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As a quick follow up on this topic from a few months ago
(prior post can be read here),
has approved alternatives to Nasdaq's historical $4 minimum bid price
listing standard. Under the new alternative listing standards, a security
may qualify for listing on the Nasdaq Capital Market if:
In addition, the issuer must also demonstrate that it
Nasdaq-listed securities have historically not been
regulated as "penny stocks" (which subject broker-dealers trading in
them to additional disclosure and other requirements) because of the exception
for securities registered on a national securities exchange that, among other
things, required a minimum bid price of $4 per share at initial listing.
NYSE Amex benefits from a "grandfather" exception that permits lower
initial prices. With Nasdaq's new alternative listing standards, it can
compete with the NYSE Amex for listings in the $2-3 range. However, it is
possible that companies listing under these lower standards may become
To address this, new Nasdaq interpretive guidance
(IM-5505) provides that an issuer listing under the alternative price
requirements may become a "penny stock" if the issuer fails the net
tangible assets and revenue tests after listing and does not satisfy any of the
other exclusions from being a penny stock contained in Rule 3a51-1 under the
Exchange Act. Nasdaq will monitor issuers whose securities are listed
under the alternative price requirement, and publish on its website on a daily
basis a list of those companies that no longer satisfy the net tangible assets
or revenue tests, nor any other exclusion from being a penny stock. If a
security subsequently has a $4 closing price for at least five consecutive
business days, it can be reevaluated under the regular Nasdaq qualitative and
quantitative initial listing standards and deemed listed under these standards.
Nasdaq has represented that its review of the issuer's compliance at this stage
will be "robust" and "wholesale." In addition, Nasdaq
has represented that enhanced surveillance procedures will be used to monitor
anomalous trading in securities listed under these alternatives.
With Nasdaq now competing with NYSE Amex for listings in
the $2-3 range (and the relaxed registration requirements under the IPO
"on-ramp" provisions of the JOBS Act), mid-sized IPO candidates have
additional options for accessing the capital markets.
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