Update: NASDAQ Temporarily Delays Implementation of Accelerated Delisting Rules During COVID-19 Pandemic
On May 14, 2020, the Securities and Exchange Commission (SEC) approved the request by the Nasdaq Stock Market (NASDAQ) to delay until September 1, 2020, the implementation of a recently adopted rule that will accelerate the delisting process for listed companies (i) with securities in a minimum bid price compliance period (as described below) with bid prices at or below $0.10 or (ii) that have fallen below the minimum bid price after completing one or more reverse stock splits with a ratio of 250 shares (or more) to one over the prior two years.
NASDAQ’s continued listing rules require that a company’s listed equity securities maintain a minimum closing bid price of at least $1.00 per share. A NASDAQ-listed company is noncompliant with this listing standard when the bid price for its listed security closes below $1.00 for 30 consecutive business days. Generally, after becoming noncompliant, a NASDAQ-listed company has a period during which it can regain compliance.
Under the recently adopted accelerated delisting rules — approved by the SEC on April 21, 2020 — a NASDAQ-listed company in a minimum bid price compliance period (as described above) will be immediately delisted if the security had a bid closing price of $0.10 or less for a period of 10 consecutive trading days, which would end the applicable compliance period. Additionally, NASDAQ will immediately delist companies that become noncompliant with the $1.00 minimum bid price standard after completing one or more reverse stock splits resulting in a cumulative ratio of 250 shares (or more) to one over the immediately preceding two years.
In light of the market uncertainty due to the COVID-19 crisis, NASDAQ requested and the SEC approved delaying the implementation of the new accelerated delisting rules, which will now begin being implemented for companies that first receive notification of noncompliance with the minimum bid price standard on or after September 1, 2020. NASDAQ-listed companies that received notification of noncompliance prior to that date will not be subject to the accelerated delisting process.