On April 17, 2020, the U.S. Securities and Exchange Commission (the “SEC”) approved a proposal by The Nasdaq Stock Market LLC (“Nasdaq”) to provide companies with a longer period of time to regain compliance with the continued listing bid price and market value of publicly held shares requirements (collectively, the “Price-based Requirements”) by tolling the compliance periods through and including June 30, 2020. The Price-based Requirements require the Nasdaq listed issuer to maintain a bid price of at least $1 per share and a market value of publicly held shares of at least $1 million. The Nasdaq rule, which is effective immediately, provides temporary relief for companies that are out of compliance with the Price-based Requirements amid the COVID-19 pandemic to help them focus on the more immediate needs of their employees, customers, and communities.
Under the new rule, Nasdaq will provide companies that are out of compliance with the Price-based Requirements additional time to regain compliance by tolling the compliance periods through and including June 30, 2020. The tolling period began on April 17, 2020. Beginning on July 1, 2020, companies will receive the balance of any pending compliance period in effect at the start of the tolling period to regain compliance. For example, if a company is 120 days into its first 180-day compliance period for a bid price deficiency when the tolling period starts, and the company does not regain compliance before June 30, 2020, the company would have an additional 60 days, starting on July 1, 2020, to regain compliance. Similarly, companies that were in the delisting hearing process would return to that process at the same stage they were in when the tolling period began. Companies that are newly identified as non-compliant during the tolling period would have 180 days to regain compliance, beginning on July 1, 2020.
Nasdaq will continue to monitor the Price-based Requirements and companies will continue to be notified about new instances of non-compliance with the Price-based Requirements in accordance with existing Nasdaq rules. Nasdaq will continue to maintain and update the list of companies that are non-compliant with the Price-based Requirements (and other deficiencies) on the Nasdaq website. In addition, companies that are notified about non-compliance with the Price-based Requirements will still have to notify investors by issuing a Form 8-K, where required by SEC rules, or a press release in accordance with Nasdaq rules.
The SEC’s adoption of the temporary Nasdaq rule change is available at this link.
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