NYSE Listed Company Compliance Guidance Letter
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Stock Exchange Listing Agreements As a Vehicle for Corporate Governance
1981] STOCK EXCHANGE LISTING AGREEMENTS AS A VEHICLE FOR CORPORATE GOVERNANCE INTRODUCTION After nearly two hundred years of operation, stock exchanges remain largely unexplored as vehicles for regulating the internal affairs of corporations whose stocks they list for trading. Such regulation would seek to establish uniform, easily comprehensible standards of corporate conduct and to communicate them to every investor. The standards would be implemented by requiring that corporations conform to them as a prerequisite to having their securities traded on an exchange. As a result, investors could more accurately assess the value of corporate equity securities than they can today, and would be less likely to base an investment decision on a misunderstanding of their potential rights as shareholders.1 In evaluating the price of an equity security today, investors face fifty state corporation laws and as many state judicial systems, which together determine the bundle of rights the investor pur- chases. This problem stems from the principle that state law defines the rights and obligations a corporation owes to its share- holders.2 Investors who have neither the expertise to school them- selves in the nuances of state corporation law nor the resources to hire an attorney for that purpose 3 may choose "safer" invest- ments,4 or equally risky but more understandable investments,5 or I Stock exchanges currently regulate some aspects of internal corporate affairs, see, e.g., note 40 infra, but this Comment advocates greater supervisory powers. Furthermore, because of the relative obscurity of listing agreement provisions, investors do not generally appreciate the specifies of current exchange regulations. -
Why Are the First Day Returns of China's Ipos So High?
University of Wollongong Research Online Faculty of Commerce - Papers (Archive) Faculty of Business and Law 2005 Why Are the First Day Returns of China’s IPOs So High? S. Ma University of Wollongong, [email protected] Follow this and additional works at: https://ro.uow.edu.au/commpapers Part of the Business Commons, and the Social and Behavioral Sciences Commons Recommended Citation Ma, S.: Why Are the First Day Returns of China’s IPOs So High? 2005. https://ro.uow.edu.au/commpapers/474 Research Online is the open access institutional repository for the University of Wollongong. For further information contact the UOW Library: [email protected] Why Are the First Day Returns of China’s IPOs So High? Abstract We investigate the causes of the high first day returns of Chinese firms making an initial public offering (IPO) of A-shares from 1991 to 2003 on Shanghai and Shenzhen stock exchanges. Our results show an average underpricing of 175.21 percent. We argue that the IPO underpricing is an interaction of ex-market underpricing and on-market overpricing. The high first day returns of China’s IPOs are most likely generated from on-market overpricing. Government intervention, market speculation, special ownership structure, strategy of proceeds maximization and risk concerns are the main drivers of the high first day returns. However, the high first day returns have decreased significantly in ecentr years. We explained this change by testing the risk composition hypothesis, the realignment of incentives hypothesis and the changing issuer objective hypothesis, which shows that the reduction in risk, senior managerial shares and seasoned offerings mitigate the first day returns. -
Initial Public Offerings
November 2017 Initial Public Offerings An Issuer’s Guide (US Edition) Contents INTRODUCTION 1 What Are the Potential Benefits of Conducting an IPO? 1 What Are the Potential Costs and Other Potential Downsides of Conducting an IPO? 1 Is Your Company Ready for an IPO? 2 GETTING READY 3 Are Changes Needed in the Company’s Capital Structure or Relationships with Its Key Stockholders or Other Related Parties? 3 What Is the Right Corporate Governance Structure for the Company Post-IPO? 5 Are the Company’s Existing Financial Statements Suitable? 6 Are the Company’s Pre-IPO Equity Awards Problematic? 6 How Should Investor Relations Be Handled? 7 Which Securities Exchange to List On? 8 OFFER STRUCTURE 9 Offer Size 9 Primary vs. Secondary Shares 9 Allocation—Institutional vs. Retail 9 KEY DOCUMENTS 11 Registration Statement 11 Form 8-A – Exchange Act Registration Statement 19 Underwriting Agreement 20 Lock-Up Agreements 21 Legal Opinions and Negative Assurance Letters 22 Comfort Letters 22 Engagement Letter with the Underwriters 23 KEY PARTIES 24 Issuer 24 Selling Stockholders 24 Management of the Issuer 24 Auditors 24 Underwriters 24 Legal Advisers 25 Other Parties 25 i Initial Public Offerings THE IPO PROCESS 26 Organizational or “Kick-Off” Meeting 26 The Due Diligence Review 26 Drafting Responsibility and Drafting Sessions 27 Filing with the SEC, FINRA, a Securities Exchange and the State Securities Commissions 27 SEC Review 29 Book-Building and Roadshow 30 Price Determination 30 Allocation and Settlement or Closing 31 Publicity Considerations -
Direct Versus Derivative and the Law of Limited Liability Companies Daniel S
Mitchell Hamline School of Law Mitchell Hamline Open Access Faculty Scholarship 2006 Direct Versus Derivative and the Law of Limited Liability Companies Daniel S. Kleinberger Mitchell Hamline School of Law, [email protected] Publication Information 58 Baylor Law Review 63 (2006) Repository Citation Kleinberger, Daniel S., "Direct Versus Derivative and the Law of Limited Liability Companies" (2006). Faculty Scholarship. Paper 233. http://open.mitchellhamline.edu/facsch/233 This Article is brought to you for free and open access by Mitchell Hamline Open Access. It has been accepted for inclusion in Faculty Scholarship by an authorized administrator of Mitchell Hamline Open Access. For more information, please contact [email protected]. Direct Versus Derivative and the Law of Limited Liability Companies Abstract The yh brid nature of limited liability companies causes us to re-invent, or at least re-examine, many doctrinal wheels. This Article will reexamine one of the most practical of those wheels-the distinction between direct and derivative claims in the context of a closely-held limited liability company. Case law concerning the direct/derivative distinction is still overwhelmingly from the law of corporations, although LLC cases are now being reported with some frequency. LLC cases routinely analogize to, or borrow from, the corporate law. This Article encompasses that law, analyzes LLC developments, and argues that courts should (i) avoid the "special injury" rule, (ii) embrace the "direct harm" approach, and (iii) engraft ot the direct harm approach an exception applicable when those in control of a limited liability company harm the company with the "purpose and effect" of injuring a particular member. -
Frequently Asked Questions About the 20% Rule and Non-Registered Securities Offerings
FREQUENTLY ASKED QUESTIONS ABOUT THE 20% RULE AND NON-REGISTERED SECURITIES OFFERINGS issuance, equals or exceeds 20% of the voting power understanding the 20% Rule outstanding before the issuance of such stock; or (2) the number of shares of common stock to be issued is, or will be upon issuance, equal to or in excess What is the 20% rule? of 20% of the number of shares of common stock The “20% rule,” as it is often referred to, is a corporate outstanding before the transaction. “Voting power governance requirement applicable to companies listed outstanding” refers to the aggregate number of on nasdaq, the nYSe or the nYSe American LLC votes that may be cast by holders of those securities (“nYSe American”) (collectively, the “exchanges”). outstanding that entitle the holders thereof to vote each exchange has specific requirements applicable generally on all matters submitted to the issuer’s to listed companies to receive shareholder approval securityholders for a vote. before they can issue 20% or more of their outstanding common stock or voting power in a “private offering.” However, under nYSe Rule 312.03(c), the situations The exchanges also require shareholder approval in in which shareholder approval will not be required connection with certain other transactions. Generally: include: (1) any public offering for cash, or (2) any issuance involving a “bona fide private financing,1” if • Nasdaq Rule 5635(d) requires shareholder approval such private financing involves a sale of: (a) common for transactions, other than “public offerings,” -
Shareholder Capitalism a System in Crisis New Economics Foundation Shareholder Capitalism
SHAREHOLDER CAPITALISM A SYSTEM IN CRISIS NEW ECONOMICS FOUNDATION SHAREHOLDER CAPITALISM SUMMARY Our current, highly financialised, form of shareholder capitalism is not Shareholder capitalism just failing to provide new capital for – a system driven by investment, it is actively undermining the ability of listed companies to the interests of reinvest their own profits. The stock shareholder-backed market has become a vehicle for and market-fixated extracting value from companies, not companies – is broken. for injecting it. No wonder that Andy Haldane, Chief Economist of the Bank of England, recently suggested that shareholder capitalism is ‘eating itself.’1 Corporate governance has become dominated by the need to maximise short-term shareholder returns. At the same time, financial markets have grown more complex, highly intermediated, and similarly short- termist, with shares increasingly seen as paper assets to be traded rather than long-term investments in sound businesses. This kind of trading is a zero-sum game with no new wealth, let alone social value, created. For one person to win, another must lose – and increasingly, the only real winners appear to be the army of financial intermediaries who control and perpetuate the merry-go- round. There is nothing natural or inevitable about the shareholder-owned corporation as it currently exists. Like all economic institutions, it is a product of political and economic choices which can and should be remade if they no longer serve our economy, society, or environment. Here’s the impact -
Initial Public Offering Allocations
Initial Public Offering Allocations by Sturla Lyngnes Fjesme A dissertation submitted to BI Norwegian Business School for the degree of PhD PhD specialization: Financial Economics Series of Dissertations 9/2011 BI Norwegian Business School Sturla Lyngnes Fjesme Initial Public Offering Allocations © Sturla Lyngnes Fjesme 2011 Series of Dissertations 9/2011 ISBN: 978-82-8247-029-2 ISSN: 1502-2099 BI Norwegian Business School N-0442 Oslo Phone: +47 4641 0000 www.bi.no Printing: Nordberg Trykk The dissertation may be downloaded or ordered from our website www.bi.no/en/Research/Research-Publications/ Abstract Stock exchanges have rules on the minimum equity level and the minimum number of shareholders that are required to list publicly. Most private companies that want to list publicly must issue equity to be able to meet these minimum requirements. Most companies that list on the Oslo stock exchange (OSE) are restricted to selling shares in an IPO to a large group of dispersed investors or in a negotiated private placement to a small group of specialized investors. Initial equity offerings have high expected returns and this makes them very popular investments. Ritter (2003) and Jenkinson and Jones (2004) argue that there are three views on how shares are allocated in the IPO setting. First, is the academic view based on Benveniste and Spindt (1989). In this view investment banks allocate IPO shares to informed investors in return for true valuation and demand information. Informed investors are allocated shares because they help to price the issue. Second, is the pitchbook view where investment banks allocate shares to institutional investors that are likely to hold shares in the long run. -
Frequently Asked Questions About Initial Public Offerings
FREQUENTLY ASKED QUESTIONS ABOUT INITIAL PUBLIC OFFERINGS Initial public offerings (“IPOs”) are complex, time-consuming and implicate many different areas of the law and market practices. The following FAQs address important issues but are not likely to answer all of your questions. • Public companies have greater visibility. The media understanding IPOS has greater economic incentive to cover a public company than a private company because of the number of investors seeking information about their What is an IPO? investment. An “IPO” is the initial public offering by a company • Going public allows a company’s employees to of its securities, most often its common stock. In the share in its growth and success through stock united States, these offerings are generally registered options and other equity-based compensation under the Securities Act of 1933, as amended (the structures that benefit from a more liquid stock with “Securities Act”), and the shares are often but not an independently determined fair market value. A always listed on a national securities exchange such public company may also use its equity to attract as the new York Stock exchange (the “nYSe”), the and retain management and key personnel. nYSe American LLC or one of the nasdaq markets (“nasdaq” and, collectively, the “exchanges”). The What are disadvantages of going public? process of “going public” is complex and expensive. • The IPO process is expensive. The legal, accounting upon the completion of an IPO, a company becomes and printing costs are significant and these costs a “public company,” subject to all of the regulations will have to be paid regardless of whether an IPO is applicable to public companies, including those of successful. -
Limited Liability with One-Man Companies and Subsidiary Corporations
LIMITED LIABILITY WITH ONE-MAN COMPANIES AND SUBSIDIARY CORPORATIONS Bm Nmw F. CATALDO* Limited liability, usually regarded as the most significant feature of corporate enterprise, has received extravagant praise. Among those who have paid verbal homage to the concept of limited liability are two former university presidents who cut a large figure in the intellectual manners of the nation during the last half century. President Eliot of Harvard regarded limited liability as "the corporation's most precious characteristic" and "by far the most effective legal invention ... made in the nineteenth century."' President Nicholas Murray Butler of Columbia made the pronouncement in i91: "I weigh my words when I say that in my judg- ment the limited liability corporation is the greatest single discovery of modern times.... Even steam and electricity are far less important than the limited liability corporation, and they would be reduced to comparative impotence without it."' Our courts have rested-unnecessarily, it is believed 3 -the concept of limited lia- bility on the legal entity theory. This theory, familiar to every elementary student of corporation law and finance, treats the corporation as a legal persona or juristic person constituting an entity in itself separate and distinct from the members. The essence of this theory, stated in stark terms, is that the shareholders own "the corporation" and the latter owns and operates the assets and the business. The questionable4 but judicially accepted reasoning which regards limited liability as a * A.B. 1929, LL.B. 1932, LL.M. 1936, University of Pennsylvania. Member of Philadelphia bar; Special Attorney, Department of Justice, Washington, D. -
The Market Reaction to Cross-Listings: Does the Destination Market Matter?
ARTICLE IN PRESS Journal of Banking & Finance xxx (2009) xxx–xxx Contents lists available at ScienceDirect Journal of Banking & Finance journal homepage: www.elsevier.com/locate/jbf The market reaction to cross-listings: Does the destination market matter? Peter Roosenboom, Mathijs A. van Dijk * Rotterdam School of Management, Erasmus University, P.O. Box 1738, 3000 DR Rotterdam, Netherlands article info abstract Article history: This paper examines (i) whether market reactions to cross-listings differ across destination markets and Received 26 November 2008 (ii) to what extent the following explanations for value creation around cross-listings can account for dif- Accepted 17 April 2009 ferences in market reactions across cross-listings on various destination markets: overcoming market Available online xxxx segmentation, increased market liquidity, improved information disclosure, and better investor protec- tion (‘‘bonding”). We analyze 526 cross-listings from 44 different countries on eight major stock JEL classification: exchanges and document significant announcement returns of 1.3% on average for cross-listings on US F30 exchanges, 1.1% on London Stock Exchange, 0.6% on exchanges in continental Europe, and 0.5% (not sig- G14 nificant) on Tokyo Stock Exchange. We find evidence consistent with improved disclosure and bonding G15 creating value for cross-listings on US exchanges, while overcoming segmentation and bonding are asso- Keywords: ciated with higher announcement returns on the London Stock Exchange. The evidence is mixed for con- Cross-listings tinental European exchanges and for Tokyo. Our results highlight the role of the destination market in Capital market integration value creation around cross-listings. Investor protection Ó 2009 Elsevier B.V. -
The Business Case for the Current SEC Shareholder Proposal Process
The Business Case for the Current SEC Shareholder Proposal Process April 2017 About Ceres Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. Through our powerful networks and advocacy, we tackle the world’s biggest sustainability challenges, including climate change, water scarcity and pollution, and human rights abuses. The Ceres Investor Network on Climate Risk and Sustainability comprises more than 130 institutional investors, collectively managing more than $17 trillion in assets, advancing leading investment practices, corporate engagement strategies and policy solutions to build an equitable, sustainable global economy and planet. For more information, visit www.ceres.org. About ICCR The Interfaith Center on Corporate Responsibility (ICCR) is a 46 year-old, pioneer coalition of over 300 organizational investors representing faith-based communities, socially responsible asset managers, labor unions, and others who engage corporations on the environmental and social impacts of their operations. About US SIF US SIF: The Forum for Sustainable and Responsible Investment is the leading voice advancing sustainable, responsible and impact investing across all asset classes. Our mission is to rapidly shift investment practices towards sustainability, focusing on long-term investment and the generation of positive social and environmental impacts. Our 300+ members collectively represent more than $3 trillion in assets under management or advisement. Acknowledgements We wish to thank our colleagues and partners who contributed to this paper: Rob Berridge (Ceres), Chris Davis (Ceres), Dan Mitler (Ceres), as well as numerous members of the Ceres, ICCR, and US SIF investor networks, and the Council of Institutional Investors. -
NYSE Direct Listing Rules Approved; Nasdaq Proposes Substantially Similar Rules
Capital Markets Alert 01 / 06 / 21 NYSE Direct Listing Rules Approved; Nasdaq Proposes Substantially Similar Rules If you have any questions regarding On December 22, 2020, the U.S. Securities and Exchange Commission (SEC) approved the matters discussed in this a proposal by the New York Stock Exchange (NYSE) that allows companies going memorandum, please contact the public via a direct listing to issue new shares and raise capital without involvement of a attorneys listed on the last page traditional underwriter. The SEC first approved the proposed rules on August 26, 2020, or call your regular Skadden contact. but stayed the approval upon receiving notice that the Council of Institutional Investors intended to petition for review of the rules. After a de novo review, the SEC approved the rules, concluding that the NYSE had “met its burden to show that the proposed rule This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its change is consistent with the Exchange Act.” The NYSE rules, which are immediately affiliates for educational and informational effective, bolster direct listings as a potentially attractive alternative to traditional under- purposes only and is not intended written initial public offerings (IPOs). and should not be construed as legal advice. This memorandum is considered Nasdaq also recently filed a direct listing rule proposal with the SEC, which would have advertising under applicable state laws. provided for more pricing flexibility than is permitted in the NYSE rules, but the SEC staff delayed approval of the rule, subjecting it to additional procedures for consider- ation. Upon approval of the NYSE rules, Nasdaq filed a substantially similar proposal, One Manhattan West requesting immediate effectiveness.