Nasdaq has proposed a rule change that will require companies listing in connection with a Regulation A+ offering to have a minimum operating history of two years at the time of the approval of the initial listing application.
Citing to the Longfin SEC enforcement action, the rule notes that Nasdaq has observed problems with certain Regulation A companies. The rule filing indicates Nasdaq believes that companies seeking to list in conjunction with a Regulation A offering are generally less mature companies with less developed business plans than other companies seeking to list. In addition, Nasdaq believes that the Regulation A offering process may not adequately prepare companies for the rigors of operating a public company and satisfying the SEC and Nasdaq’s reporting and corporate governance requirements.
The rule filing also indicates Nasdaq staff has adopted heightened review procedures for companies applying to list on Nasdaq in connection with an offering under Regulation A.
Nasdaq believes that this proposed requirement will help assure that companies have more established business plans and a history of operations upon which investors can rely. In addition, the proposed operating history requirement will help assure that the company has been able to fund the initial phase of its operations. Further, Nasdaq believes that these more seasoned companies are more likely to be ready for the rigors of being a public company, including satisfying the SEC and Nasdaq’s reporting and corporate governance requirements.