In March 2025, Nasdaq released a comprehensive set of policy recommendations intended to advance capital formation in a paper titled “Advancing the U.S. Public Markets: Unlocking Capital Formation for a Stronger American Economy.” The paper outlines three key sets of policy reforms, which were prepared by Nasdaq in dialogue with industry stakeholders, including current and prospective public companies. The paper observes the decline in the number of public companies, noting that since 2000, the number has gone from roughly 7,000 to 4,500, or a decline of 36%. According to the report, this decline is harmful to the overall markets. The report reviews a now familiar trend—that is that private companies are choosing to defer initial public offerings and remaining private longer and often choosing other liquidity alternatives. In addition, the report notes the disparity in the growth rates of public equity versus private equity—with public equity growing at a 3% annual growth rate that pales in comparison to the 15% growth rate of private equity.
The report organizes suggested reforms into the following categories: proxy process modernization; scaled disclosure relief; and levelling the playing field with smart regulation. The report contends that while the proxy process can be important for stockholders it is broken—requiring too much management time and attention and draining resources. The report recommends, among other things, lengthening emerging growth company (EGC) status, expanding the benefits of scaled disclosure to more companies, harmonizing the definitions of EGC and smaller reporting company (SRC), and expanding the definition of well-known seasoned issuer (WKSI). Finally, the report identifies opportunities to eliminate ineffective, inefficient and burdensome rules. These include concerns regarding the Public Company Accounting Oversight Board’s (PCAOB) regulations and their impact on companies. Also, stakeholders see a need for change as it relates to securities litigation. The full text of the paper is available here.
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