Starting on a lower tier market such as OTCBB or O
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Posted On: 03/12/2020 8:33:23 PM
Starting on a lower tier market such as OTCBB or OTCQX you grow your business, and then consider moving up to NASDAQ or a similar higher market. To do so, you must meet a number of requirements, both quantitative and qualitative:
Quantitative NASDAQ Requirements
The numerical or quantitative listing requirements of going public on NASDAQ are in the following areas:
• Stockholders’ equity
• Market value of publicly held shares
• Operating history
• Market value of listed securities
• Net income from continuing operations
• Publicly held shares
• Bid price [not Ask Price]
• Shareholders (round lot holders)
• Market makers
Qualitative NASDAQ Requirements
In addition to meeting the minimum numerical standards listed above, there are other subjective factors, which are considered. The company must be a going concern or be the successor to a going concern.
These markets have broad discretion regarding the listing of a company. They may deny listing or apply additional or more stringent criteria based on any event, condition, or circumstance that makes the listing of the company inadvisable or unwarranted in the opinion of the Exchange. Such determination can be made even if the company meets the standards set forth above.
The primary subjective factors considered are:
• Nature of a company’s business.
• Market for its products.
• Reputation of its management.
• Historical record and pattern of growth.
• Financial integrity and going concern.
• Demonstrated earnings power.
• Future outlook.
• Required corporate governance procedures.
The required corporate governance procedures relate to:
• Distribution of annual and interim reports
• Board requirements
• Independent Directors
• Executive Sessions
• Compensation and Nominating Committees
• Audit Committees
• Shareholder Meetings
• Annual Meeting
• Quorum
• Solicitation of Proxies
• Conflicts of interest
• Shareholder approval
• Code of conduct
• Voting rights
http://www.gopublicdirect.com/going-public-an...to-nasdaq/
NASDAQ Listing Requirements
• 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.
• 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.
Bringing It All Together
• 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.
https://www.investopedia.com/ask/answers/nasd...uirements/
Quantitative NASDAQ Requirements
The numerical or quantitative listing requirements of going public on NASDAQ are in the following areas:
• Stockholders’ equity
• Market value of publicly held shares
• Operating history
• Market value of listed securities
• Net income from continuing operations
• Publicly held shares
• Bid price [not Ask Price]
• Shareholders (round lot holders)
• Market makers
Qualitative NASDAQ Requirements
In addition to meeting the minimum numerical standards listed above, there are other subjective factors, which are considered. The company must be a going concern or be the successor to a going concern.
These markets have broad discretion regarding the listing of a company. They may deny listing or apply additional or more stringent criteria based on any event, condition, or circumstance that makes the listing of the company inadvisable or unwarranted in the opinion of the Exchange. Such determination can be made even if the company meets the standards set forth above.
The primary subjective factors considered are:
• Nature of a company’s business.
• Market for its products.
• Reputation of its management.
• Historical record and pattern of growth.
• Financial integrity and going concern.
• Demonstrated earnings power.
• Future outlook.
• Required corporate governance procedures.
The required corporate governance procedures relate to:
• Distribution of annual and interim reports
• Board requirements
• Independent Directors
• Executive Sessions
• Compensation and Nominating Committees
• Audit Committees
• Shareholder Meetings
• Annual Meeting
• Quorum
• Solicitation of Proxies
• Conflicts of interest
• Shareholder approval
• Code of conduct
• Voting rights
http://www.gopublicdirect.com/going-public-an...to-nasdaq/
NASDAQ Listing Requirements
• 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.
• 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.
Bringing It All Together
• 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.
https://www.investopedia.com/ask/answers/nasd...uirements/
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