By Cydney Posner

The NYSE has filed a proposed rule change to conform to the JOBS Act by allowing companies to list with only two years of audited financial statements.  The proposal would amend the initial financial listing standards in Sections 102.01C and 103.01B to permit an EGC that elects to report only two years of audited financial statements, as permitted by the JOBS Act, to meet the applicable initial listing standard on the basis of the two years of audited financial data actually reported, rather than the three years of financial information would otherwise be required. (Under Nasdaq Marketplace Rules 5310(g) and (h), the Nasdaq Global Select Market allows companies to list with fewer than three years of audited financials.) EGCs would still be required to meet the same aggregate financial requirements, but over a two-year period instead of a three-year period. As result, as proposed, some of the tests are actually more stringent. For example, the Domestic Earnings Test requires that an applicant's earnings must total (x) at least $10 million in the aggregate in the three most recent fiscal years together with a minimum of $2 million in the two most recent years and positive amounts in all three years or (y) at least $12 million in aggregate in the last three years with a minimum of $5 million in the most recent fiscal year and a minimum of $2 million in the next most recent fiscal year. Under the proposed amendment to that test, EGCs that report only two years of audited financial data would need earnings to total at least $10 million in the aggregate in the two most recent fiscal years together with a minimum of $2 million in each of the two years.

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