Nice catch on the rule change, Rawnoc. The amend
Post# of 43064
Nice catch on the rule change, Rawnoc. The amendments were adopted April 18, 2012.
For those who are interested, here is some good background reading on the purpose and details of the rule change: http://nasdaq.cchwallstreet.com/NASDAQ/pdf/na...ment_1.pdf
The new rule relaxes the entry requirements for the lowest (third) tier of the NASDAQ. Too many details to bother summarizing, so how about some copy-and-paste:
"5505. Initial Listing of Primary Equity Securities
A Company applying to list its Primary Equity Security on the Capital Market must meet all of the requirements set forth in Rule 5505(a) and at least one of the Standards in Rule 5505(b).
(a) Initial Listing Requirements for Primary Equity Securities:
(1) (A) Minimum bid price of $4 per share; or
(B) Minimum closing price of $3 per share, if the Company meets the requirements of the Equity or Net Income Standards under Rules 5505(b)(1) or (b)(3), or of $2 per share, if the Company meets the requirements of the Market Value of Listed Securities Standard under Rule 5505(b)(2), provided that in either case the Company must also demonstrate that it has net tangible assets (i.e., total assets less intangible assets and liabilities) in excess of $2 million, if the issuer has been in continuous operation for at least three years; or net tangible assets in excess of $5 million, if the issuer has been in continuous operation for less than three years; or average revenue of at least $6 million for the last three years. A security must meet the applicable closing price requirement for at least five consecutive business days prior to approval.
For purposes of this paragraph (B), net tangible assets or average revenues must be demonstrated on the Company's most recently filed audited financial statements filed with, and satisfying the requirements of, the Commission or Other Regulatory Authority, and which are dated less than 15 months prior to the date of listing.
(2) At least 1,000,000 Publicly Held Shares;
(3) At least 300 Round Lot Holders;
(4) At least three registered and active Market Makers;
(5) In the case of ADRs, at least 400,000 issued.
(b) Initial Listing Standards for Primary Equity Securities:
(1) Equity Standard
(A) Stockholders' equity of at least $5 million;
(B) Market Value of Publicly Held Shares of at least $15 million; and
(C) Two year operating history.
(2) Market Value of Listed Securities Standard
(A) Market Value of Listed Securities of at least $50 million (current publicly traded Companies must meet this requirement and the price requirement for 90 consecutive trading days prior to applying for listing if qualifying to list only under the Market Value of Listed Securities Standard);
(B) Stockholders' equity of at least $4 million; and
(C) Market Value of Publicly Held Shares of at least $15 million.
(3) Net Income Standard
(A) Net income from continuing operations of $750,000 in the most recently completed fiscal year or in two of the three most recently completed fiscal years;
(B) Stockholders' equity of at least $4 million; and
(C) Market Value of Publicly Held Shares of at least $5 million.
Adopted March 12, 2009 (SR-NASDAQ-2009-018); amended April 18, 2012 (SR-NASDAQ-2012-002).
IM-5505. Initial Listing for Securities below $4
(a) Penny Stock Provisions. Rule 5505(a)(1)(B) provides an alternative initial listing requirement for certain companies with a minimum bid price below $4. A company that qualifies for initial listing only under this alternative could become a "penny stock" if it later fails the net tangible assets and revenue tests after listing and does not satisfy any of the other exclusions from being a penny stock contained in Rule 3a51-1 under the Act. In order to assist brokers' and dealers' compliance with the requirements of the Penny Stock Rules, Nasdaq will monitor companies listed under the alternative requirement and publish on its website on a daily basis a list of any company that initially listed under the alternative requirement, which no longer satisfies the net tangible assets or revenue test contained in Rule 5505(a)(1)(B), and which does not satisfy any of the other exclusions from being a penny stock contained in Rule 3a51-1 under the Act. If a company initially lists with a bid price below $4 under the alternative requirement contained in Rule 5505(a)(1)(B), but subsequently achieves a $4 closing price for at least five consecutive business days and, at the same time, satisfies all other initial listing criteria, it will no longer be considered as having listed under the alternative requirement and Nasdaq will notify the Company that it has qualified for listing under the price requirement contained in Rule 5505(a)(1)(A).
Brokers and dealers are reminded that the list published by Nasdaq is only an aid and that the Penny Stock Rules impose specific obligations on brokers and dealers with respect to transactions in penny stocks.
(b) Determination of closing price. For purposes of Rule 5505(a)(1)(B) and this IM- 5505, the closing price will be the Nasdaq Official Closing Price, if there is one, or the consolidated closing price distributed under the applicable National Market System Plan if there is no Nasdaq Official Closing Price. Nasdaq will require that a security maintain the necessary closing price for five consecutive business days, but may extend this five day period, based on any fact or circumstance, including the margin of compliance, the trading volume, the Market Maker montage, the trend of the security's price, or information or concerns raised by other regulators concerning the trading of the security.
Adopted April 18, 2012 (SR-NASDAQ-2012-002)."
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