NASDAQ Listing Requirements
The National Association of Securities Dealers Automated Quotations (NASDAQ) is a national securities exchange that ranks second in market capitalization to the NYSE, and maintains its own listing requirements for each of its tiers. The NASDAQ, as an organization, was founded in 1971 and gained recognition from the SEC in 2006. With its constituent companies having a combined market capitalization of over $8.5 trillion, NASDAQ is the preferred marketplace for technology and bio-technology stocks. The exchange is well known for the high-volatility trading that takes place in its electronic marketplace. NASDAQ’s normal trading hours are between 9:30am and 4:00pm Eastern time, with a pre-market session from 4:00 am to 9:30 am and post-market session from 4:00 pm to 8:00 pm Eastern time.
NASDAQ is segregated into three distinct tiers with each having their own listing requirements:
- The NASDAQ Global Select Market (which has the most rigorous listing requirements of all three tiers as well as any stock exchange around the globe)
- The NASDAQ Global Market (for companies that operate or sell their products/services internationally)
- The NASDAQ Capital Market (for companies wishing to raise capital)
Listing Requirements
Companies that want to list their securities on NASDAQ must meet certain requirements including both quantitative and qualitative requirements, with additional requirements that must be met throughout the duration of the security?s listing. Companies must also adhere to corporate governance standards.
Before a company files a complete application, they have the option to undergo a preliminary listing eligibility review. The Listing Qualifications staff will attempt to determine whether a company has met the numerical listing criteria through reviewing public filings, and if the company has any reason for regulatory concerns. A preliminary listing eligibility review is not the same as filing a formal application.
NASDAQ Global Select Market
Companies must meet all of the criteria under at least one of four different financial standards:
Financial Requirements |
Standard 1: Earnings |
Standard 2: Capitalization with Cash Flow |
Standard 3: Capitalization with Revenue |
Standard 4: Assets with Equity |
Listing Rules |
5315(e) and 5315(f)(3)(A) |
5315(e) and 5315(f)(3)(B) |
5315(e) and 5315(f)(3)(C) |
5315(e) and 5315(f)(3)(D) |
Pre-Tax Earnings |
Aggregate in prior three fiscal years above or equal to $11mm, and each of the prior three fiscal years above or equal to $0, and each of the two most recent fiscal years above or equal to $2.2mm |
- |
- |
- |
Cash Flows |
- |
Aggregate in prior three fiscal years above or equal to $27mm, and each of the prior three fiscal years above or equal to $0 |
- |
- |
Market Cap |
- |
Average above or equal to $550mm over prior 12 months |
Average above or equal to $850mm over prior 12 months |
$160mm |
Revenue |
- |
Previous fiscal year above or equal to $110mm |
Previous fiscal year above or equal to $90mm |
- |
Total Assets |
- |
- |
- |
$80mm |
Stockholders’ Equity |
- |
- |
- |
$55mm |
Bid Price |
$4 |
$4 |
$4 |
$4 |
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Companies trying to qualify for the NASDAQ Global Select Market’s initial listing standards must also meet these liquidity requirements:
Liquidity Requirements |
Initial Public Offerings and Spin-Off Companies |
Seasoned Companies: Currently Trading Common Stock or Equivalents |
Affiliated Companies |
Listing Rule |
Round lot shareholders or Total shareholders or Total shareholders and average monthly trading volume over past twelve months |
450 or 2,200 |
450 or 2,200 or 550 and 1.1mm |
450 or 2,200 or 550 and 1.1mm |
5315(f)(1) |
Publicly Held Shares |
1,250,000 |
1,250,000 |
1,250,000 |
5315(e)(2) |
Market value of publicly held shares or Market value of publicly held shares and stockholders’ equity |
$45mm |
$110mm or $100mm and $110mm |
$45mm |
5315(f)(2) |
NASDAQ Global Markets
Companies must meet all of the criteria of at least one of four standards listed below.
Requirement |
Income Standard |
Equity Standard |
Market Value Standard |
Total Assets/ Total Revenue Standard |
Listing Rules |
5405(a) and 5405(b)(1) |
5405(a) and 5405(b)(2) |
5405(a) and 5405(b)(3) |
5405(a) and 5405(b)(4) |
Income from continuing operations before income taxes (in latest fiscal year or in two of last three fiscal years) |
$1mm |
- |
- |
- |
Stockholders’ Equity |
$15mm |
$30mm |
- |
- |
Market Value of Listed Securities |
- |
- |
$75mm |
- |
Total Assets and Total Revenue (in latest fiscal year or in two of last three fiscal years) |
- |
- |
- |
$75mm and $75mm |
Publicly Held Shares |
1.1mm |
1.1mm |
1.1mm |
1.1mm |
Market Value of Publicly Held Shares |
$8mm |
$18mm |
$20mm |
$20mm |
Bid Price |
$4 |
$4 |
$4 |
$4 |
Shareholders (round lot holders) |
400 |
400 |
400 |
400 |
Market Makers |
3 |
3 |
4 |
4 |
Operating History |
- |
2 years |
- |
- |
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NASDAQ Capital Market
Companies must meet all of the criteria of at least one of three standards listed below.
Requirements |
Equity Standard |
Market Value of Listed Securities Standard |
Net Income Standard |
Listing Rules |
5505(a) and 5505(b)(1) |
5505(a) and 5505(b)(2) |
5505(a) and 5505(b)(3) |
Stockholders’ Equity |
$5mm |
$4mm |
$4mm |
Market Value of Publicly Held Shares |
$15mm |
$15mm |
$5mm |
Operating History |
2 years |
- |
- |
Market Value of Listed Securities |
- |
$50mm |
- |
Net Income from Continuing Operations (in the latest fiscal year or in two of the last three fiscal years) |
- |
- |
$750K |
Publicly Held Shares |
1mm |
1mm |
1mm |
Shareholders (round lot holders) |
300 |
300 |
300 |
Market Makers |
3 |
3 |
3 |
Bid Price OR Closing Price |
$4 $3 |
$4 $2 |
$4 $3 |
Listing Fees
Depending on which market your company is attempting to qualify for, and what type of security your company is planning on issuing, there will be different listing fees.
Market entry fees, based on the total number of shares outstanding at the time of initial listing, includes a non-refundable application fee. Entry fees are due before the first day of trading.
Entry fees for the three different tiers are listed below:
NASDAQ Global Select Market and NASDAQ Global Market
Total Shares Outstanding |
Entry Fee |
Up to 30mm |
$125K, including $25K application fee |
30+ to 50mm |
$150K, including $25K application fee |
50+ to 100mm |
$200K, including $25K application fee |
Over 100mm |
$225K, including $25K application fee |
NASDAQ Capital Market
Total Shares Outstanding |
Entry Fee |
Up to 15mm |
$50K, including $5K application fee |
Over 15mm |
$75K, including $5K application fee |
For the full NASDAQ listing requirements, see the NASDAQ Initial Listing Guide.
Corporate Governance
The three tiers of the NASDAQ stock market all have similar rigorous standards regarding corporate governance. Companies are subject to the following corporate governance standards and categories:
- Annual Meetings: No later than one year after the end of a company?s fiscal year, an annual meeting with shareholders must be held.
- Approval by Shareholders: Companies must gain approval from their shareholders when there is an acquisition of 20% or more of outstanding shares or when issuances are made that result in a change of control.
- Audit Committee: Companies must have audit committees of at least three independent directors.
- Code of Conduct: Companies must create a code of conduct that applies to all employees.
- Conflict of Interest: Companies must conduct oversight to determine any potential conflict of interest situations.
- Distribution of Annual Reports: Shareholders must have access to annual and interim reports.
- Director Nominations: Independent directors are responsible for selecting and/or recommending director nominees.
- Executive Officer Compensation: Companies must create a compensation committee of at least two independent directors. The committee recommends and/or determines the compensation of the CEO and all other executive officers.
- Independent Directors: A majority of the board of directors must be independent directors.
- Proxy Solicitation: Proxies must be solicited for any shareholder meeting.
- Quorum: For any company meetings with holders of common stock, a quorum must exist of no less than 1/3 of the company?s outstanding shares of voting stock.
- Voting Rights: A company cannot take any action to restrict a shareholder?s voting rights.
Seasoning Rules
NASDAQ adopted ?seasoning rules? in 2011, which restrict companies who have completed reverse mergers with a public shell from submitting an application until 1) the company has traded on an over-the-counter market, another national securities exchange, or a regulated foreign exchange or 2) one year has passed since all required information from the merger has been filed. Companies must also file all required reports for the merger, including an annual report.
For at least 30 days prior to filing the application, the reverse merger company must also keep their closing price stock equal to the initial listing standard that applied to the company?s stock price. An exception exists for to companies that complete a firm commitment that has net proceeds of at least $40 million.
The SEC also maintains the right to impose more requirements on a company if they believe it is warranted.
Application Requirements
Depending on a company?s circumstances, there are 12 different NASDAQ listing applications, designed to cover situations where there has been a change of control, a company has completed an IPO, etc.
All applications are approximately 7 pages in length and require companies to submit basic information, in addition to information about the specific security. Companies must also disclose any investigations or lawsuits within the 10 years prior to the application that involve the company.
The formal NASDAQ application package requires a company to submit a:
- Symbol reservation form
- Listing application
- Listing agreement
- Corporate governance certification
- Initial application fee (see above)
- Logo submission form
Companies who wish to get listed on any of the the NASDAQ market tiers can submit an application. Getting listed on a NASDAQ market tier is a four step process, which includes:
- Gathering Company Information
- Creating an Account with the NASDAQ
- Completing an Online Listing Form
- Connecting with a Personal Analyst
Submitted applications typically take 4-6 weeks to process.
Get Started with your NASDAQ Listing
If you would like help you getting started on your NASDAQ listing, please complete this form below.
Benefits
Trading on a national exchange helps companies attract investors, have higher trading volume and increased liquidity. Broker-dealers are more easily able to participate in the IPO and subsequent trading, because while they are not typically able to recommend penny stocks to their clients, exchange listed stocks are not subject to the penny stock definition.
Colonial Stock Transfer can help provide SEC registered transfer agent services for your IPO as well as help you with your NASDAQ application. To speak with a professional today or learn more, please contact us.