Brian T. Borders
Attorney at Law
1747 Pennsylvania Avenue, NW,
Washington, DC 20006
(202) 296 - 8420
Fax (202) 296--8494
January 11, 2000
Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington D.C. 20549-0609
Re: Comments of the National Venture Capital Association on Amendment No.2 to Release No.34-42233; File No. SR-NYSE-99-39
Dear Mr. Katz:
This letter is submitted on behalf of the National Venture Capital Association ("NVCA" or "the Association") to comment on the above-captioned amendment to the NYSE rule proposal on qualitative listing standards regarding audit committees.
In a comment letter on the new listing standards, filed November 12, 1999, the NVCA recommended a transition period of eighteen months for newly public companies to meet the new requirements regarding composition, charter, and disclosure. Therein, NCVA argued that "[g]oing public is one of an array of strategic goals that pre-public companies are encouraged to consider.... Companies often pursue various "exit strategies" on parallel tracks. A decision to sell or to re-capitalize privately may come only after the company has made substantial preparation for, and is close to becoming public. In those cases, the substantial cost and effort required to meet the new audit committee listing standards will be wasted.... Therefore, a reasonable transition period should be developed for newly listed companies after they have moved from private to public status." Id. at 4-5.
While Amendment No. 2 does not provide the full range of IPO transitional considerations sought, it demonstrates an appreciation of the propriety of such a transition period. Moreover, the transitional relief provided is significant. Therefore, NVCA supports the Amendment and expresses its appreciation for the NYSE's step toward codification of this reasonable practice.
Companies going public on the NYSE will surely take advantage of the opportunity to reconfigure their audit committees after they have gone public rather than incurring the cost prior to doing so.
The Association hopes that the new NYSE IPO transition rule will serve as an example to the Nasdaq and AMEX Exchanges in their implementation of their new qualitative listing standards.
I thank you for your consideration of NVCA's comments. Please feel free to contact me if I can be of assistance in this matter.
Very Truly Yours,
Brian T. Borders /s/
Brian T. Borders, Esq.
For The National Venture Capital Association