Nasdaq Capital Market

Posted on by user

Nasdaq Capital Market

Key points

  • The Nasdaq Capital Market is Nasdaq’s tier for early-stage and small-cap companies seeking to raise capital.
  • Listing requirements are less stringent than for Nasdaq’s higher tiers, but corporate governance standards (audit committee, independent directors, code of conduct) apply across all tiers.
  • Companies qualify for initial listing by meeting one of three standards: Equity, Market Value of Listed Securities, or Net Income.
  • Common baseline requirements include at least 1,000,000 publicly held shares, roughly 300 shareholders, and three market makers.
  • Many companies exceed the minimums before listing because of the costs and expectations associated with an exchange listing.

Overview

Formerly called the Nasdaq SmallCap Market, the Nasdaq Capital Market focuses on smaller companies (commonly small-cap, roughly $300 million–$2 billion in market capitalization) and SPACs that need access to public capital. It provides a pathway to listing with lower financial thresholds than the Global Market and Global Select Market, while maintaining the same governance rules across all Nasdaq tiers.

Listing criteria — how companies qualify

Companies may choose one of three initial-listing standards. All standards share baseline requirements: at least 1,000,000 publicly held shares, about 300 shareholders, and three market makers. Differences between the standards include equity, market-value, operating-history, and net-income thresholds.

  1. Equity Standard
  2. Stockholders’ equity: $5 million
  3. Operating history: typically two years required

  4. Suited for companies with established equity and operating record

  5. Market Value of Listed Securities Standard

  6. Market value of listed securities: at least $50 million
  7. Market value of publicly held shares: at least $15 million
  8. Stockholders’ equity: generally $4 million

  9. Suited for companies with sufficient market capitalization but perhaps shorter operating histories

  10. Net Income Standard

  11. Net income: at least $750,000 in the most recent fiscal year or in two of the last three years
  12. Market value of publicly held shares: as low as $5 million (the lowest of the three standards)
  13. Stockholders’ equity: generally $4 million
  14. Suited for companies with demonstrated profitability but lower market float

Companies pick the standard that best fits their financial profile. Because meeting and maintaining listing requirements involves expense and scrutiny, many firms list with metrics comfortably above the minimums.

Corporate governance and continued listing

Although initial financial thresholds are lower on the Capital Market, companies must meet Nasdaq’s corporate governance rules for all tiers. Typical requirements include:
* An independent audit committee
* Independent directors on the board
* A formal code of conduct
Failing to maintain listing standards or governance requirements can trigger delisting procedures or require remedial action.

Nasdaq listing tiers — where the Capital Market fits

Nasdaq operates three primary listing tiers:
* Nasdaq Capital Market — for small-cap and early-stage companies
* Nasdaq Global Market — for mid-cap companies with higher financial and disclosure standards
* Nasdaq Global Select Market — the most stringent tier for larger, more established companies
Companies may move between tiers if they meet the criteria for a higher tier or if their market metrics change.

Alternatives and context

Other markets, such as the London AIM or various alternative trading venues, position themselves as lighter-regulation entry points for very early-stage firms. Companies evaluate regulatory requirements, listing costs, investor access, and reputation when choosing between Nasdaq and alternative exchanges.

Conclusion

The Nasdaq Capital Market offers a structured but accessible route to public capital for smaller and emerging companies. It balances relatively lower financial-entry thresholds with the governance and disclosure expectations of a major exchange, making it a common choice for firms planning to grow while maintaining investor confidence.

Sources

Nasdaq listing rules and the Nasdaq Initial Listing Guide.