July 7, 2020

Volume X, Number 189

July 07, 2020

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July 06, 2020

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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.[1]

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.

© 2020 Jones Walker LLPNational Law Review, Volume X, Number 149

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About this Author

Alexandra Clark Layfield Corporate Attorney Jones Walker Law Firm
Partner

Alexandra Layfield joined Jones Walker's Corporate & Securities Practice Group in 2008. Ms. Layfield's practice is exclusively transactional, concentrating principally on the areas of securities law, mergers and acquisitions, general corporate law and corporate governance matters.

Ms. Layfield's principal area of focus is counseling corporations on corporate governance matters and the related disclosure requirements of the securities laws and trading markets, including reviewing annual, quarterly, and current reports, proxy statements, and...

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Thomas Kimball, Jones Walker Law Firm, New Orleans, Corporate Law Attorney
Associate

Thomas D. Kimball is an associate in the firm’s Corporate & Securities Practice Group and practices from the firm’s New Orleans office. He is a 2016 graduate of the Loyola University New Orleans College of Law, where he received a juris doctor degree, summa cum laude, a Certificate in Law, Technology, and Entrepreneurship, and earned the William L. Crowe, Sr. Scholar distinction. In addition, Mr. Kimball was an Articles Editor on the Loyola Law Review Editorial Board and served in Loyola’s Entrepreneurship Project, a partnership with Propeller which aimed to provide free transactional legal services to New Orleans’ underserved business and non-profit communities.

Prior to law school, Mr. Kimball received his Bachelor of Science in Psychology, cum laude, from the University of New Orleans in 2009, where he was included on the Dean’s List for four semesters. Upon completing his undergraduate studies, he spent four years working for a large practice of psychologists performing psychological tests in various inpatient and outpatient settings, prisons, and schools across the region.

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