Understanding Nasdaq’s Financial Criteria
To be listed on Nasdaq, companies must meet specific financial benchmarks. The requirements vary by listing tier (e.g., Nasdaq Global Select Market or Nasdaq Capital Market) but generally include:
- Market Value: A minimum market value of publicly held shares is required to ensure adequate market capitalization.
- Share Price: Companies must maintain a minimum bid price, typically between $1 and $4, depending on the tier.
- Shareholder Equity: Adequate shareholder equity is necessary to demonstrate financial stability.
Corporate Governance Standards
Nasdaq enforces rigorous governance standards to promote transparency and protect investors:
- Board Independence: A majority of independent directors is required, ensuring unbiased oversight.
- Audit Committee: The audit committee must consist entirely of independent directors, overseeing financial reporting and compliance.
- Code of Conduct: Companies must implement and follow a code of conduct that sets ethical standards for all employees and management.
Additional Listing Requirements
Beyond financial and governance criteria, Nasdaq evaluates other aspects:
- Operating History: A minimum of two years of operating history is usually required, though exceptions can be made for companies with substantial financial backing or industry expertise.
- Public Float: A minimum number of publicly held shares is necessary to ensure liquidity and a broad shareholder base.
- Market Value of Listed Securities: Adequate investor interest and trading activity are required for the company’s securities.
Maintaining Compliance Post-Listing
Companies must adhere to ongoing Nasdaq requirements to retain their listing status. This includes:
- Timely Financial Reporting: Regular and accurate financial disclosures are required.
- Governance Standards: Continued adherence to corporate governance practices is mandatory.
- Market Value and Share Price: Companies must maintain minimum market value and bid price criteria.
Engaging with legal and financial advisors familiar with the Nasdaq listing process can help companies navigate these requirements effectively.