Under New Rule, NYSE-only Listed Companies from Outside North America Can Comply with Holder Distribution Standards on a Global Basis

On May 2, the Securities and Exchange Commission approved an amendment to Section 102.01 of the New York Stock Exchange (NYSE) Listed Company Manual allowing companies organized outside North America (i.e., outside the U.S., Canada, and Mexico) listing in connection with an initial public offering (IPO)—and not listed on any other regulatory exchange—to take into account all of their stockholders on a global basis in complying with the NYSE’s minimum stockholder distribution standards.

Those distribution standards require companies conducting an IPO to have a minimum of 400 stockholders holding a trading unit or more of the relevant security (typically, 100 shares). The amendment is effective immediately. 

Under the previous rule, companies organized outside North America that are not listed on any other regulatory exchange could only count U.S. holders toward meeting the stockholder distribution standards, while such companies that are listed on another regulatory exchange could, in addition to U.S. holders, count holders from their home market only at the NYSE’s discretion. The amendment further clarifies that this discretion applies only when the issuer is listed on another regulated exchange.  

The new rule is intended to enhance the NYSE’s competitiveness in attracting non-U.S. company listings, particularly relative to Nasdaq, which already permits worldwide stockholder counts. According to the NYSE, the amendment reflects the reality that modern cross-border settlement systems allow investors outside North America to participate effectively in U.S. trading markets.

By limiting the accommodation to companies for which the NYSE would be the sole regulated exchange, the NYSE believes the liquidity policy underlying the distribution standards will be satisfied since trading in the securities will be concentrated on the NYSE.

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