Nasdaq Uplisting Explained: It is an exclusive club that has a very high reputation. Its reputation is based on the ease with which companies can trade on it. There are hundreds of thousands of companies listed on the Nasdaq exchange. The variety and niche vary. However, getting on the exchange isn’t easy. The process requires effort. There are many benefits once you get listed on Nasdaq. For instance, you can get ranked amongst the top companies in the world today. By trading amongst the top companies in the world, you can learn, learn to grow, expand and inevitably earn profits. Nasdaq uplisting essentially means getting listed on the Nasdaq exchange and getting further listed by consistent internal and external company efforts. Once you get on Nasdaq, the picture ahead is always bright.
Process Of Getting On The Nasdaq Uplisting
If you want to go through Nasdaq uplisting, you have to go through a process. First, remember that it takes four to six weeks to process a company uplisting application at the exchange. However, the time frame might be shortened in certain instances.
The process also requires you to fill a symbol reservation form, listing application, listing agreement, corporate governance certification, check payment forms, and logo submission forms.
The Nasdaq exchange also doesn’t allow any company to trade on its exchange without fulfilling the minimum criteria. Only companies with a proper history and management can get listed on the exchange.
There could be a lot of other requirements to get uplisted. However, there are four main requirements we’re going to talk about.
Every company must meet these minimum requirements to get a chance to get on the exchange. Remember you can get delisted if you fail to meet the minimum requirements. Even after getting listed.
Therefore, it’s important to abide by the rules and then try to get listed.
Nasdaq Uplisting: Four Rules To Follow
If a company wants to get uplisted, here are four important rules to follow.
- Rule # 1: For getting uplisted, you must have a minimum of “1,250,000 publicly trades shares outstanding” on the listing. This shouldn’t include shares which are held by the directors or officers of the company. Moreover, beneficial owners of more than 10% of the company stock are also excluded in this minimum number of shares traded of a company to get listed on the exchange.
- Rule #2: If the regular bid price of the shares of a company’s stock are listed at a price of at least $4.00 a share, it can get listed. However, an exception is, if the closing price is $2.00 or $3.00. Ifthe company is meeting different requirements of getting listed, it can still get uplisted.
- Rule #3: If a company wants to get uplisted, they’d need to have at least three or four market makers. Companies who are using the $2 or $3 criteria at stock value will require just two market makers. Another condition for uplisting is that the company must meet certain corporate governance rules such 5250, 5605, 5605 and others to get uplisted.
- Rule #4: Finally, another condition for Nasdaq uplisting is that companies should have at least 100 shares or more shareholders, with at least 2,200 total shareholders or 550 total shareholders. This has to be with 1.1 million average trading volumes in the last 12 months.
As of 2020, a company must be paying at least a $25,000 application fee before its stock can be on the listing. Once it’s successfully on the list, it can pay $150,000 to $295,000. To get uplisted, you must follow the rules. Aside from the rules above, there are some standards to follow also.
Standards To Follow To Get Uplisted
There are certain standards that have to be followed to get uplisted as well.
First, the company that wants to get uplisted must have a total of $11 million in pre-tax earnings in the last three years. And in the past two years, a minimum of $2.2 million. Furthermore, a company cannot be in a net loss in the last three years to get uplisted. These three standards must be met to get uplisted.
Second, the company must have a cash flow of at least $27.5 million in the last three fiscal years to get uplisted. It should also have had no negative cash flow in the past three years.
It should also have an average market capitalization of over $550 million and revenues in the last fiscal year of $110 million.
A point to note here is that companies can be taken out of cash flow requirements of the 2nd standard if their average market capitalization in the last 12 months is at least $850 million and revenues are more than $90 million in the last fiscal year.
Assets also play a very important role in determining whether you can get listed on the Nasdaq uplisting. For instance, you can take out the cash flow and revenue requirement and lose market capitalization requirements to $160 million if the total assets are worth at least $80 million. Lastly, to get uplisted, the minimum requirement for stockholder equity is a minimum of $55 million.
The point to be remembered in this is that in all of these cases, the bid price of the company stock must always be $4.
There are other requirements for getting uplisted as well. However, once uplisted, it is always good bliss.
The NASDAQ exchange is a BIG exchange operating on a global level. There are more than one minimum criteria to get on the exchange. As a company, you must be sound and stable to have enough shareholders, assets, and capital in your name, to get your company listed.
Important indicators of getting listed on the exchange are ‘maintaining a proper minimum operating income’ and ‘revenue’. If a company has less operating income, it should have more revenue and vice versa.
You can even get delisted if you fail to meet specific requirements at Nasdaq or if you fail to maintain given standards. Furthermore, you can even get delisted if you fail to meet the minimum required share price requirements or say, market capitalization value in specific years.
Essentially, the best way to go about it, is to meet all the given stated requirements to get on the Nasdaq listing.