NASDAQ Capital Market

What is the NASDAQ Capital Market?

If you are in the stock exchange Market for a while now, chances are you have heard of the world’s most popular stock exchange ‘NASDAQ Capital Market”. The market is developed for companies with low market capitalization. In other words, it involves the early-stage firms in the US. Now that it focuses on the companies with low market capitalization, the eligibility criteria for the NASDAQ capital market is less strict.

Formerly referred to as the NASDAQ SmallCap Market, the primary purpose of this US’s market tier is to develop a platform for the small-scale companies with limited market capitalization and less liquidity. The market was renamed in 2005.

How does the NASDAQ Capital Market Work?

The NASDAQ Capital Market has gained immense popularity over the past few decades. It focuses on the sectors that need to raise capital for growth. Many small and medium-sized organizations get listed on the NASDAQ Capital Market. As mentioned above, the listing requirements are quite simple. However, the eligibility criteria get a bit complicated when it comes to retaining your position in the listings.

Each company that appears on this US’s small cap market tier is supposed to comply with the corporate and federal laws of the States. For example, each listed company has to have a strict code of conduct, board of directors, and most importantly, an audit committee that’s in charge of verifying the company’s financial statements annually.

Eligibility Criteria

This market tier has made it relatively easier for SMEs to get listed on the NASDAQ Capital Market. The process is faster and smoother than the listing requirements for the NASDAQ stock exchange or 100 Index. Basically, there are three listing criteria you are supposed to follow -

• Total revenue
• Market value of the stocks
• The equity value

The company must have at least a million shares issued to the public with a minimum of 300 shareholders. Each standard has different listing requirements. For instance, the company needs minimum equity of INR 5 million as well as a strong operating record in order to get qualified for the listing through the “Equity Standard”. For the other two listing standards, the company with INR 4 million equity will be considered eligible for the NASDAQ Capital Market. If you are applying through the second criteria “Market Value of Stocks”, then the total value of the securities listed in the market must exceed INR 50 million.

For the first standard, the company needs a Net worth of INR 750,000 to be listed on the NASDAQ Capital Market. Companies need to research all the above-mentioned standards. Due to the requirement of high cost for meeting these standards, most firms that apply for NASDAQ Capital Market are the ones that easily qualify for the requirements. NASDAQ has three listing tiers, including the global select, global, and capital market. Each market tier has different listing requirements.