Nasdaq Uplisting Explained

Nasdaq Uplisting Requirements Explained

6 min read

Nasdaq Uplisting Explained: It is an exclusive club with 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 further listed by consistent internal and external company efforts. Once you get on the Nasdaq, the picture ahead is always bright.

If you want to go through Nasdaq uplisting, you must 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 out a symbol reservation form, listing application, listing agreement, corporate governance certification, check payment, 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 try to get listed.

Nasdaq Uplisting Requirements

Nasdaq Website

Four Rules to Follow

If a company wants to get uplisted, here are four important rules.

  • Rule # 1: To get uplisted, you must have a minimum of “1,250,000 publicly traded shares outstanding” on the listing. This shouldn’t include shares that the company’s directors or officers hold. Moreover, beneficial owners of more than 10% of the company stock are also excluded from this minimum number of shares a company trades to get listed on the exchange.
  • Rule #2: If the regular bid price of a company’s stock shares is listed at a price of at least $4.00, it can get listed. However, an exception is if the closing price is $2.00 or $3.00. If the company meets different requirements for getting listed, it can still get uplisted.
  • Rule #3: If a company wants to get uplisted, it needs at least three or four market makers. Companies 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 as 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 pay 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 uplifted, you must follow the rules. Aside from the rules above, there are some standards to follow.

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Standards to Follow

Certain standards have to be followed to get uplisted as well.

First, the company that wants to get uplisted must have $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 an important role in determining whether you can get listed on the Nasdaq uplisting. For instance, you can remove 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.

Final Thoughts: Nasdaq Uplisting

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.’ A company with less operating income 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 market capitalization value in specific years.

The best way to do it is to meet all the stated requirements to get on the Nasdaq listing.

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