Backdoor Listing Law and Legal Definition

Backdoor Listing is a technique used by a company which failed to get listed on an exchange, whereby the company acquires and merges with a company already listed on that exchange. By undertaking a back door listing, the privately-held company avoids the public offering process and gains automatic inclusion on a stock exchange. Following the acquisition, the acquirer may merge both companies' operations or, alternatively, create a shell corporation that allows the two companies to continue operations independent of each other.