The Jumpstart Our Business Startups Act (the JOBS Act) provides, among many other things, that a company which qualifies as an emerging growth company (EGC) may chose to include only two years of audited financial data in the registration statement for its initial equity public offering rather than three years of audited financial data that would have been required previously. Moreover, for as long as a company remains an ECG, it is not required to file selected financial data for any period prior to the earliest period for which it included audited financial statements in its initial public offering registration statement.
In a May 4 filing with the Securities and Exchange Commission, the New York Stock Exchange (NYSE) proposed to modify its initial financial listing standards to permit an EGC to meet the applicable standard on the basis of two years of audited financial data actually reported, rather than the three years of financial data that would otherwise have been required. In addition, certain financial listing standards would be able to be met on the basis of two, rather than three, years of financial data. The rule changes would only be applicable to EGCs that actually avail themselves of their ability to report only two years of audited financial information. On May 15 the proposed rule changes were declared effective by the SEC.
In a separate development, a proxy fee advisory committee (PFAC) formed by the NYSE has recently released recommendations for changing the fees paid by public companies to banks and brokers for the distribution of proxy material to shareholders holding their stock in “street name.” The PFAC’s recommendations propose to streamline proxy fees, make them more transparent to issuers and effect a modest decrease in total fees paid of approximately 4%, with some fees increasing and others decreasing. For example, the processing fees for special meetings and proxy contests would increase slightly, but the fee for annual meeting reminder notices would be reduced by half, according to the proposal. The NYSE expects to submit a rule change proposal to the SEC, which would be published for public comment prior to obtaining SEC approval.