If you are looking for a way to raise capital and increase the visibility of your company, you might be thinking about going public. There are multiple exchanges from which to choose, but one of the biggest options in the world is the NASDAQ. Even though many companies listed on the NASDAQ are tech companies, there are other industries represented on the NASDAQ as well.
Some of the biggest advantages of listing stock on the NASDAQ include lower listing fees and lower minimum requirements. The NASDAQ stock exchange is also completely electronic, which is another reason why many companies decide to list their shares for sale on the NASDAQ. What are the requirements to list shares for sale on the NASDAQ, and how long does the process take?
Listing Requirements on the NASDAQ
There are several sets of requirements that companies need to meet to be traded on the NASDAQ. Some of the biggest requirements include:
- All companies need to adhere to the marketplace rules set by the US Securities and Exchange Commission.
- The regular bid price of the company’s shares has to be at least $4 at the time of listing.
- All companies need to have at least 1.25 million publicly traded shares outstanding.
- Companies also need to pay a listing fee between $5,000 and $25,000 in addition to fees based on the number of shares being issued.
- Companies should also meet shareholder and average trading volume requirements.
In addition, companies traded on the NASDAQ need to meet earnings or capitalization requirements, which can vary depending on how they are calculated. See a full list of NASDAQ requirements.
The Listing Process
The listing process on the NASDAQ could be drawn out. It could take anywhere from a month to close to a year. Some of the steps involved include:
- A company needs to submit an application for listing to the NASDAQ stock exchange.
- There is a preliminary review process that explores the company’s history of earnings.
- If there are any issues raised by the NASDAQ stock exchange, these need to be addressed by company leadership.
- Finally, once all issues are addressed and the review process is completed, the company can be listed for sale on the NASDAQ.
If there are no issues raised by the staff, a company could be listed for sale on the NASDAQ in a month or two; however, the process usually takes 6 to 12 months.
Why the Process Often Takes Longer
The NASDAQ is a very competitive stock exchange, and not every company will be listed. Companies need to prove that they have not had a net loss during the prior three years, have made at least $2.2 million during the prior two years, and have aggregate pre-tax earnings of at least $11 million during the prior three years. There are also market capitalization and cash flow requirements. Because it can take a long time to produce documents to verify these numbers, the listing process could take as long as a year.
NASDAQ companies also need a transfer agent to manage their shareholders and help with the listing process. Contact Colonial Stock to get started.