Change in 24-hour notice cycle: NYSE amends dividend notice requirement



August 15, 2017

Securities Alert

Author(s): Kelly D. Babson

New rule requires NYSE-listed companies to provide notice to the NYSE at least 10 minutes before making any public announcement with respect to a dividend or stock distribution in all cases, including outside the hours in which the NYSE’s immediate release policy is in operation.

On August 14, 2017, the Securities and Exchange Commission (SEC) announced that it has approved the New York Stock Exchange’s (NYSE) proposed amendments to its rules regarding advance notice of dividend and distribution announcements. As amended, the rules will require NYSE-listed companies to provide notice to the NYSE at least 10 minutes before making any public announcement with respect to a dividend or stock distribution in all cases, including outside the hours when the NYSE’s immediate release policy is in operation. The rule change was approved yesterday and is immediately effective. The NYSE will provide more detailed guidance to NYSE-listed companies regarding the mechanics of complying in the near future.

What was the NYSE’s notice requirement before the amendment?

The NYSE’s immediate release policy, set forth in Sections 202.05 and 202.06 of the NYSE Listed Company Manual (the Manual), requires companies releasing material news between 7:00 a.m. ET and the NYSE close (generally 4:00 p.m. ET) to call the NYSE’s Market Watch team at least 10 minutes before its release. NYSE-listed companies announcing dividends during these hours are required to comply with the immediate release policy in connection with such announcements.

Section 204.12 of the Manual requires NYSE-listed companies to give notice to the NYSE at least 10 days in advance of the record date regarding any dividend- or stock distribution-related action in respect of any NYSE-listed stock (including the omission or postponement of a dividend action at the customary time, as well as the declaration of a dividend). This notice, which is in addition to the requirement to publicly disclose the information pursuant to the immediate release policy, must be given as soon as possible after a dividend is declared, but no later than simultaneously with the announcement to the news media.

In addition, Section 204.21 of the Manual requires NYSE-listed companies to give the NYSE prompt notice of the fixing of a date for taking a record of shareholders, or for closing transfer books (in respect of an NYSE-listed security), for any purpose. The notice must state the purpose or purposes for which the record date has been fixed.

How does the amendment change the NYSE’s notice requirement?

The principal effect of the amendment is to require NYSE-listed companies to provide notice to the NYSE at least 10 minutes before making any dividend announcement, regardless of the time that announcement is made, rather than just during the hours of operation of the immediate release policy as was the case before the amendment.

The NYSE also amended Section 202.06(B) of the Manual to emphasize that NYSE-listed companies are required to comply with the immediate release policy with respect to all announcements relating to a dividend or stock distribution.

What is the intended purpose of these changes?

The NYSE’s stated goal for the new requirement is to allow the NYSE to address any issues that may arise in relation to any dividend or stock distribution announcement and, therefore, avoid any confusion in the marketplace resulting from the dissemination of inaccurate information. The SEC indicated in its notice of approval of the rule change that the NYSE intends to have staff available, regardless of the time of day or day of the week, to review dividend notifications immediately and contact the disclosing NYSE-listed company if there is a problem with its notification.

The SEC’s notice of approval of the rule change is available here.

The NYSE’s announcement of the amendments is available here.

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