What are the Listing Requirements for the Nasdaq?
BY MARY HALL Updated Aug 5, 2019
Major stock exchanges, like the Nasdaq, are exclusive clubs—
their reputations rest on the companies they trade. As such,
the Nasdaq won't allow just any company to be traded on its
exchange. Only companies with a solid history and top-notch
management behind them are considered.
The Nasdaq has four sets of listing requirements. Each
company must meet at least one of the four requirement sets,
as well as the main rules for all companies.
Listing Requirements for All Companies
Each company must have a minimum of 1,250,000 publicly
traded shares upon listing, excluding those held by
officers, directors or any beneficial owners of more than
10% of the company.
Also, the regular bid price at the time of listing must be
$4.00, and there must be at least three market makers for
the stock.
However, a company may qualify under a closing price
alternative of $3.00 or $2.00 if the company meets varying
requirements.
Each listing firm is also required to follow Nasdaq
corporate governance rules 4350, 4351 and 4360.
Companies must also have at least 450 round lot
(100 shares) shareholders, 2,200 total shareholders,
or 550 total shareholders with 1.1 million average trading
volume over the past 12 months.
KEY TAKEAWAYS
Major stock exchanges, like the Nasdaq, are exclusive clubs
—their reputations rest on the companies they trade.
The Nasdaq has four sets of listing requirements.
Each company must meet at least one of the four requirement
sets, as well as the main rules for all companies.
In addition to these requirements, companies must meet all
of the criteria under at least one of the following
standards.
A company has four ways to get listed on the Nasdaq,
depending on the underlying fundamentals of the company.
In addition to these requirements, companies must meet all
of the criteria under at least one of the following
standards.
Standard No. 1: Earnings
The company must have aggregate pre-tax earnings in the
prior three years of at least $11 million, in the previous
two years at least $2.2 million, and no single year in the
prior three years can have a net loss.
Standard No. 2: Capitalization With Cash Flow
The company must have a minimum aggregate cash flow of at
least $27.5 million for the past three fiscal years, with
no negative cash flow in any of those three years. Also,
its average market capitalization over the prior 12 months
must be at least $550 million, and revenues in the previous
fiscal year must be $110 million, minimum.
Standard No. 3: Capitalization With Revenue
Companies can be removed from the cash flow requirement of
the second standard if its average market capitalization
over the past 12 months is at least $850 million and
revenues over the prior fiscal year are at least
$90 million.
Standard No. 4: Assets With Equity
Companies can eliminate the cash flow and revenue
requirements, and decrease its marketing capitalization
requirements to $160 million if their total assets total at
least $80 million and their stockholders' equity is at least
$55 million.
A company has four ways to get listed on the Nasdaq,
depending on the underlying fundamentals of the company.
If a company does not meet certain criteria, such as the
operating income minimum, it has to make it up with larger
minimum amounts in another area, like revenue. This helps
to improve the quality of companies listed on the exchange.
After a company gets listed on the market, it must maintain
certain standards to continue trading. Failure to meet the
specifications set out by the stock exchange will result in
its delisting. Falling below the minimum required share
price, or market capitalization is one of the major factors
triggering a delisting. The exact details of delisting
depend on the exchange
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