Recently, PilieroMazza had the privilege of representing India Globalization Capital, Inc. (NYSE: IGC) on its appeal of a decision by the New York Stock Exchange (“NYSE American” or “the Exchange”) to delist IGC’s common stock from trading on the Exchange. Victories in NYSE appeals are rare and extremely difficult to come by, particularly when the Exchange’s delisting decision is based on subjective and discretionary criteria. In these types of proceedings, the odds are always stacked against the company. But ultimately, even against those odds, truth wins out; the Exchange’s delisting procedures allow for a meaningful presentation of evidence to rebut the decision, and under the right circumstances, a company can be vindicated.

On October 29, 2018, NYSE American issued a letter and public announcement informing IGC and the investor public that it had determined to commence proceedings to delist the common stock of the company from trading on the Exchange. Trading of the stock was suspended that day at the market open. NYSE American’s claims were two-fold. First, the Exchange alleged that IGC had substantially discontinued the business that it conducted at the time it was listed or admitted to trading and had become engaged in ventures or promotions that had not developed to a commercial stage or the success of which was problematical. And, second, the Exchange contended that IGC or its management had engaged in operations that, in the opinion of the Exchange, were contrary to the public interest. IGC felt strongly that the decision was fundamentally incorrect and wished to challenge it.

Our litigation team, led by Matthew Feinberg, presented IGC’s case to an engaged review panel, offering a comprehensive company profile so that the panel could understand who IGC was and how it operates its business. It was critical that we make clear to the panel that IGC continues to operate both of its business lines: an infrastructure business, which has been in operation primarily in Asia since IGC’s founding in 2005; and a legal medical cannabis business line, which has been in operation primarily in the United States since 2014. Ultimately, the review panel ruled unanimously that “although revenue the Company attributed to its infrastructure business may no longer be wholly derived from sources identical to those that existed at the time of its listing . . ., the Company continues to operate its infrastructure business . . .” necessitating that the delisting decision be set aside on that ground.

The decision to delist a company’s stock based on alleged public interest concerns is entirely subjective, thus on appeal, we were compelled to prove that the Exchange’s “opinion” was incorrect. To do so, we directed our attack on both legal and factual grounds. First, we argued that the NYSE’s delisting letter violated IGC’s due process rights by failing to give IGC adequate notice of the specific grounds for the decision. And, the review panel agreed, announcing that the notice of intended delisting must “contain more specific detail than just a citation to the listing standard.”

Although it had failed to disclose the grounds on which it would rely in the delisting letter, the Exchange based its public interest argument on what it alleged to be unsupported and unreasonable press releases and public disclosures. In response, we provided the review panel with evidence to support IGC’s press releases and public disclosures. And, the review panel concluded unanimously that the evidence provided was sufficient to rebut NYSE American’s contentions that IGC had acted contrary to the public interest. On these grounds, the review panel concluded that the NYSE had failed to meet its burden of proof and that, subject to ongoing satisfaction of continued listing standards, IGC’s securities should remain listed on the Exchange.

Although the odds remain steep for any business facing delisting by the NYSE, the IGC case offers important precedent and inspiration for aggrieved companies. Victory in an NYSE appeal can be had where the company is committed to achieving a just result and engages the right team with the wherewithal to present the company’s best case. If your company is facing delisting by the New York Stock Exchange, the attorneys at PilieroMazza can leverage their experience to assist you in the appeals process.
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