NASDAQ

Here is a simplified guide on the requirements list on NASDAQ

The NASDAQ stock exchange is one of the most well-known and prestigious platforms for companies to list their shares and raise capital from the public. Listing on NASDAQ can provide a company with increased visibility, access to a broader investor base, and enhanced credibility. However, gaining a spot on this exchange requires meeting specific criteria to ensure financial stability and transparency. In this article, we'll provide a simplified guide to the requirements for listing on NASDAQ.

Financial Performance

A company's financial performance is one of the primary considerations for listing on NASDAQ. To qualify, a company must demonstrate a profitability and sustainable growth history. The specific financial criteria vary depending on the listing tier within NASDAQ.

Market Value

NASDAQ has multiple listing tiers, the most well-known being the NASDAQ Global Select Market. The market value of the publicly held shares is a crucial factor for listing on different tiers. For instance, the Global Select Market requires a higher market value than the Capital Market tier. As of my last knowledge update in September 2021, the exact figures are subject to change, so it's important to refer to NASDAQ's official guidelines for the most current requirements.

Shareholder Equity

Shareholder equity, which is the company's assets minus its liabilities, is another key factor. NASDAQ typically requires a minimum amount of shareholder equity for listing. This ensures the company has a solid financial foundation and can meet its obligations.

Minimum Bid Price

The minimum bid price is the lowest price at which company shares are traded. Maintaining a minimum bid price is important for ensuring a certain level of investor interest and liquidity in the company's stock. The company might face delisting if the bid price falls below a specified threshold.

Corporate Governance and Compliance

NASDAQ places a strong emphasis on corporate governance and compliance with regulatory standards. Companies seeking to list must have a well-functioning board of directors and meet certain audit committee requirements. Additionally, they must comply with the Sarbanes-Oxley Act to enhance transparency and financial reporting.

Market Capitalization

Market capitalization, calculated by multiplying the stock price by the total number of outstanding shares, is critical for NASDAQ listing. Different listing tiers have different market capitalization requirements, and maintaining a certain level of market capitalization is crucial to remaining listed on NASDAQ.

Publicly Available Financial Statements

NASDAQ requires companies to provide audited financial statements that meet the Generally Accepted Accounting Principles (GAAP). These statements provide transparency into the company's financial health and performance.

Minimum Number of Shareholders

To list on NASDAQ, a company needs to have a minimum number of shareholders. This requirement ensures a certain level of public interest in the company's stock.

Operating History

NASDAQ generally requires companies to have a track record of operating history. This helps ensure the company has a proven business model and is not a speculative venture.

Compliance with Continued Listing Requirements

Listing on NASDAQ is not a one-time event; companies must continue to meet ongoing requirements to remain listed. These requirements include regular financial reporting, maintaining minimum bid prices, and adhering to corporate governance standards.

Conclusion

Listing on NASDAQ can offer numerous advantages to companies, including increased visibility, access to capital, and enhanced credibility. However, the exchange maintains strict requirements to ensure that listed companies are financially stable, transparent, and well-governed. As these requirements can change over time, companies must stay up-to-date with NASDAQ's official guidelines and work towards meeting the criteria for their desired listing tier.