By Liz Dunshee
Even as the SEC works to ease disclosure requirements for public companies in an effort to “Make IPOs Great Again” – for example, through yesterday’s proposal to permit semi-annual (rather than quarterly) reporting, which my colleague Broc Romanek summarized in Cooley’s Governance Beat blog and which we will discuss in more detail soon – a thriving public market depends on more than deregulation alone. Market quality is also part of the equation, and stock exchange listing standards are one of the key mechanisms for maintaining it. Those standards are worth tracking alongside any SEC rulemaking.
On that front, beginning this month, it will be harder for special purpose acquisition companies to qualify for an initial listing on Nasdaq. As part of its ongoing efforts to enhance listing standards – which I last blogged about in January – the exchange has increased certain initial listing requirements for SPACs on both the Nasdaq Global Market and the Nasdaq Capital Market.
Here are six FAQs about the changes:
1. Which companies are affected?
The amended listing standards apply to “acquisition companies” as described in Nasdaq Listing Rule IM-5101-2 – i.e., special purpose companies whose business plan is to complete a business combination with one or more unidentified targets. They do not affect listing standards for non-acquisition companies.
2. What do the amendments do?
Nasdaq is tightening the requirements for acquisition companies listing under the “market value standard” on either the Nasdaq Global Market or the Nasdaq Capital Market.
For the Nasdaq Global Market, the amendments raise the minimum market value of listed securities required under Rule 5405(b)(3)(A) from $75 million to $100 million.
For the Nasdaq Capital Market, the amendments carve out acquisition companies from the existing market value standard in Rule 5505(b)(2), create Rule 5505(b)(4) as a separate new standard, and amend the minimum shareholder requirement in Rule 5505(a)(3). Under the amended rules, an acquisition company must meet all of the following rules to list on the Nasdaq Capital Market:
- Market value of listed securities of $75 million (current publicly traded companies must meet this requirement and the $4 bid price requirement for 90 consecutive trading days before applying for listing if qualifying to list only under the market value standard).
- Market value of unrestricted publicly held shares of at least $20 million (for companies listing via IPO, this requirement must be satisfied from the offering proceeds).
- At least four registered and active market makers.
- At least 400 public shareholders – which aligns with the corresponding requirements under the Nasdaq Global Market and NYSE American.
For comparison, Nasdaq Capital Market Rule 5505(b)(2), which many acquisition companies had been relying on prior to these amendments, requires a market value of listed securities of $50 million, stockholders’ equity of $4 million, a market value of unrestricted publicly held shares of $15 million and 300 round lot holders. Acquisition companies can no longer list under this standard.
3. When are the amendments effective?
The amended listing standards are effective immediately and operative in mid-May. Acquisition companies should be prepared to comply with the new standards for any listings that are planned for on or after May 15, 2026.
4. Are there any other changes?
All the other requirements of Nasdaq Listing Rule IM-5101-2 continue to apply as is.
The amendments do not affect any other aspects of the initial listing criteria for the Nasdaq Global Market or the Nasdaq Capital Market, nor do they affect the alternative listing standards available to acquisition companies looking to list on the Nasdaq Global Market, which are set forth in Rule 5406. Among other things, the alternative listing standards require:
- Market value of listed securities of $100 million, which the newly amended Rule 5405(b)(3)(A) now matches.
- At least 300 round lot holders, which is a lower requirement than the 400 round lot holders required by Rule 5405(b)(3)(A).
As noted above, the amendments do not affect listing standards for non-acquisition companies.
5. Why now?
Historically, acquisition companies chose to list on the Nasdaq Capital Market due to lower fees and lower initial distribution requirements – but that changed after a 2021 statement from SEC staff, which influenced the accounting treatment of warrants issued by acquisition companies. The updated accounting treatment compressed stockholders’ equity and led more acquisition companies to list on the Nasdaq Global Market, which apparently has led to investor protection concerns.
Nasdaq’s response is to raise standards on both tiers, create a dedicated listing track for acquisition companies on the Capital Market and align Nasdaq’s thresholds broadly with those of NYSE and NYSE American. The heightened standards come at a time when SPAC IPOs are ticking up – they represented 38.5% of 2025 initial public offerings, according to the SEC’s statistics & data visualizations page.
6. What should deal teams do?
Given the 30-day transition window – which began on April 15, 2026 – if a SPAC IPO is near pricing, counsel should confirm with Nasdaq’s listing qualifications team which listing standard applies before the new requirements go operative. For transactions that won’t close within the window, run the pro forma capitalization against the new thresholds. Companies may need to revisit assumptions and offering structures.
A procedural note: Nasdaq filed under a procedure that permits immediate effectiveness of the rule. However, the SEC retains the right to summarily suspend this rule change within 60 days of the April 15, 2026 filing date if it concludes that suspension is necessary or appropriate in the public interest. This is something we will continue to monitor.
SPAC deals have always involved some complexities. The initial listing changes are meaningful, but the path through them is clear enough – as long as your team starts planning now.
Questions? Reach out to the Cooley capital markets team.
