Nasdaq Amends and Clarifies Listing Requirements for Direct Listings

Sullivan & Cromwell LLP - March 1, 2019
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On February 14, 2019, the Nasdaq Stock Market LLC filed notice with the Securities and Exchange Commission of a rule change to “amend and clarify certain aspects of the listing process for Direct Listings.” The rule, which became effective upon filing, clarifies the conditions under which private companies can list on Nasdaq through a direct listing, rather than by raising new capital through a traditional initial public offering, and is substantially similar to the direct listing rule adopted by the New York Stock Exchange in February 2018. Like the NYSE rule, the Nasdaq rule covers companies applying to list their securities on Nasdaq upon effectiveness of a registration statement under the Securities Act of 1933 registering only the resale of securities sold in earlier private placements, and provides guidance on how Nasdaq calculates compliance with its initial listing standards for direct listings, including with respect to companies listing securities that do not have an established private placement market. The SEC is soliciting comments on the rule through March 15, 2019.