Editor’s response: It’s still a little soon to start entertaining this possibility. I think it will happen, but I think there are many other concerns to address in the meantime. However, here’s the basic requirements for a true NASDAQ listing…

(This was ripped straight from Investopedia. The same data appears on the NASDAQ site, but is buried in legalese. This is the quick and dirty explanation you were wanting to know.)

The Nasdaq has three sets of listing requirements. The company must meet at least one of the three requirement sets, as well as the main rules for all companies.

Listing Requirements for All Companies

Each company must have a minimum of 1,250,000 publicly-traded shares upon listing, excluding those held by officers, directors or any beneficial owners of more then 10% of the company. In addition, the minimum bid price at time of listing must be greater than $5, and there must be at least 3 market makers for the stock. Each listing firm is also required to follow Nasdaq Corporate Governance rules 4350, 4351 and 4360. Companies must also have at least 450 round lot (100 shares) shareholders, 2,200 total shareholders, or 550 total shareholders with 1.1 million average trading volume over the past 12 months.

In addition to these requirements, companies must meet all of the criteria under at least one of the following standards.

Listing Standard 1

The company must have aggregate pre-tax earnings in the prior 3 years of >= $11 million, in the prior 2 years >= $2.2 million, and no one year in the prior 3 years can have a net loss.

Listing Standard 2

The company must have a minimum aggregate cash flow >= $27.5 million for the past 3 fiscal years, with no negative cash flow in any of the 3 years. In addition, its average market capitalization over the prior 12 months must be >= $550 million, and revenues in the previous fiscal year must be >= $110 million.

Listing Standard 3

Companies can be removed from the cash flow requirement of Standard 2 if the average market capitalization over the past 12 months is >= $850 million, and revenues over the prior fiscal year are >=$90 million.

A company has three ways to get listed on the Nasdaq depending on the underlying fundamentals of the company. If a company does not meet certain criteria such as the operating income minimum, it has to make it up with larger minimum amounts in another area like revenue. This helps to improve the quality of companies listed on the exchange.

It doesn’t end there: after a company gets listed on the market, it must maintain certain standards to continue trading. Failure to meet the specifications set out by the stock exchange will result in its delisting. Falling below the minimum required share price, or market capitalization, is one of the major factors triggering a delisting. Again, the exact details of delisting depend on the exchange.