What Are the Listing Requirements for Nasdaq?

Bloomberg

There is no such thing as "the stock exchange."

To be more specific, there is no such thing as one, single stock exchange. Instead traders do business on many exchanges around the world. Which ones they choose depend on the specific companies they want to trade, the markets that interest them and (often) the country in which they live.

The biggest, measured by the total value of all the stocks traded on it and by raw reputation, is the New York Stock Exchange (NYSE). The second largest stock exchange in the world is the Nasdaq. To list your company on this exchange, it must meet one of four specific requirements.

Nasdaq Listing Requirements 

Companies listed on Nasdaq must meet two standards. First, they must pass the exchange's general requirements. These apply to every company listed to trade on the Nasdaq exchange. Then, the company must meet one of the requirements for listing on one of the exchange's three market tiers:

• The Nasdaq Capital Market (small capitalization)

• The Nasdaq Global Market (midrange capitalization)

• The Nasdaq Global Select Market (high capitalization)

A company will qualify for listing under one of these tiers; each has its own set of escalating restrictions.

General Requirements for Nasdaq

To appear on the exchange, every company must meet the following conditions:

• Nasdaq's criterion for corporate governance, including publicly available shareholder reports, a majority of independent directors on the board, an independent audit committee, an independent committee for the compensation of executives and a uniform code of conduct for all officers and employees.

• The company must meet Nasdaq's conditions for shareholder approval of securities issuances.

• If the company was trading its stock on the over-the-counter market prior to listing, it must have had a trading volume of at least 2,000 shares over the 30 days prior to listing OR a firm underwritten public offering of at least $4 million.

Nasdaq Capital Market

To get listed on the Nasdaq's Capital Market, the section for those with smaller capitalization, a company must have three market makers. It must have at least 1 million unrestricted publicly held shares with at least 300 unrestricted round-lot shareholders. The bid price for these shares must be $4 or, under certain circumstances, have a closing price of between $2 and $3.

If the company meets these standards, it must also meet one of the following criteria:

• The Equity Standard

The company must have total stockholders' equity of at least $5 million.

The market value of its unrestricted publicly held shares must be worth at least $15 million.

It must have operated for at least two years.

• The Market Value Standard

The company must have a total stockholders' equity of at least $4 million.

The market value of its unrestricted publicly held shares must be worth at least $15 million.

The market value of its total listed securities must be worth at least $50 million.

• The Net Income Standard

The company must have a total stockholders' equity of at least $4 million.

The market value of its unrestricted publicly held shares must be worth at least $5 million.

The net income from continuing operations in either the past fiscal year or two out of three of the past fiscal years must be at least $750,000.

Nasdaq Global Market

To get listed on the Nasdaq's Global Market, the section for companies with midrange capitalization, a company must have at least 1.1 million unrestricted publicly held shares. The bid price for these shares must be $4 with at least 400 unrestricted round-lot shareholders.

If a company meets these standards it must also meet one of the following criteria:

• The Income Standard

The income from continuing operations before income taxes in the latest fiscal year, or in two of the past three fiscal years, must be at least $1 million.

The company must have stockholders' equity of at least $15 million.

The market value of the unrestricted publicly held shares must be at least $8 million.

The company must have at least three market makers.

• The Equity Standard

The company must have stockholders' equity of at least $30 million.

The market value of the unrestricted publicly held shares must be at least $18 million.

The company must have at least three market makers.

The company must have been in continuous operation for at least two years.

• The Market Value Standard

The company must have a market value of all listed securities worth at least $75 million.

The market value of the unrestricted publicly held shares must be worth at least $20 million.

The company must have at least four market makers.

• The Total Assets Standard

The company must have total assets worth at least $75 million.

The company must have total revenue in the latest fiscal year or in two of the past three fiscal years of at least $75 million.

The market value of the unrestricted publicly held shares must be worth at least $20 million.

The company must have at least four market makers.

The Nasdaq Global Select Market

To get listed on the Global Select Market, Nasdaq's high capitalization section, a company must have at least 1.25 million unrestricted publicly held shares with a bid price of at least $4. It must meet one of the following shareholder requirements:

• 450 unrestricted round-lot shareholders;

• 2,200 total shareholders;

• Or 550 total shareholders, if the company has an average trading volume of 1.1 million shares over the previous 12 months.

The company must have either $45 million in unrestricted publicly held shares or, if the company currently trades common stock, $110 million in unrestricted publicly held shares.

If the company meets these standards, it must also meet the following criteria:

• The Earnings Standard

Aggregate pre-tax earnings over the previous three fiscal years of at least $11 million, with a minimum of $2.2 million in earnings per year over the previous two fiscal years. None of these years may have run a net loss.

• The Capitalization With Cash Flow Standard

Aggregate cash flows over the previous three fiscal years of at least $27.5 million and negative cash flows over any of those years.

An average market capitalization of at least $550 million over the prior 12 months.

Revenue of at least $110 million in the previous fiscal year.

• The Capitalization With Revenue Standard

An average market capitalization of at least $850 million over the prior 12 months.

Revenue of at least $90 million in the previous fiscal year.

• The Assets With Equity Standard

Market capitalization of at least $160 million.

Total assets worth at least $80 million.

Stockholders' equity worth at least $55 million.