Shoe #2 drops with a thud. The NYSE
Euronext announced earlier this month that, like the Nasdaq, it wants
reverse merger companies to trade on the over-the-counter market before being
allowed to apply to uplist. Luckily, like Nasdaq, it exempts companies coming
to the NYSE with a firm commitment underwriting, which is frankly how most
companies we work with get there. So it's not of much practical concern for
most of us. But still it is another slap in the face of the RM industry.
The NYSE proposal also goes further than Nasdaq in
requiring a full year of "seasoning" as opposed to Nasdaq's proposal of six
months. Other parts of the proposal: maintain "for a sustained period" a stock
price of $4.00 while trading over-the-counter and make all your SEC filings for
Another interesting feature - in defining what companies
completed reverse mergers subject to seasoning they say it's a business
combination with a shell. But their proposed definition of shell is broader
than the SEC rule ( their definition is a company with no or nominal
operations and no or nominal assets other than cash). They say it's a
shell if it meets that SEC definition but they may say that others are shells
depending on other factors including how active the assets were, what
revenues the company had, etc.
More on this in another post.
For additional insights on reverse mergers,
SPACs, other alternatives to traditional initial public offerings, the small
and microcap markets and the economy, visit the Reverse Merger and
SPAC Blog by David N. Feldman, Esq., Partner of Richardson &
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