Client Alert

Last week, the SEC approved a rule change proposed by The NASDAQ Stock Market LLC (“Nasdaq”) to extend, through April 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 ("MVPHS").¹ The suspension was put in place in October 2008 and was originally set to expire January 16, 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 MVPHS requirements, companies are subject to delisting for failing to maintain a MVPHS ranging from $1 million to $15 million, depending on their particular Nasdaq market, for 30 consecutive business days.

In support of the extension, Nasdaq said that market conditions have not improved since the temporary suspension was first granted last fall, as 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. The suspension is intended to permit companies to focus on running their businesses, rather than meeting market-based conditions that may be beyond their control, and allow investors to buy lower-priced securities without fear of near-term delisting.

During the suspension period, companies will not be cited for new minimum bid price or MVPHS 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 MVPHS requirements will be determined using data starting on April 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.

Note
¹ The SEC release is available at http://www.sec.gov/rules/sro/nasdaq/2009/34-59219.pdf (January 8, 2009). The Nasdaq proposed rule change is available at http://www.nasdaq.com/about/SR-NASDAQ-2008-099.pdf (December 18, 2008). Our earlier client alert describing the temporary suspension of the minimum bid price and MVPHS requirements through January 16, 2009 may be found at http://www.wcsr.com/resources/pdfs/cs102008.pdf.