NASDAQ (National Association of Securities Dealers Automated Quotations) is an American stock exchange that is the second-largest stock exchange in the world and has a market capitalization of over $1.2 trillion.
The NASDAQ listing requirements are governed by NASDAQ regulations and disclosures. Companies need to meet certain market standards before they can list their stocks on the Nasdaq Exchange.
Nasdaq regulations require listed companies to be registered with the SEC and have a minimum market capitalization of $50 million, among other requirements.
Moreover, Nasdaq’s listing requirements are stringent because it aims to maintain high standards for all companies that list on its exchange, which is why it only lists large-cap stocks (over $1 billion).
NASDAQ requires your company to satisfy four major conditions
To be listed on the NASDAQ, you must meet the following minimum standards.
- Financial standards – minimum of $1,000,000 in total assets and a minimum of $250,000 in total shareholder equity for unsponsored or $2,500,000 in total assets and a minimum of $500,000 in total shareholder equity for sponsored companies
- The minimum market capitalization of $150 million
- Minimum unrestricted public float of 100%
- Minimum of 300 round lot shareholders (a round lot is 100 shares)
NASDAQ Listings Requirements:
1. SEC Registrations and Financial Reports
NASDAQ, as mentioned above, is a stock exchange company that serves as a leading index for stocks in the US. In addition to that, it owns and operates the NASDAQ Stock Market, which lists over 3,800 issues.
The SEC is the regulatory body that oversees the listing requirements of NASDAQ. They offer a complete set of registration forms and guidance to ensure that the company’s financial reports meet NASDAQ requirements.
Registered companies must file reports with the SEC on an ongoing basis. These reports include quarterly and annual filings, and other periodic filings.
The company must also file a Form 8-K if there is any material development in connection with it, such as changes in officers or directors, dividend payments, stock splits, or other similar occurrences.
The following information is required to be filed with NASDAQ:
- The Exchange requires that an issuer’s registration statement be filed with it before any securities may be sold pursuant to such registration statement.
- The Exchange also requires that any issuer which has securities listed on the Exchange and which becomes subject to Section 13 or Section 15(d) of the Securities and Exchange Act of 1934 file annual and interim reports with it.
- If an issuer meets the requirements for filing annual reports pursuant to Regulation S-K (17 C.F.R., Chapter II), such issuer shall file its annual report on Form 10-K
2. Annual Meeting and Shareholder Votes on Executive Compensation Plans
The Nasdaq Listing Rules also require an annual meeting to be held for shareholders to vote on executive compensation plans. Shareholders have the right to vote on executive compensation plans at least once every three years.
To vote, a shareholder must have been a shareholder of record as of the date of the annual meeting and must be a continuing shareholder as of the date shares are voted. Votes may not be cast by proxy or by mail.
However, Nasdaq requires public companies to hold annual meetings and shareholder votes on executive compensation plans if their stock trades on the exchange.
The Nasdaq is the second U.S. stock market to require corporate shareholder votes on executive compensation, following New York Stock Exchange (NYSE) Rule 472. The Listing Requirements mandate that all American companies with shares traded on the Nasdaq must hold annual meetings and shareholder votes on executive compensation plans annually if their stock trades there.
Why Startups Should Care About Meeting the NASDAQ Listing Requirements?
NASDAQ provides many benefits for startups, including offering resources for launching their business, giving them access to capital markets, and helping them with public relations.
Startups should care about meeting the requirements of NASDAQ because if they don’t then they may not be able to raise money or get their company listed on NASDAQ.
Legal Terms & Conditions Of NASDAQ
The legal terms and conditions for NASDAQ are written in an easy-to-understand manner.
The following is a copy of the NASDAQ Services Rule, which sets forth the legal terms and conditions for NASDAQ.
a) NASDAQ Services Rule: The rule defines the requirements of Nasdaq’s services, including the fees associated with these services.
b) Fees: The fees associated with Nasdaq’s services are set out in Schedule A below, which constitutes an integral part of this rule.
c) Trade Reporting Fees: Trade reporting fees are charged to each party that executes a trade on Nasdaq or reports trade on behalf of another party that executes a trade on Nasdaq. Trade reporting fees are set out in Schedule B below, which constitutes an integral part of this
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A: Listing requirements are a firm set of conditions that one needs to meet to invest in the stock exchange.
A: The regular or minimum share price on NASDAQ is 4.00 dollars
A: No, companies do not have to pay to be listed on NASDAQ, as NASDAQ doesn’t require any registration fee