Last week, the SEC published for comment a rule relating to procedures for companies that fail to file annual

reports on time.

The proposal, which was filed with the SEC back in August, would amend the NYSE's Listed Company Manual so that companies failing to file annual reports with the SEC in a timely manner would be subject to the following procedures:

Notification

Once the NYSE identifies that a company has failed to file a timely periodic annual report with the SEC, the exchange would notify the company in writing of its status.

For the purposes of the proposal, the “Filing Due Date” would be considered the latter of:

The date that the annual report was required to be filed with the SEC by the applicable form, or

If a Form 12b-25 was timely filed with

the SEC, the extended filing due date for the annual report

Disclosures And Discussion

Within five days of receipt of the notification, the company would be required to:

Contact the Exchange to discuss the status of the annual report filing, and

If it has not already done so, issue a press release disclosing the status of the filing.

NYSE Release

If the company fails to issue the press release mentioned above "in a timely manner," the Exchange would itself issue a press release stating that the company has failed to timely file its annual report with the SEC.

Nine Months Of Monitoring

During the nine-month period from the Filing Due Date, the NYSE would monitor the company and the status of the filing, including through contact with the company, until

the annual report is filed.

Discretionary Extension

If the company failed to file the annual report within nine

months from the Filing Due Date, the exchange could—at its sole discretion—allow the

company’s securities to be traded for up to an additional three-month trading period, depending on the company’s specific circumstances.

According to the proposal, in determining whether an additional trading period is appropriate, the NYSE would consider "the likelihood that the filing can be made during the additional period." The exchange would also consider the company’s general financial status, based on information provided by a variety of sources, "including the company, its audit committee, its outside auditors,

the staff of the SEC and any other regulatory body."

The proposal also noted that the NYSE "strongly encourages

companies to provide ongoing disclosure on the status of the annual report filing to the

market through press releases." That's because the frequency and detail of those disclosures would be taken into account in determining whether an additional three-month trading period is appropriate.

Suspension And Delisting

If the exchange determined that an

additional trading period of up to three months was not appropriate—or if an additional trading period was provided but the company failed to file its report by the end of that additional period—suspension and

delisting procedures would commence.

The proposal also noted that the NYSE reserved the right to suspend trading in any security if necessary to protect investors under existing rules.

The complete rule, as well as details on whom to contact for questions or comments, can be found in the box above, right.

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