On December 22, the Securities and Exchange Commission re-approved a proposal by the NYSE which enables companies conducting a direct listing on its exchange to sell newly issued shares into the opening auction on the first day of trading, raising fresh capital as part of a direct listing, while continuing to permit existing stockholders to sell their shares.  This rule change is effective immediately.   This is a big win for issuers, particularly technology companies, that are global, recognizable and have a large shareholder base. 

The rule was originally approved by the SEC in August 2020, but it was stayed in September 2020 when the Council of Institutional Investors (CII) petitioned that the approval order did not contain adequate investor protections. Last week, the SEC found that the proposed rule was consistent with the Exchange Act, and it was approved.

For a further description of the new rule and its implications, please see our client alert published in August 2020.