The NASDAQ OMX Group received approval in May 2011 from the SEC to launch its new listing market, the BX Venture Market. The BX Venture Market is intended to serve as a new listing option for early-stage and smaller companies that do not qualify for listing on national securities exchanges. The objective of the BX Venture Market is to provide a more regulated and more transparent marketplace than those available in the over-the-counter markets.
NASDAQ expects to begin accepting listing applications later in 2011 and to launch the new market in 2012. Companies will be able to list common and preferred stock, ordinary shares and ADRs, trust and limited partnership interests, units, rights and warrants.
Potential companies for listing on this new market include those currently trading on an over-the-counter market (such as the OTC Bulletin Board or the OTC Pink Sheets), companies that have been or will be delisted by another market for failure to meet that market's listing standards, and smaller, less-traded companies seeking to increase liquidity.
The BX Venture Market features less rigorous quantitative listing requirements, but generally similar qualitative listing requirements as those of national securities exchanges.
Companies must meet the following qualitative listing requirements, among others, related to corporate governance to list on the BX Venture Market:
Significantly, BX Venture Market-listed companies will not be required to have a majority independent board or an independent nominating committee, and companies will be permitted to phase in compliance with independent director requirements. In addition, BX Venture Market-listed companies are not subject to the "20% Rule," which requires companies to obtain stockholder approval for certain private placement issuances at less than market value.
Companies that list on the BX Venture Market must meet the following financial standards, which are set lower than the requirements of other national securities exchanges:
In addition, a company not previously listed must have at least a one-year operating history, and a minimum of either $1 million in shareholders' equity or $5 million in total assets, and must demonstrate that it has sufficient working capital for its business for at least 12 months after the first day of listing.
Securities listed on the BX Venture Market are considered "penny stocks" and therefore will be subject to the SEC penny stock rules. In addition, unlike securities on other national securities exchanges, it should be noted that securities listed on the BX Venture Market are not exempt from state blue sky rules. Accordingly, such securities must be registered with state rules governing the sale and offering of securities. BX Venture Market-listed companies will be prohibited from representing that they are listed on a NASDAQ market and will be subject to delisting for violating this prohibition.
Herbert F. Kozlov, Partner, email@example.com
Herb has been engaged in the practice of law since 1977. His practice focuses upon corporate law, including public and private mergers, acquisitions and divestitures; private equity transactions; capital markets transactions; venture capital transactions; partnership matters; cross-border transactions; corporate governance matters; and representation of private and publicly owned companies.
Herb serves as outside general counsel for public and private companies and provides advice on a broad range of legal issues. He has served as a director of various companies. He has played an active role in advising companies in diverse fields, including information sciences; real estate finance; software; communications; biomedical, nutrition and health care; chemical and plastics; advertising, marketing and promotions; and media and entertainment.
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Jason is an associate in the Corporate and Securities Group. His recent work includes U.S. registered public offerings and private placements of debt and equity securities and preparing SEC reporting documents, including periodic reports for reporting companies and beneficial ownership reports for shareholders and insiders of public companies. Jason regularly represents both issuers and investors in private placements, including PIPE offerings, and in registered direct shelf offerings of public companies. His practice includes advising on resales of restricted securities under Rule 144, counseling boards on corporate governance matters, advising issuers on corporate finance, and drafting a variety of agreements dealing with general corporate/business and securities law matters, including operating agreements of limited liability companies. Jason works with a plethora of clients, both emerging companies and more seasoned issuers, from diverse fields, notably life sciences and medical, real estate finance, communications, and technology.
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Material in this work is for general educational purposes only, and should not be construed as legal advice or legal opinion on any specific facts or circumstances. For legal advice, please consult your personal lawyer or other appropriate professional. Reproduced with permission from Reed Smith. This work reflects the law at the time of writing September 2011.