Toughened listing criteria proposed Nasdaq plan follows abuses by some small companies

WASHINGTON — WASHINGTON -- The Nasdaq stock market proposed tougher listing standards yesterday for the 5,400 companies that trade on its markets after a series of trading abuses by smaller companies.

The standards, if approved by the Nasdaq board and the Securities and Exchange Commission, would make 570 companies, or about 11 percent of the total, ineligible to list on the nation's second largest stock market.


The proposal is geared especially toward Nasdaq's SmallCap market, where several small companies recently accused of price manipulation were listed.

Earlier this month, Nasdaq delisted Columbia-based Novatek International Inc. and Cam-Net Communications Network Inc. because both companies' executives were under regulatory scrutiny.


"Our goal is to strike the proper balance between access to capital for companies and investment quality for investors," said Nasdaq President Alfred Berkeley.

Berkeley said the most important proposal would require shareholder approval for small companies' issuance of new stock.

Nasdaq, which is run by the National Association of Securities Dealers, operates both the Nasdaq National market and the Nasdaq SmallCap market. Its explosive growth in recent years has been fueled by high-technology companies.

Many of the proposals for the SmallCap market involve upgrading corporate-governance standards to the level of those on the National market.

The proposed requirements for the National market, where large companies such as Microsoft Corp., Intel Corp. and Apple Computer Inc. trade, focus on listing standards alone.

Among the proposals:

Both the National and SmallCap markets would toughen some listing requirements for net tangible assets, pre-tax income, market value of public float and bid price;

No stock trading at less than $1 could be listed on either market;


The SmallCap market would require companies to have a minimum of two independent directorsand an audit committee with a majority of independent directors, and to hold an annual shareholder meeting.

The Nasdaq staff is issuing the proposal, which was expected, for public comment this Friday. Staff recommendations will be submitted to the Nasdaq board Jan. 26. Nasdaq board plans have to be submitted to the SEC for ultimate approval.

Pub Date: 11/14/96