On September 3, 2025, Nasdaq proposed amendments to its liquidity listing standards for the Nasdaq Capital Market and Nasdaq Global Market to increase the minimum Market Value of Unrestricted Publicly Held Shares (“MVUPHS”) requirement for those companies listing under the net income standard from $5 million to $15 million. This follows the April rule amendment requiring that MVUPHS can only be satisfied through IPO proceeds and that shares registered for resale may no longer be counted (see HERE). In addition to making it more difficult for small cap companies to complete a Nasdaq IPO, the proposed rule would eliminate the only material distinction and benefit to listing using the net income standard.
Background
To list its securities on Nasdaq, a company is required to meet: (a) certain initial quantitative and qualitative requirements and (b) certain continuing quantitative and qualitative requirements. The quantitative listing thresholds for initial listing are generally higher than for continued listing, thus helping to ensure that companies have reached a sufficient level of maturity prior to listing.
Each tier of Nasdaq offers three different listing standards for which a company can qualify including an equity standard, market value of listed securities standard and net income standard. Presumably, in establishing these listing standards, Nasdaq has determined that companies that have an operating history, a higher market value of listed securities, or that generate net income should be given an opportunity to access capital markets under different criteria. At the end of this blog I have included a chart of the Nasdaq Capital Markets quantitative listing standards.
For initial listing on the Nasdaq Global Market, a company must have a minimum MVUPHS of $8 million under the Income Standard, $18 million under the Equity Standard, and $20 million under either the Market Value or Total Assets/Total Revenue Standards. For initial listing on the Nasdaq Capital Market, a company must have a minimum MVUPHS of $5 million under the Net Income Standard, and $15 million under either the Equity or Market Value of Listed Securities Standards. In establishing the MVUPHS standards, Nasdaq’s goal is to ensure there is sufficient liquidity to provide for price discovery and active trading.
Proposed Rule Amendment
Nasdaq is proposing to amend Rules 5405 and 5505 to increase the MVUPHS for both Nasdaq Global Market and Nasdaq Capital Market to $15 million for companies seeking to list in reliance on the Net Income Standard.
Not surprisingly, following the rule amendment in April prohibiting a company to count shares registered for resale as part of its MVUPHS, Nasdaq has seen an uptick in company’s seeking to list in reliance on the Net Income Standard. In its rule release, Nasdaq indicates it is “… concerned that companies initially listing with just $5 million or $8 million MVUPHS on the Nasdaq Capital or Global Markets, respectively, may not trade in a manner supportive of price discovery.” Moreover, regardless of the reasoning for the initial listing standards, Nasdaq now believes that it is not “appropriate to require such a significantly lower liquidity threshold for companies simply because they have a minimum level of net income, as opposed to equity or market value.”
Nasdaq does not offer any other explanations or discussion on the subject and does not acknowledge that the rule change would in essence eliminate the Net Income Standard for listing.
Current Listing Standards
Nasdaq Capital Markets quantitative listing standards:
| Requirements | Equity Standard | Market Value of
Listed Securities Standard |
Net Income
Standard |
| Listing Rules | 5505(a) and
5505(b)(1) |
5505(a) and
5505(b)(2) |
5505(a) and
5505(b)(3) |
| Stockholders’ equity | $5 million | $4 million | $4 million |
| Market value of unrestricted publicly held shares ** | $15 million | $15 million | $5 million |
| Operating history | 2 years | N/A | N/A |
| Market value of listed securities | N/A | $50 million* | N/A |
| Net income from continuing operations (in the latest fiscal year or in two of the last three fiscal years) | N/A | N/A | $750,000 |
| Unrestricted publicly held shares | 1 million | 1 million | 1 million |
| Bid price or
Closing Price*** |
$4
$3 |
$4
$2 |
$4
$3 |
| Corporate governance | Yes | Yes | Yes |
| Unrestricted round lot shareholders**** | 300 | 300 | 300 |
| Market Makers | 3 | 3 | 3 |
* Currently traded companies qualifying solely under the Market Value Standard must meet the $50 million market value of listed securities and the applicable bid price requirement for 90 consecutive trading days before applying.
** Effective April 11, 2025, companies listing in conjunction with an initial public offering must meet this requirement solely with the offering proceeds.
*** Securities subject to resale restrictions for any reason are excluded from the calculation of publicly held shares, market value of publicly held shares and round lot shareholders. In addition, except for SPACs listing under IM-5101-2, at least half of the minimum required number of round lot holders must each hold unrestricted securities with a minimum value of $2,500.
**** To qualify under the closing price alternative, a company must have (i) average annual revenues of $6 million for three years, (ii)net tangible assets of $5 million or (iii) net tangible assets of $2 million and a 3-year operating history, in addition to satisfying the other financial and liquidity requirements listed above.
The Author
Laura Anthony, Esq.
Founding Partner
Anthony, Linder & Cacomanolis
A Corporate and Securities Law Firm
Securities attorney Laura Anthony and her experienced legal team provide ongoing corporate counsel to small and mid-size private companies, public companies as well as private companies going public on the Nasdaq, NYSE American or over-the-counter market, such as the OTCQB and OTCQX. For more than two decades Anthony, Linder & Cacomanolis, PLLC has served clients providing fast, personalized, cutting-edge legal service. The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker-dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions, securities token offerings and initial coin offerings, Regulation A/A+ offerings, as well as registration statements on Forms S-1, S-3, S-8 and merger registrations on Form S-4; compliance with the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers; applications to and compliance with the corporate governance requirements of securities exchanges including Nasdaq and NYSE American; general corporate; and general contract and business transactions. Ms. Anthony and her firm represent both target and acquiring companies in merger and acquisition transactions, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. The ALC legal team assists Pubcos in complying with the requirements of federal and state securities laws and SROs such as FINRA for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the small-cap and middle market’s top source for industry news, and the producer and host of LawCast.com, Corporate Finance in Focus. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.
Ms. Anthony is a member of various professional organizations including the Crowdfunding Professional Association (CfPA), Palm Beach County Bar Association, the Florida Bar Association, the American Bar Association and the ABA committees on Federal Securities Regulations and Private Equity and Venture Capital. She is a supporter of several community charities including the American Red Cross for Palm Beach and Martin Counties, Susan Komen Foundation, Opportunity, Inc., New Hope Charities, the Society of the Four Arts, the Norton Museum of Art, Palm Beach County Zoo Society, the Kravis Center for the Performing Arts and several others.
Ms. Anthony is an honors graduate from Florida State University College of Law and has been practicing law since 1993.
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