Going Public and Making It to NASDAQ

Going Public and Making It to NASDAQ

Follow the steps and procedures to be listed on NASDAQ.

Unless your company has an underwritten IPO, going public directly to NASDAQ requires a few initial steps.

You will start on a lower tier market such as OTCBB or OTCQX.  As you grow your business, you will also consider moving up to NASDAQ or a similar higher market.  To do so, you must meet an number of additional 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

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