Over the last eighteen months, The Nasdaq Stock Market LLC (“Nasdaq”) has implemented stricter listing standards for companies with securities listed on the Nasdaq Global Market (the “Global Market”) and Nasdaq Capital Market (the “Capital Market”), the market tiers more accommodating to emerging growth, small- and micro-cap companies. Nasdaq has specifically targeted (i) the listing rule requiring companies to maintain a closing bid price above $1.00 per share (the “bid price rule”) and (ii) liquidity requirements for the Global Market and Capital Market. Through these changes, Nasdaq has accelerated delisting for companies that fall out of compliance with its listing standards and made it more difficult for companies to initially list on Nasdaq.
Bid Price
Since August 2024, Nasdaq has proposed a series of rules strengthening the enforceability of the bid price rule. When taken together, these rules accelerate the delisting process for companies that struggle to maintain compliance with the bid price rule.
October 2024 Rule: Cannot Cure Bid Price Deficiency by Violating Other Listing Standards
In October 2024, the Securities and Exchange Commission (“SEC”) approved a proposed rule from Nasdaq that narrows the options for companies seeking to regain compliance with the bid price rule (the “October 2024 Rule”). Under the October 2024 Rule, if a company effects a reverse stock split to regain compliance with the bid price rule and as a result falls below the numerical threshold of another listing standard (such as the minimum number of holders or number of publicly held shares), the company will not be deemed to cure the bid price deficiency. The company must then cure the other listing standard deficiency before Nasdaq will consider the bid price deficiency cured. Nasdaq will not provide additional time after the original 180-day bid price rule compliance period for the company to cure the deficiencies. If the company does not resolve both deficiencies, the Nasdaq staff will issue a delisting letter.
January 2025 Rule: Accelerated Delisting After Bid Price Deficiency
In January 2025, the SEC approved a proposed rule from Nasdaq that accelerates the delisting process for companies that fail to comply with the bid price rule (the “January 2025 Rule”). Under the January 2025 Rule, Nasdaq will (i) move to delist a company’s securities if it had effected a reverse stock split in the last year and the company fails to comply with the bid price rule, and (ii) automatically suspend a company’s securities from trading on Nasdaq if the company has not regained compliance with the bid price rule within 360 days, even if it is appealing a delisting determination to a Nasdaq Listing Qualifications Hearings Panel.
August 2025 Proposal: Low Price Requirement Overtakes Bid Price Rule for Some Delistings
In August 2025, Nasdaq submitted an additional proposed rule (the “August 2025 Proposal”) that would accelerate delisting when a company does not maintain a closing bid price of at least $0.10 for 10 consecutive trading days (the “low price requirement”). Under current Nasdaq listing rules, when a company has already violated the bid price rule and fails to meet the low price requirement, Nasdaq will issue a delisting determination, regardless of any available bid price rule compliance period. Under the August 2025 Proposal, if approved, Nasdaq will automatically issue a delisting determination and suspend trading of securities that fail to meet the low price requirement, even if the company is in compliance with the bid price rule.
Unlike the general rule, where a timely request for a hearing would stay the suspension and delisting action pending the issuance of a written panel decision, a request for a hearing under the January 2025 Rule and the August 2025 Proposal would not stay the suspension, and the company’s securities would be promptly delisted from Nasdaq.
Public Float
Nasdaq has also taken steps to increase the liquidity requirements under its initial listing standards, which will make it more difficult for companies to list on Nasdaq.
March 2025 Rule: Changing What Counts as Public Float for IPOs and Uplists
In March 2025, the SEC approved a proposed rule from Nasdaq (the “March 2025 Rule”) that modified the initial listing liquidity requirements for companies completing an initial public offering (“IPO”) or an uplist from the over-the-counter market (“OTC”).
When a company applies for initial listing on the Capital Market or the Global Market, it must satisfy certain initial listing standards, including a minimum market value of unrestricted publicly held shares requirement (“Public Float”). See the chart below for the Public Float requirements in these markets.
Generally, the only shares that count toward the Public Float requirement are those not held by an officer, director, or 10% shareholder of the company and not subject to resale restrictions. Before this rule was approved, shares sold in the IPO or uplist and shares registered for resale or without restrictive legends at the time of the offering (“freely tradeable shares”) counted toward the Public Float requirement.
Under the March 2025 Rule, a company must meet the applicable Public Float requirement solely with proceeds from the IPO or uplist. The value of freely tradeable shares will no longer count toward the Public Float requirement. In other words, now a company pursuing an IPO or uplist and listing on the Capital Market will need to raise at least $15 million in its offering if it is relying on the equity standard; whereas, before the new rule, this company could have counted the value of freely tradeable shares, such as shares that were issued in private placements more than 12 months before the IPO and had the restricted legend removed.
In addition, to qualify for initial listing on the Capital Market or Global Market using the equity standard, a company uplisting from the OTC must (i) have a minimum daily trading volume of 2,000 shares over the past 30 trading days with trading occurring on at least 50% of the days, or (ii) list in connection with a firm commitment underwritten public offering of at least $15 million for a Capital Market listing or at least $18 million for a Global Market listing. If the company is using a different standard, the minimum required capital raise would be equal to the Public Float requirement under that standard.
September 2025 Proposal: Increased Public Float Requirements and Potential Delisting for Low Public Float
In September 2025, Nasdaq proposed a new rule to increase Public Float requirements for initial listing and to accelerate delisting if a company violates a continued listing requirement and then fails to maintain a Public Float of at least $5 million (the “September 2025 Proposal”).
To be listed on Nasdaq, a company must meet initial listing standards for the Capital Market or Global Market. The table below outlines the current and proposed Public Float requirement for each standard:
| Capital Market | Global Market | |||
| Standard | Current | Proposed | Current | Proposed |
| Equity | $15 million | $15 million | $18 million | $18 million |
| Market Value of Listed Securities | $15 million | $15 million | $20 million | $20 million |
| Net Income/Income | $5 million | $15 million | $8 million | $15 million |
| Total Assets/Total Revenue | N/A | N/A | $20 million | $20 million |
Notably, the September 2025 Proposal would increase the net income standard for the Capital Market and the income standard for the Global Market.
Also, if the September 2025 Proposal is approved, a company’s securities would be subject to delisting if the company (i) violates any continued listing requirement related to its bid price, stockholders’ equity, total shareholders, publicly held shares, or market makers; and then (ii) fails to maintain a Public Float of at least $5 million for 10 consecutive business days. Unlike the general rule, where a timely request for a hearing would stay the suspension and delisting action pending the issuance of a written panel decision, a request for a hearing under the September 2025 Proposal would not stay the suspension during the appeal process.
Conclusion
Nasdaq continues to tighten its rules, making it more difficult for small and micro-cap companies to list and remain listed on Nasdaq. The volatile markets of the post-pandemic years have forced many of these companies to navigate increasingly strict listing rules to maintain liquidity for their shareholders. Companies and their advisors must remain vigilant for changes in Nasdaq listing standards, particularly in times of significant market pressure on stock prices, whether due to macroeconomic factors, significant company news, or offerings.
As more companies are delisted from Nasdaq because of these stricter listing standards, it will be interesting to see whether they will find a new home on other exchanges or the OTC. For example, the Texas Stock Exchange is a newly approved national securities exchange that will become active in 2026 and is aimed at reducing the burden of going and staying public. With the current SEC administration focused on eliminating regulatory barriers to capital formation, advisors to emerging growth, micro- and small-cap companies will be watching to see whether new avenues open to these critical market participants.
Contact HSE’s Securities and Capital Markets Group with any questions.