Glossary
Listing
Admission of a company's shares to trade on an exchange, which requires meeting and maintaining the exchange's standards.
A listing is a company's admission to have its shares traded on a stock exchange such as the NYSE or Nasdaq. To list, a company must meet the exchange's initial standards for size, share price, number of shareholders and governance; to stay listed it must keep meeting continued listing standards. A listing brings visibility, liquidity and access to index funds, in return for disclosure and governance obligations.
How companies get listed
The usual route is an initial public offering. A company can also list through a direct listing, in which existing shares start trading without an underwritten sale, through a merger with a special-purpose acquisition company (SPAC), or by uplisting from the over-the-counter market once it qualifies. Exchanges set financial tests, such as minimum earnings, revenue or market value, plus corporate-governance rules such as a majority of independent directors and an independent audit committee.
Keeping the listing
Both major US exchanges watch for companies that slip below their standards. The most familiar is the price test: on Nasdaq, a stock that closes below $1.00 for 30 consecutive business days receives a deficiency notice and generally has 180 calendar days to regain compliance.
When a listing ends
If a company cannot cure a deficiency, misses filings or goes bankrupt, the exchange can delist it. Delisted shares usually move to the OTC market, where liquidity is thinner and many institutions cannot hold them. Companies may also delist voluntarily after being acquired or taken private.