New York Stock Exchange's
board of directors approved a proposal to eliminate a rule that made a listed company meet certain requirements before it could voluntarily delist its securities from the Big Board.
A statement on the NYSE's Web site said the recommendation will be submitted to the
Securities and Exchange Commission
When it was first adopted in 1939, Rule 500 required two-thirds of a company's outstanding shares to be voted in favor of a delisting, with no more than 10% of the shares opposing, the NYSE said.
In 1999 the requirement of a shareholder vote was eliminated, and the rule now requires board and audit committee approval, written notice to the company's 35 largest holders and a press release.
"The rationale for requiring separate audit-committee approval of a delisting was to ensure that independent directors approved the decision," Catherine R. Kinney, president and co-chief operating officer of the exchange, said in the statement. "In our work on listing standards, we have seen that a majority-independent board has already become the norm among many of our companies. After our currently pending governance proposals become final, a majority-independent board will become
a standard. As a result, we believe that in this new environment, board approval of a transfer should suffice, and the rule is no longer necessary."
Neither advance notification to shareholders nor a company press release will be mandated, since the companies and the market to which they are transferring publicize the move, the NYSE said.
In addition, the exchange pointed out that companies are obligated to disclose material events, and pending SEC changes will require a regulatory filing when a company takes action to terminate a listing. Practical considerations such as the need to make brokers and investors aware of a change in the ticker symbol will also ensure that a planned move is known, the exchange said.
Should a transferring company miss the regulatory filing or issuing a press release, the NYSE itself would issue a release.