The Securities and Exchange Commission approved a Nasdaq proposal allowing companies to raise capital while also doing direct listings instead of initial public offerings.
Nasdaq initially submitted the proposal in September, but after the SEC expressed concern with it in December, Nasdaq amended the proposal in February, and the SEC approved it in an order dated May 19.
Unlike IPOs, direct listings allow companies to participate in the stock market without selling new shares, and with fewer restrictions and fees.
Prior to approving a similar proposal from the New York Stock Exchange in December, the SEC did not allow companies to raise new capital while going through the direct listing process.
Nasdaq's proposal allows a company that has not previously had its common equity securities registered with the SEC to list those securities on the Nasdaq Global Select Market upon the effective date of a registration statement. The company itself will sell shares in the opening auction on the first day of trading on the exchange, Nasdaq noted in its filing.
This listing requirement is met if the amount of the company's unrestricted publicly held shares before the offering, along with the market value of the shares to be sold by the company in the direct listing, is at least $110 million (or $100 million, if the company has stockholders' equity of at least $110 million), according to the Nasdaq proposal.
Nasdaq will calculate the market of unrestricted publicly held shares using a price per share equal to the lowest price of the range disclosed by the issuer in its effective registration statement, the exchange said.