On July 6, 2023, Nasdaq published a new FAQ related to de-SPAC transactions. Under this FAQ, if the target company in a de-SPAC is public, Nasdaq will consider the trading price of the target's securities when determining compliance with Nasdaq's price-based listing requirements. This contrasts to when a SPAC engages in a transaction with a private company, where Nasdaq looks to the SPAC's trading price in determining compliance with the price-based listing requirements.

This will make it more difficult for potential target companies quoted on OTC to use a SPAC to move to Nasdaq if their trading price is low. For example, under this FAQ, if a target's stock is trading at $1.00 per share and it will be converted into the SPAC's stock on a one-for-one basis, Nasdaq will assume that the trading price of the post de-SPAC company's stock is $1.00 per share, regardless of valuation of the target, fairness opinions, or the trading price of the SPAC's stock. In the scenario I just gave, the company would not be able to meet the minimum share price requirement under Nasdaq's initial listing rules.

Companies looking to do a de-SPAC involving a publicly traded company will need to ensure that conversion ratios for the publicly traded company's stock will result in the combined company meeting Nasdaq's initial listing requirements.