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The United States Securities and Exchange Commission has approved new listing rules for the NASDAQ Stock Market, the New York Stock Exchange and the NYSE Amex Stock Exchange relating to companies seeking to go public after completing a reverse merger. When the SEC determined that many such companies - and in particular overseas companies - were not accurately reporting financial results, it decided that heightened requirements on reverse merger companies prior to their listing on an Exchange would provide greater protections for investors.
Under the new rules, prior to applying to list with any of the Exchanges, the shares of such reverse merger companies must trade in the United States over-the-counter market, on another national securities exchange or on a regulated foreign exchange for at least one year after filing all required information with the SEC, including but not limited to, information regarding the reverse merger transaction and audited financial statements. Additionally, the new rules require that a company going public through a reverse merger maintain a minimum share price for a sustained period and for at least thirty of the sixty trading days immediately prior to submitting a listing application and the Exchange's decision to list such company. The SEC anticipates that the required seasoning period and increased disclosure requirements associated with the new rules will provide greater protection for investors and help prevent fraudulent accounting disclosures.
