Nasdaq Capital Market
What Is the Nasdaq Capital Market?
The Nasdaq Capital Market is one of Nasdaq's U.S. market tiers containing beginning phase companies that have moderately lower market capitalizations. Listing requirements for companies on the Nasdaq Capital Market are less severe than for the two other Nasdaq market tiers, which center around bigger companies with higher market capitalization.
Figuring out the Nasdaq Capital Market
The Nasdaq Capital Market, referred to until 2005 as the Nasdaq SmallCap Market, essentially records alleged small cap stocks (ordinarily those with market capitalizations of around $300 million to $2 billion). The name change mirrored a shift in center towards listing companies that need to raise capital. It's intended to be a less encumbered entrance for a smaller company or a Special Purpose Acquisition Company (SPAC) to capitalize and develop through a Nasdaq listing.
Albeit the initial listing requirements are loose, the corporate governance required to keep a Nasdaq listing is something similar across all tiers. This means Nasdaq Capital Market companies must have a code of conduct, an audit committee, independent directors, etc.
Listing Requirements for the Nasdaq Capital Market
The Nasdaq Capital Market makes it simpler for beginning phase companies to get listed, especially when compared to other senior exchanges with additional onerous requirements. To list initially on the Nasdaq Capital Market, companies must meet every one of the criteria under something like one of three listing standards — the equity standard, the market value of listed securities standard, or the total resources/total revenue standard.
Every one of the standards share a few requirements like 1,000,000 publicly held shares, 300 shareholders, and three market makers (MMs). Notwithstanding, these likewise vary in important ways. The equity standard requires stockholders' equity of $5 million, where the other two require just $4 million; and it likewise requires an operating history of two years, while the other two don't need an operating history. The market value of listed securities standard requires a market value of listed securities of $50 million and a market value of publicly held shares of $15 million. The net income standard is the only one requiring a net income, $750,000 in the most recent fiscal year or in two of the last three years, however has the least requirement for market value of publicly held shares at $5 million.
In spite of the fact that companies can pick the standard that best accommodates their situation, the listing standards and the required governance are more tough than some beginning stage capital markets. In light of the costs associated with meeting these standards, companies listing on the Nasdaq Capital Market frequently helpfully surpass the base requirements before they choose to list. Other beginning stage capital markets like the alternative investments market, or [AIM](/alternative-speculation market), have situated themselves as lighter regulation objections to give bridge listings to companies as they develop enormous enough for the Nasdaq.
Nasdaq Listing Tiers
The Nasdaq exchange has three tiers for listed companies:
- Nasdaq Capital Market: previously known as the Nasdaq SmallCap Market for small-cap companies
- Nasdaq Global Market: previously part of the Nasdaq National Market (Nasdaq-NM) for around 1,450 mid-cap stocks
- Nasdaq Global Select Market: the freshest tier, which was previously part of the Nasdaq National Market, and records around 1,200 [large-cap](/enormous cap) companies
The listing requirements for every tier require changing levels of documentation, average market capitalization over the previous month, and number of shareholders. Companies might move starting with one tier then onto the next over the long haul contingent upon how they meet requirements. The top tier, Nasdaq Global Select ordinarily has around 1,200 companies listed, while the lower tiers change around 1,000 to 1,500 companies each.
Features
- Companies listed here might be small companies with a need to develop capital or shell corporations intended to bring capital up in public markets to secure other business substances.
- The Nasdaq Capital Market (Nasdaq-CM) is one of three listing tiers on the Nasdaq exchange, explicitly for companies that need to raise capital.
- Nasdaq Capital Market companies are required to fulfill a net income guideline of no less than $750,000, a base public float of a million shares, no less than 300 shareholders, and a share bid price of something like $4 (with certain special cases).
- Companies that don't meet all requirements for the Nasdaq National Market trade on Nasdaq-CM.
