What is Listing Requirements?

by Investing School on January 20, 2011

The term “Listing Requirements” refers to the specific conditions that a stock exchange will demand from companies that wish to become listed on that exchange. These conditions could include such things as a minimum amount of outstanding shares, minimum level of market capitalization, or even minimum annual income. However, the requirements may vary according to the different stock exchanges located throughout the world.

For example, in order to be listed on the New York Stock Exchange (NYSE), the requirement is that a company needs to have issued a minimum of one million shares of stock with a worth of $100 million. The company must also have earned in excess of $10 million during the course of the past three years.

A company that wants to be listed on the NASDAQ Stock Exchange will find similar requirements with slightly different figures. NASDAQ requires that a company has issued at least 1.25 million shares of stock with a worth of at least $70 million. The NASDAQ does want a higher level of earnings over the past three years than the NYSE, requiring more than $11 million.

Looking overseas, the Bombay Stock Exchange (BSE) also has specific requirements for companies who wish to list there. The BSE wants to see a minimum market capitalization of 250 Million rupees, as well as a minimum public float equivalent to 100 Million rupees.

For the London Stock Exchange, the main market institutes a comparatively comprehensive set of requirements. These include a minimum amount of market capitalization (£700,000), three years of audited financial statements, a minimum public float (25 per cent) and sufficient working capital to cover 12 months from the listing date.

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