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IRS Okays Nymex For-Profit Plan
Nymex got final approval last week for its demutualization plan from the Internal Revenue Service, which said there would be no tax consequences for the organization or its members. The plan, which calls for the equity in the exchange to remain with the seat-owners of its Nymex Division, will make the exchange the first in New York to convert from a not-for-profit membership structure to a for-profit organization.
The approval is the "final step in repositioning the exchange as a 21st century business enterprise that will create and pursue profitable new opportunities, react rapidly and decisively in an increasingly competitive marketplace, and explore interest by outside investors," said Chairman Daniel Rappaport.
Nymex launched the plan last December. It was approved earlier this year by the Securities and Exchange Commission, the Commodity Futures Trading Commission, and a 97.5% majority of the Exchange members (see NGI, May 8).
Once demutualization is effective, the exchange, a not-for-profit membership corporation under New York law, will be reorganized as a for-profit membership corporation under Delaware law and will be renamed New York Mercantile Exchange, Inc. A new stock-holding company named Nymex Holdings Inc., will be formed to own all of the economic interests and most of the voting control in the for-profit membership corporation. Each existing Nymex Division membership will be converted into one share of common stock in Nymex Holdings, representing equity in the overall organization, and one membership in the exchange representing trading privileges. The common stock and trading privileges will not be separable until a majority of stockholders vote to permit separate trading of the common stock and trading rights.
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