NYSE proposes five-year transition for internal audit requirement
All companies listed on the NYSE would have up to five years from their listing date to establish an internal audit function under the proposed amendment.
On July 31, 2026, New York Stock Exchange LLC filed a proposed rule change (File No. SR-NYSE-2026-37, Release No. 34-106128) to amend Sections 303A.00 and 303A.07 of the NYSE Listed Company Manual. The amendment would extend the transition period for a listed issuer to implement an internal audit function from the current one-year deadline to five years after the listing date.
Section 303A.07(c) requires each listed company to have an internal audit function, which may be outsourced to a third-party provider. The Exchange argues that a longer transition period will allow newly public issuers to develop a more effective function while they upgrade accounting systems, internal controls, and staffing. Existing governance requirements - including an Audit Committee of at least three independent directors, the Audit Committee charter review, and Sarbanes-Oxley Sections 404(a) and 404(b), as well as CEO/CFO certifications under Sections 302 and 906 - remain unchanged.
The Exchange notes that Nasdaq does not impose an internal audit requirement, and therefore the proposed five-year period would not lessen the stringency of NYSE rules relative to its peer exchange. The statutory basis for the amendment is cited as Section 6(b) of the Securities Exchange Act of 1934 and Section 6(b)(5), which aim to promote just and equitable principles of trade and protect investors.
The SEC will act on the proposal within 45 days of this notice's publication in the Federal Register, or within a longer period up to 90 days if designated. Interested parties may submit comments electronically or by paper, referencing file number SR-NYSE-2026-37.