Client Alert
NASDAQ Further Extends Price and Market Cap Listing Suspension
April 1, 2009
Yesterday the SEC approved a rule change proposed by The NASDAQ Stock Market LLC (“Nasdaq”) to further extend, through July 19, 2009, the temporary suspension of Nasdaq’s continued listing requirements relating to (i) minimum bid price and (ii) market value of publicly held shares.1 The suspension was put in place in October 2008 and, as previously extended, was set to expire April 19, 2009. Under the minimum bid price requirements, companies are subject to the delisting of their securities on the Nasdaq Stock Market for failing to maintain at least a $1 closing bid price for 30 consecutive business days. Under the market value requirements, companies are subject to delisting for failing to maintain a market value ranging from $1 million to $15 million, depending on their particular Nasdaq market, for 30 consecutive business days.
In support of the extension, Nasdaq again cited the fact that, since the initial suspension, market conditions have not improved and the number of securities trading on Nasdaq below $1, as well as the number of securities trading between $1 and $2, has increased. Nasdaq attributes these changes to a general decline in investor confidence rather than a change in the underlying business model or prospects for many of these companies. Furthermore, Nasdaq has recognized that the deteriorating market conditions make it difficult for companies to successfully execute a plan to regain compliance with the minimum bid price or market value requirements.
During the suspension period, companies will not be cited for new minimum bid price or market value deficiencies, and the time allowed to companies already facing such deficiencies will remain suspended. Companies will continue to be subject to delisting for failure to comply with other Nasdaq listing requirements. Following the extended suspension period, any new deficiencies with the minimum bid price or market value requirements will be determined using data starting on July 20, 2009.
If you have any questions regarding these recent Nasdaq developments, please contact Sudhir Shenoy, the principal drafter of this client alert, or you may contact the Womble Carlyle attorney with whom you usually work or one of our Corporate and Securities attorneys at the following link: http://wcsr-dev.siteworx.com/profSearch?team=corporate-and-securities.
1 The SEC release is available at http://www.sec.gov/rules/sro/nasdaq/2009/34-59661.pdf (March 31, 2009). The Nasdaq proposed rule change is available at http://nasdaq.cchwallstreet.com/NASDAQ/pdf/nasdaq-filings/2009/SR-NASDAQ-2009-026.pdf (March 18, 2009). Our earlier client alerts regarding the Nasdaq suspension may be found at http://www.wcsr.com/resources/pdfs/cs102008.pdf and http://www.wcsr.com/resources/pdfs/cs011209.pdf. Our client alert regarding similar actions by the New York Stock Exchange, LLC to temporarily ease continued listing requirements for listed companies may be found at http://www.wcsr.com/resources/pdfs/CA_CS_9March2009.pdf.
For a printer friendly version of this alert, please click here.
Womble Carlyle client alerts are intended to provide general information about significant legal developments and should not be construed as legal advice on any specific facts and circumstances, nor should they be construed as advertisements for legal services.
IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice within this client alert is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in a client alert.
