In June, Nasdaq amended its proposal to impose a new $5 million minimum market cap requirement for continued listing. As John noted, the original proposal would have tied the Hearings Panel’s hands pretty tightly (meaning that it only would have been able to overturn a delisting decision if it found Nasdaq got the math wrong and the company never actually failed to satisfy the minimum market cap requirement). The amended proposal adds a bit more discretion and permits the Hearings Panel to grant an exception for a period not to exceed 180 days from a Staff Delisting Determination for the company to demonstrate that it meets all requirements for initial listing.

On Wednesday, the SEC posted an order granting approval of this proposed rule change, as modified by the June amendment. Here’s more info on the content of the rule change as a reminder:

[P]roposed Nasdaq Rule 5810(c)(1) would provide that a Staff Delisting Determination will inform the company that its securities are immediately subject to suspension and delisting when the company fails to comply with the continued listing requirement for MVLS of at least $5 million under proposed Nasdaq Rules 5450(a)(3) or 5550(a)(6) for a period of 30 consecutive business days (“MVLS Requirement”). In addition, the Exchange proposes to amend Nasdaq Rule 5810(c)(3)(C) to provide that a company would not be entitled to any cure or compliance period if the company failed to comply with the MVLS Requirement and would immediately receive a Staff Delisting Determination.

The Exchange also proposes to add to the list of circumstances in which a request for Hearings Panel review will not stay the suspension of a company’s securities from trading. Specifically, the Exchange proposes to amend Nasdaq Rule 5815(a)(1)(B) to provide that a timely request for a hearing will not stay the suspension of the securities from trading pending the issuance of a written Hearings Panel decision where the company received a Staff Delisting Determination due to a failure to comply with the MVLS Requirement. The Exchange states that, given the difficulties with maintaining fair and orderly markets in such low value companies, it believes it is not appropriate for these companies to continue trading on Nasdaq during the pendency of a Hearings Panel review for deficiencies under proposed Nasdaq Rules 5450(a)(3) or 5550(a)(6).

Finally, the Exchange proposes to adopt Nasdaq Rule 5815(c)(1)(I) to provide that in the case of a company that received a Staff Delisting Determination due to a failure to comply with the MVLS Requirement, the Hearings Panel may reverse a delisting decision where the Hearings Panel determines that the Staff Delisting Determination was in error, or grant an exception for a period not to exceed 180 days from the Staff Delisting Determination for the company to demonstrate that it meets all requirements for initial listing.

– Meredith Ervine