|NYSE listing rules to become more flexible in 2010|
As of January 1, the New York Stock Exchange (NYSE) is applying some new listing rules. In September, aiming to smooth out a few rough spots, the exchange submitted a document with proposed changes for appraisal by the Securities and Exchange Commission.
Under the old rules, companies could only get listed if their boards and audit committees were made up mostly of independent members, right from the start. Now, companies that go public will have a year’s time to comply with the board composition requirement. When it comes to audit committees, the companies may have only one independent member upon listing. In ninety days’ time, they must have at least two, and after the first year all three must be independent.
Another change regards the concept of control. Instead of the “50% of votes” criterion, the new rule determines that control will be defined as the ability to elect the majority of board members. The reason for this is that some companies have two types of voting shares, with different weights. Controlled companies enjoy some exemptions – they don’t need to install nomination or compensation committees, for instance. According to the text, many companies requested subsidiary status in order to obtain the exemptions, but their controllers did not have the power to elect most of the board.
Preference for electronic documents is also addressed in the new rule. NYSE-listed companies are no longer obligated to provide a printed version of certain documents upon shareholder request – audit committee, governance or compensation reports, or the company’s codes of ethics or conduct. Posting them on the company website will suffice.