Personal Injury Lawyers

Companies that wish to have their publicly traded securities listed on an exchange such as the New York or American Stock Exchanges or traded through NASDAQ must meet listing requirements set by the exchanges and NASDAQ and then maintain continued listing standards.

Listing on an exchange or on NASDAQ provides added value to securities due to increased marketability and recognition by investors that issuers of the securities are meeting listing standards. Section 102.00 of the New York Stock Exchange’s Listed Company Manual provides an example of listing standards. Minimum quantitative standards for U.S. companies include the following distribution and size criteria:

• Two thousand or more round-lot (generally 100 shares per lot) holders; or
• Shareholders totaling 2,200 or more and average monthly trading volume over the previous six months of 100,000 shares; or
• Shareholders totaling 500 or more and average monthly trading volume over the previous twelve months of 1 million shares; and
• Public shares outstanding totaling at least 1.1 million with a market value of $100 million for public companies or $60 million for initial public offerings, spin-offs, carve-outs, and affiliated companies.

Minimum quantitative standards for U.S. companies also include the following financial criteria:

• Aggregate pretax earnings over the previous three years of $10 million and at least $2 million in minimum earnings in each of the previous two years; or
• Aggregate operating cash flow over the last three years of $25 million with a positive amount for each of the three years.

Additional alternative criteria include a minimum of $75 million in revenue for the most recent fiscal year or global market capitalization of $750 million. There are additional criteria for affiliated companies, REITs, and mutual funds.

Listing on the New York Stock Exchange may continue unless the average closing price of a security is less than $1 over 30 consecutive trading days or unless some smaller proportion of the criteria by which the security became listed is not maintained. For example, securities of a company listing securities due to its global market capitalization of $750 million may be delisted if:

• The company’s average global market capitalization over 30 consecutive trading days is less than $50 million and total stockholders equity is less than $50 million or
• The company’s average global market capitalization for 30 consecutive trading days is less than $15 million.

The Exchange provides a “cure” procedure during which a company not meeting continued listing standards may seek to improve its condition and meet the standards.

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This article is for general information purposes only. We do not work on securities registration and compliance. We will provide a referral if requested.

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