Direct Listing of Securities: Going Public Without an IPO

Description

Traditional methods of corporate finance have been disrupted in recent years, as more private companies pursue alternative approaches to a public listing. A company might pursue a direct listing of its common stock on a U.S. securities exchange to provide it with acquisition currency and a basis for valuation and to provide existing shareholders with liquidity.

Direct listings bypass certain elements of the investment banking and underwriting processes that are part of the traditional IPO. A U.S. or foreign-domiciled company may list its shares on a national securities exchange without undertaking an offering and sale of its securities at the same time. It can do that by filing with the SEC a registration statement on Form 10 (for U.S. issuers) or Form 20-F (for foreign issuers). Companies and their counsel should have a thorough understanding of the filing and reporting requirements under SEC regulations and stock exchange listing rules that apply for the direct listing and the ongoing reporting requirements after completion of the listing.

The SEC has considered several proposals by the NYSE and Nasdaq to facilitate direct listings and also to enable companies to raise funds alongside a direct listing without a traditional underwriting. Direct listings gained momentum in 2021 with a number of completed transactions, and we understand that there are more of them in the pipeline.

Listen as our authoritative panel examines the registration and listing requirements associated with the direct listing of securities on a public exchange. The panel will also discuss the recent amendment to the NYSE rules and the pros and cons of direct listings.