equity securities in the form of ADRs must sponsor its ADRs and enter into an agreement with
a US depository bank to provide such services as cash and stock dividend payments, transfer of ownership and distribution of company
financial statements and notices, such as shareholder meeting material. See generally NYSE Manual § 103.04.
12
See NYSE Manual § 103.01A. Shares held by directors, officers, or their immediate families, and other concentrated holdings of 10%
or more are excluded in calculating the number of publicly held shares. If an issuer either has a significant concentration of stock, or if
changing market forces have adversely impacted the public market value of an issuer which otherwise would qualify for listing on the NYSE
such that its public market value is no more than 10% below $100 million, the NYSE will generally consider $100 million in stockholders’
equity as an alternate measure of size and therefore, as an alternative basis to list the issuer.
13
See NYSE Manual § 103.01B(I).