01/25/2012
The Securities and Exchange Commission (SEC) released a final rule on January 20, 2012, that amends Rule 146 under Section 18 of the Securities Act of 1933. The amendment designates securities listed, or authorized for listing, on Tiers I and II of BATS Exchange, Inc. (BATS) as covered securities under Section 18(b)(1).
The SEC noted that the BATS listing standards were "substantially similar" to listing standards of other named markets with covered securities, like those of NYSE, NYSE Amex and Nasdaq/NGM. BATS listing standards for primary equity securities—common stock—include requirements for a minimum bid price of $4 per share for initial listing and $1 per share for continued listing, 300 round lot holders, and 1,000,000 publicly held shares. The standards also require stockholder equity of at least $5 million, market value of publicly held shares of at least $15 million, and a two-year operating history. The SEC found these requirements along with the proposed equity, net income, market value and convertible debt standards of BATS to be substantially similar to NYSE Amex standards. Additionally, the standards of BATS for preferred stock, secondary classes of common stock, index warrants and warrants were found to be substantially similar to those of Nasdaq/NGM.
The designated covered securities on BATS will be exempt from state "blue sky" registration requirements pursuant to Section 18(a) of the Securities Act. However, covered securities must comply with the applicable listing standards and with federal securities laws, rules and regulations governing the registration and sale of securities. The rule becomes effective 30 days from publication in the federal register.
For more information on this alert, contact any of our Corporate Finance attorneys.