On September 8, 2025, the Securities and Exchange Commission (“SEC”) issued a notice that The Nasdaq Stock Market LLC (“Nasdaq”) submitted a proposed rule change (the “proposed rule”) that would modify the application of the minimum bid price rule in situations where a company does not maintain a closing bid price of at least $0.10 for 10 consecutive trading days (the “low price requirement”).
Nasdaq listing rules require companies to maintain a closing bid price above $1.00 per share (the “bid price rule”). A company violates the bid price rule when its closing bid price is less than $1.00 for 30 consecutive trading days. Under current Nasdaq listing rules, when a company is already non-compliant with the bid price rule and fails to meet the low price requirement, Nasdaq will issue a delisting determination with respect to security, regardless of whether any compliance period would otherwise be available.
Under the proposed rule, Nasdaq will automatically issue a delisting determination and suspend trading of securities that fail to meet the low price requirement, regardless of whether the company is in compliance with the bid price rule, and the company will not be eligible for any compliance period. 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 proposed rule would not stay the suspension, and the company’s securities would be delisted from Nasdaq.
The proposed rule follows recently approved rules aimed at accelerating the delisting process for companies that struggle to maintain compliance with the bid price rule, as discussed in our LEGALcurrents. If approved, the proposed rule would accelerate the delisting process for companies that are not able to meet the low price requirement. The proposed rule would become operative 45 days after approval by the SEC. On September 25, 2025, the SEC designated a longer time period to take action on the proposed rule. The SEC extended the 45-day time period to 90 days to ensure that it has sufficient time to consider the proposed rule and the comments received. As a result, a decision on the proposed rule is expected to be made by December 7, 2025. If you have any questions about the proposed rule or maintaining or regaining compliance with the rules of Nasdaq, please contact a member of Harter Secrest & Emery LLP’s Securities and Capital Markets group.