As discussed in our LEGALcurrents, on January 13, 2026, The Nasdaq Stock Market LLC (“Nasdaq”) posted a proposed rule (the “Initial Proposal”) on its website that, if approved by the Securities and Exchange Commission (“SEC”), would require companies listed on the Nasdaq Global Select, Global, or Capital Market to maintain a minimum market value of listed securities of at least $5 million (the “MVLS Requirement”). On March 11, 2026, the SEC designated a longer period of time to take action on the proposed rule and on April 28, 2026, the SEC issued an order instituting proceedings under the Securities Exchange Act of 1934, as amended, to determine whether to approve or disapprove the proposed rule.
On June 22, 2026, the SEC issued a notice that Nasdaq filed Amendment No. 1 to the proposed rule (the “Amended Rule”) to: (i) expand the scope of a Nasdaq Listing Qualifications Hearings Panel’s (the “Panel”) discretion to grant exceptions for companies seeking to regain compliance with the MVLS Requirement, (ii) address comments submitted during the comment period, and (iii) make minor technical changes. In particular, Nasdaq revised the Initial Proposal to acknowledge the position taken by some objecting commentors that certain companies with a low market capitalization may meaningfully recover and therefore continued listing on Nasdaq may be appropriate. The Amended Rule, if approved, expands the Panel’s discretion beyond recalculating whether the company failed to meet the MVLS Requirement. Under the Amended Rule, the Panel may grant exceptions from a delisting determination for up to 180 days for companies to demonstrate compliance with all requirements for initial listing, which are stricter than the requirements for continued listing. Nasdaq believes that requiring companies to comply with initial listing standards will allow a company whose operational and financial difficulties were temporary to remain listed and provide a level of certainty that the company will not immediately fall out of compliance with the MVLS Requirement.
The other key elements of the Initial Proposal remain the same in the Amended Rule. This means that a company not meeting the MVLS Requirement after 30 consecutive business days would have its stock automatically suspended from trading on Nasdaq. This leaves open the possibility raised by some commenters that the introduction of the MVLS Requirement could increase the potential for manipulative trading and market abuse. The SEC is accepting additional comments on the Amended Rule until July 10, 2026. If you have any questions about Nasdaq’s proposed rule, please contact a member of Harter Secrest & Emery LLP’s Securities and Capital Markets group.