[Last updated: 1 January 2024, unless otherwise noted]
In order to list on Nasdaq, a company must execute a listing agreement and a listing application. The company must also certify, at the time of listing, that all listing criteria have been satisfied.
The company must submit financial statements that are:
- Prepared in accordance with US generally accepted accounting principles (GAAP).
- Reconciled to US GAAP as required by the SEC's rules.
- Prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).
All reports filed (or required to be filed) with the SEC or another regulatory authority must also be filed with Nasdaq in connection with the initial listing. While no interviews are typically necessary, Nasdaq may also request any public or non-public information it deems necessary to evaluate the company or security for meeting the initial listing criteria. The company must also submit additional Nasdaq forms.
A company that qualifies as a "foreign private issuer" receives special treatment under US securities laws. In order to be a foreign private issuer, the company:
- Must be a foreign (non-US), non-governmental issuer.
- Must have 50% or less of its outstanding voting securities directly or indirectly held of record by US residents—or, if over 50% of these securities are so held by US residents, must not:
- Have a majority of its executive officers or directors who are US citizens or residents.
- Have more than 50% of its assets located in the US.
- Administer its business principally in the US.
A private company that does not qualify as a "foreign private issuer" under these criteria will generally be treated as a US domestic company, under the applicable SEC and Nasdaq criteria. The requirements applicable to such a company are outside the scope of this summary, as are the requirements applicable to a foreign private issuer that does not have securities registered or traded in the US.
A foreign private issuer that elects to follow home country practice in lieu of Nasdaq corporate governance rules (see section 5 below) must submit a written statement to Nasdaq from an independent counsel in the company's home country. The statement must certify that the company's practices are not prohibited by the home country's laws and, if the company is prohibited from complying with certain rules, state that fact as well.
In addition to the Nasdaq-related requirements for listing, a foreign private issuer must register the class of securities it intends to list with the SEC by filing a registration statement (Form 20-F). If a sale or offering is to be made in connection with the listing (for example, an IPO), the offering must be registered by filing a registration statement (typically on Form F-1 for an initial US listing), including a prospectus. The Form 20-F and Form F-1 require largely the same information.
The Form 20-F registration statement includes consolidated financial statements for the past three years, audited by an independent auditor and accompanied by an audit report. These consolidated financial statements must include:
- A balance sheet.
- Income statement/Statement of Comprehensive Income.
- Statement of changes in equity.
- Statement of cash flows.
- Any related notes or schedules required by the accounting standards under which the statements were prepared.
Any audited financial statements included in a registration statement or annual report must be prepared in compliance with US GAAP or IFRS (as issued by IASB), or, if prepared in compliance with local GAAP (including any non-IASB IFRS), they must be reconciled to US GAAP.
- If the statements are in compliance with IFRS, the compliance must be explicitly stated, and an auditor's certification to the same must be provided.
- If the financial statements and schedules are prepared according to local GAAP, the material variations with US GAAP and SEC Regulation S-X must be disclosed.
The last year of the audited financial statements generally may not be older than 15 months at the time of listing, and, in the case of an IPO, may not be older than 12 months at the time the document is filed. Consolidated interim financial statements may have to be provided if the registration statement becomes effective more than nine months after the end of the last audited financial year.
A statement regarding capitalization and indebtedness must also be included in the registration statement. If the registration with the SEC and listing on Nasdaq is being made pursuant to an IPO, then financial information regarding proceeds and use of proceeds may also be required. If an issuer is registering debt securities, a ratio of earnings to fixed charges must also be provided.
These financial statement requirements may be difficult for non-US companies to comply with, because the US requirements are somewhat unique.
The Form 20-F or Form F-1, in addition to financial statements, must publicly disclose a variety of information, such as:
- The company's business, property, legal proceedings and controlling shareholders.
- The trading market for its shares.
- Exchange controls and tax and other foreign governmental limitations affecting US shareholders.
- Management's discussion and analysis of financial condition and results of operations.
- Officers' and directors' background, compensation, management options and interests in transactions with the company.
- Corporate governance policies and practices, disclosure controls and internal accounting controls as assessed by management.
- Off-balance sheet arrangements, contractual obligations and contractual commitments.
- Changes in the company's certifying accountant and ADR fees and payments.
Filings with the SEC must be made electronically through the SEC's electronic EDGAR system. Documents are publicly available as soon as they are filed. Under certain circ*mstances (for example, where an issuer is already listed on a non-US exchange or an issuer is seeking an initial listing both on a US and a non-US exchange), the SEC will permit a foreign private issuer to make its initial filing in paper form, on a draft confidential basis. In addition, an "emerging growth company" (as that term is defined in the US Jumpstart Our Business Startups Act (JOBS Act)), including one that is also a foreign private issuer, may make an initial filing of its registration statement to the SEC on a confidential basis. All amendments (including amendments responding to the SEC's comments on the initial confidential filing) must be publicly filed through the EDGAR system.
From the time the company decides to make a public offering in the US, through the SEC's confidential review process, the company must not engage in publicity for the offering or that may stimulate interest in the company or its securities. After the registration statement is filed publicly, but before the securities are all distributed to investors and final prospectuses delivered, the company must continue to restrict its public communications and use of offering-related materials.
The SEC will not declare the registration statement effective until FINRA clears the underwriting arrangements for any related public offering.
US domestic companies are also required to register their listed class of securities with the SEC. To register a class of securities other than in connection with a sale of securities, the issuer must file on Form 10. If a sale or offering is to be made in connection with the listing (such as an IPO), the offering must be registered by filing a registration statement (typically on Form S-1), including a prospectus. The Form 10 and Form S-1 require largely the same information. The Form S-1 is similar to the Form F-1 but generally requires more extensive disclosure regarding executive compensation and corporate governance practices. US domestic issuers are required to provide US GAAP audited financial statements and may not, at this time, report their financial results under IFRS.
Timetable
The following is a fairly typical process and timetable for a listing of a either a domestic or foreign private issuer on Nasdaq via underwritten public offering in the US.
Link to Timetable
