Fast path to listing on NYSE Euronext
What US-listed public companies should know
In today’s global capital markets, listing on foreign exchanges is one way to increase visibility and access to capital. But until recently, listing requirements have been burdensome, causing US-listed companies to shy away from even the world’s second-largest capital market, Europe. A new “Fast Path” option enables US-listed (NYSE or NASDAQ), non‑EEA (European Economic Area) issuers to cross-list on NYSE Euronext’s European markets using existing US SEC filings, with or without a simultaneous capital raising. No law firm has advised on more of these transactions than Baker & McKenzie.
Benefits you may wish to think about
Here are several ways an NYSE Euronext Fast Path listing may help your company:
Balance your capital base with your operating reality. Growing economies in the world’s Eastern Hemisphere are tilting the axis of commercial activity – and capital formation – toward Eastern Europe, Asia, the Middle East and Africa. With this shift, many US-listed companies find their shareholder base out of alignment with the global realities of their operational, reputational and capital needs. A NYSE Euronext listing in Paris, Amsterdam or Brussels is a proven way to rebalance the investor pool.
Expand your commercial opportunities. A NYSE Euronext listing demonstrates a commitment to the European market and sends a strong signal to commercial partners. It can provide an edge in increasing market share in this strategically important region as well as visibility in the media that can help offset listing costs.
Improve liquidity and lower your cost of capital. The US market accounts for about 40 percent of the world’s capital. Europe; about 25 percent. Companies (and funds looking for more robust exit strategies) can increase the liquidity of their securities through cross-listing which makes them eligible for purchase by asset managers with European mandates. Cross-listed companies also typically enjoy twice as much analyst coverage, higher overall trading volumes, and lower bid/ask spreads. In addition, a NYSE Euronext listing provides a facility for future capital raisings and/or M&A activity.
Simplify management of global equity plans. Implementing equity-based compensation plans in the EU can be a challenge for non-EU issuers. But under a NYSE Euronext Fast Path listing, issuers are exempt from the requirement to have an EU equity-based compensation offering prospectus approved each year.
How the Fast Path process works
Here are answers to common questions about the Fast Path process:
Who is eligible? What offerings may be made? The process is open to non-EEA issuers and “redomesticated” EEA issuers that are not foreign private issuers under the SEC rules. Ideally, listing companies should be Well-Known Seasoned Issuers (WKSIs) under SEC rules. Listings may be made with respect to IPOs (including a simultaneous US IPO), an offering of shares or a technical listing without an offering of shares.
What documentation can be used? Issuers subject to reporting obligations of the US Securities Exchange Act of 1934 can base their prospectus on existing SEC filings. These include Form S-1, Form 10-K, Form 10-Q and Form 8-K (where applicable) for domestic issuers; and Form F-1, Form 20-F and Form 6-K for foreign private issuers.
What financial disclosures are required? What form must they take? The prospectus must include audited financial statements, including balance sheets for the past three years. Pro forma statements may be required in the case of a recent material merger or acquisition. US GAAP accounting is recognized as meeting the EU prospectus regulation and transparency directives (except for “redomesticated” EEA issuers, who must report in IFRS). It is important to involve your auditors early in the process.
Is a prospectus always required? No. Securities that have listed on another regulated market in the EEA for at least 18 months are exempt from this obligation subject to three main conditions: 1) the prospectus was approved and published in connection with the earlier listing, 2) ongoing obligations for trading on the other EEA-regulated market have been fulfilled, and 3) a summary document is made available to the public.
Do the documents provided have to be translated? The listing prospectus does not have to be translated unless there is a simultaneous retail public offering on NYSE Euronext Paris or Brussels. In such cases, only the prospectus summary (10-15 pages) must be translated. Post-listing filings can be made in English.
What are my post-filing reporting requirements? Disclosure requirements are largely the same as in the United States, so post-filing reporting requirements can be satisfied via SEC filings. These include quarterly, semi-annual and annual reports (fulfilled with SEC Forms 10-K and 10-Q for US issuers and Forms 20-F and 6-K for foreign private issuers); notice to shareholders of the availability of the proxy statement and annual and quarterly reports, and announcing material events as soon as possible, e.g., through news releases that accompany the relevant SEC filings. Issuers also must provide a list of all the information they published during the preceding year. This can be as simple as copying filings shown on the company website or the SEC’s EDGAR website.
What additional corporate governance obligations will result? None. Neither NYSE Euronext nor the national securities regulators in the NYSE Euronext European markets impose any additional corporate governance requirements on US-listed non-EU issuers.
How much does it cost? The fee for cross-listings without a capital raising on the NYSE Euronext European markets is $33,750. Also plan for fees for legal counsel ($75-100,000), your auditor ($15-25,000), information agent ($7,000) and paying agent ($3-7,000). PR/IR firm support for analyst and news conferences at the time of the initial listing typically runs about $35,000, plus an equivalent amount for out-of-pocket expenses. The listing fee in subsequent years is $13,500. The above figures are approximate and are based on a pro forma exchange rate of €1.35 = $1.00.
Our experience and service advantages
We are one of the world’s leading capital markets and financial law firms, and have helped more companies cross-list on the NYSE Euronext than any other firm. In fact, Baker & McKenzie advised in the implementation of the Fast Path process in France and created the precedent filings that Fast Path issuers there follow. Through our securities and banking and finance practices, we help companies access needed capital to improve liquidity, market visibility and financial flexibility across the world.