Key facts
- Nasdaq's rule changes aim to delist companies with a market value below $5 million for 30 consecutive days.
- The SEC approved Nasdaq's proposed rule amendments.
- New listings will face enhanced requirements, including a $15 million minimum public float under the net income standard.
- Companies failing to meet continued listing standards and with a market value below $5 million will face accelerated delisting.
- The new delisting procedures will take effect 60 days after SEC approval.
Nasdaq will expedite the delisting of companies that are struggling financially, following approval from the U.S. Securities and Exchange Commission (SEC). The exchange is implementing new rules designed to enhance market integrity and protect investors by targeting companies with low market valuations.
Under the approved changes, Nasdaq-listed companies with a market value of less than $5 million for 30 consecutive days will face immediate suspension and delisting, with limited appeal options. This move addresses concerns about volatile trading and alleged manipulation in microcap stocks.
Nasdaq had previously proposed these enhancements to its initial and continued listing standards. These include a $15 million minimum market value of public float for new listings under the net income standard, and a $25 million minimum public offering proceeds requirement for companies primarily operating in China. John Zecca, Nasdaq's Executive Vice President and Global Chief Legal, Risk & Regulatory Officer, stated that these enhancements aim to provide a healthier liquidity profile for public investors while maintaining market integrity.
The proposed rule changes also aim to address emerging patterns associated with potential pump-and-dump schemes. Nasdaq will continue to refer cases of potentially manipulative trading activities to the SEC and FINRA and strengthen cooperation with domestic and international regulators.
The accelerated delisting procedures are set to be implemented 60 days after SEC approval, while the new initial listing requirements will apply to new listings thereafter, with a 30-day window for companies already in the initial listing process.