What Is "Listed"?
"Listed" describes companies that are included and traded on a given stock exchange. Most exchanges have specific requirements that companies must meet in order to be listed and continue to stay listed.
- "Listed" is a term that describes a company that is included and on a given stock exchange so that its stock can be traded.
- Companies must meet certain requirements and follow the rules of any exchange on which it is listed.
- Companies tend to prefer to be listed on the major exchanges, such as the NYSE and Nasdaq, since they provide the most liquidity and visibility for a company's stock.
Understanding the Term "Listed"
Companies are being added to a given exchange, such as the Nasdaq. Occasionally, companies that have not fulfilled all necessary listing requirements become delisted until they again meet the requirements. Generally, companies prefer to be listed on the major exchanges, such as the New York Stock Exchange (NYSE) and Nasdaq since they provide the most liquidity and visibility for a company's stock.
To be listed on Nasdaq, each company must meet at least one of four requirements and follow set rules.
Requirements to be listed on the Nasdaq Exchange
Companies can qualify to be on the Nasdaq under different standards: equity standard, market value of listed securities standard, or net income standard. Broadly speaking, however, the main requirements include the following:
- Companies must have a minimum of 1,000,000 publicly traded shares upon listing, excluding those held by officers, directors, or any beneficial owners of more than 10% of the company.
- In addition, the regular bid price at the time of listing must be at least $4, and there must be at least three market makers for the stock.
- Companies may qualify under a closing price alternative of $3 or $2 if the company meets varying requirements.
- Each company is also required to follow Nasdaq corporate governance rules 4350, 4351, and 4360.
- Companies must have a market value of publicly held stock of $15,000,000 (or $5,000,000 if using the net income standard).
According to The Street, the Nasdaq also requires companies to meet all of the criteria under at least one of the following standards:
- Earnings standard: The company must have aggregate pre-tax earnings in the prior three years of at least $10 million, in the prior two years of at least $2 million, and no single year in the prior three years can have a net loss.
- Capitalization with cash flow: The company must have a minimum aggregate cash flow of at least $27.5 million for the past three fiscal years with no negative cash flow in any of those three years. In addition, the company's average market capitalization over the prior 12 months must be at least $550 million, and revenues in the previous fiscal year must be a minimum of $110 million.
- Capitalization with revenue: Companies can be removed from the cash flow requirement of the second standard if their average market capitalization over the past 12 months is at least $850 million and revenues over the prior fiscal year are at least $90 million.
- Assets with equity: Companies can eliminate the cash flow and revenue requirements, and decrease their marketing capitalization requirements to $160 million if their total assets total at least $80 million and their stockholders' equity is at least $55 million.