Helping You With Your Uplisting Transaction
Most OTC companies strive to uplist on a national exchange such as Nasdaq or the NYSE Amex, and we can help them make that goal a reality.
Uplisting To Nasdaq
Nasdaq reviews uplisting applications differently than an IPO application. In addition to meeting the initial listing requirements, which can be viewed here, Nasdaq has several rules that are particular to OTC market companies in the uplisting process.
In particular, unless a company’s securities are being listed on Nasdaq in connection with a firm commitment underwritten public offering of at least $4 million, as of the date of application, the security must have a minimum average daily trading volume of 2,000 shares (including trading volume of the underlying security on the primary market with respect to an ADR), over the 30-day trading period prior to listing, with trading occurring on more than half of those 30 days. The NYSE does not have a similar requirement.
The Seasoning Rule
Both Nasdaq and the NYSE/NYSE American have a “seasoning rule” for companies that go public via a reverse merger with a shell company. Nasdaq defines a “reverse merger” as any transaction whereby an operating company becomes an Exchange Act reporting company by combining, either directly or indirectly, with a shell company that is an Exchange Act reporting company, whether through a reverse merger, exchange offer or otherwise.
The seasoning rules prohibit a company that has completed a reverse merger with a public shell from applying to the list until the combined entity has traded in the U.S. over-the-counter market, on another national securities exchange or on a regulated foreign exchange, for at least one year following the filing of all required information about the reverse merger transaction, including audited financial statements (generally a Super 8-K). In addition, the rules require that the new reverse merger company file all of its required reports for the one-year period, including at least one annual report with a full year of combined audited financial statements.
In addition, the seasoning rule requires that the reverse merger company “maintain a closing stock price equal to the stock price requirement applicable to the initial listing standard under which the reverse merger company is qualifying to list for a sustained period of time, but in no event for less than 30 of the most recent 60 trading days prior to the filing of the initial listing application.”
The rule includes an exception for companies that complete a firm commitment offering resulting in net proceeds of at least $40 million. The rules also excepts companies that have traded for one year on the U.S. over-the-counter market, on another national securities exchange or on a regulated foreign exchange and that have filed at least four annual reports containing all required audited financial statements for a full fiscal year commencing after filing the Super 8-K.
In addition to the specific additional listing requirements contained in the new rule, the exchange may “in its discretion impose more stringent requirements than those set forth above if the exchange believes it is warranted in the case of a particular reverse merger company based on, among other things, an inactive trading market in the reverse merger company’s securities, the existence of a low number of publicly held shares that are not subject to transfer restrictions, if the reverse merger company has not had a Securities Act registration statement or other filing subjected to a comprehensive review by the SEC, or if the reverse merger company has disclosed that it has material weaknesses in its internal controls which have been identified by management and/or the reverse merger company’s independent auditor and have not yet implemented an appropriate corrective action plan.”
Get Experienced Guidance For Your Uplisting Transaction Today
An uplisting will take considerable time, effort and money. The process can be long, confusing and complicated. That is why you will need lawyers who are highly skilled in securities law and understand the technicalities of the process and the implications of your decisions.