For the last couple of years, Nasdaq has been requesting that companies engaging in smaller IPOs provide detailed information about the underwriting distribution in an attempt to ensure that there would be an orderly trading market post transaction. For example, Nasdaq has been reluctant to approve the listing of companies that would have a highly concentrated shareholder base post IPO or that would have a significant number of non-U.S. stockholders post IPO.

Earlier this month, Nasdaq released an FAQ (Identification No. 1850) formalizing the policies that it had put into place over the last couple of years. In particular, the FAQ:

• advised that Nasdaq may request that underwriters provide an expected allocation list including the names and locations of investors anticipated to receive shares in the IPO.
• advised that Nasdaq could request representations from the company (i) relating to the existence of policies that could impact trading, and (ii) that the company is not aware of any arrangement through which shareholders or potential shareholders are being loaned or given money to purchase shares in the IPO.
• indicated that, in connection with approving listing, Nasdaq would consider the concentration of shareholdings, any restrictions on shares being able to trade, the geographic location of the accounts, and any regulatory concerns identified with any underwriter.

Companies and underwriters should be prepared to provide the indicated additional information to Nasdaq and ensure that the proposed IPO distribution is wide enough to meet Nasdaq's new requirements.