The NASDAQ OMX Group has received approval from the SEC to launch its new listing market, the BX Venture Market. The BX Venture Market is intended to serve as a new listing alternative for early stage and smaller companies that do not qualify for a NASDAQ Capital Market listing, bridging the gap between the over-the-counter markets and NASDAQ’s existing listing venues. Companies will be able to list common and preferred stock, ordinary shares and ADRs, trust and limited partnership interests, units, rights and warrants. NASDAQ expects to begin accepting listing applications during the third quarter and to launch the BX Venture Market later this year.
Candidate companies for listing on the BX Venture Market include those presently trading on an over-the-counter market, companies that have been or will be delisted by another market for failure to meet that market’s quantitative listing standards and smaller, less-liquid companies seeking to expand capital financing opportunities and provide an exit opportunity for initial investors.
To be eligible for a BX Venture Market listing, a company must meet the following quantitative standards:
- 200,000 publicly held shares;
- 200 public shareholders, at least 100 of which must be round lot holders for initial listing, and 200 public shareholders for continued listing;
- A market value of listed securities of at least $2 million for initial listing and $1 million for continued listing;
- Two market makers; and
- A minimum initial listing price of $1.00 per share for securities not previously listed on a national securities exchange and $0.25 per share for securities previously listed on a national securities exchange at any time during the three months prior to listing on the BX Venture Market (or, in the case of a company that applies to list prior to Sept. 30, 2011, was listed at any time between Jan. 1, 2010 and Sept. 30, 2011); the listed security must maintain a minimum $0.25 per share bid price for continued listing.
Additionally, companies that have not previously listed on a national securities exchange must have either $1 million in stockholders’ equity or $5 million in total assets, a one year operating history and a plan to maintain sufficient working capital for its planned business for at least 12 months after listing. In connection with listing, NASDAQ listings staff will conduct a public interest review of a candidate company’s listing application, which will include, among other things, a background check of the company and affiliated individuals and a review of the company’s proxy disclosures and other SEC filings.
The BX Venture Market will have comparable, though in many respects less stringent, qualitative listing standards to those of The NASDAQ Stock Market and other national securities exchanges. Among other requirements, the listed class of securities must be registered under Section 12(b) of the Exchange Act, the company must be current in its Exchange Act filings and, subject to phase-in, the company must have an independent audit committee comprised of at least three members and independent directors must make or recommend compensation decisions for executive officers. However, BX Venture Market companies will not be required to have a majority independent board or an independent nominating committee and they will not be subject to the “20% rule,” which requires shareholder approval for a private placement issuance equal to 20% or more of the outstanding common stock at a price less than the greater of book and market value. Securities listed on the BX Venture Market will not be exempt from state blue-sky requirements or the SEC’s penny stock rules.