On November 8th, the US Securities and
Exchange Commission approved rule changes requested by the three major US stock
exchanges, Nasdaq, the NYSE Amex and the New York Stock Exchange. In sum, companies
completing reverse mergers with SEC-reporting shell companies will now have to
"season" by trading on the over-the-counter markets or another national
exchange for one year, and timely filing all its periodic reports with the SEC
before seeking to uplist to these major exchanges. Companies completing reverse
mergers with special purpose acquisition companies (SPACs) are exempt from
In addition to waiting to move up, the post-reverse
merger company will have to have its stock trade at the same price as the
larger exchange's initial listing price for a sustained period before applying
to list. This would not be required for a company that completed its reverse
merger at least four years prior to applying to uplist.
One can bypass seasoning if the company is coming to the
larger exchange with a firm commitment underwritten public offering with gross
proceeds of at least $40 million. This applies on all three exchanges.
There was some hope that, based on a comment letter from
WestPark Capital, there might be an exemption for Form 10 share exchange
transactions, but this was rejected.
My thoughts? To come...
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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