Nasdaq Temporarily Eases Minimum Bid Price and Market Value of Public Shares Maintaining Listing Requirements

In response to the current volatility in the stock markets and the decline in the stock prices of many companies, the Nasdaq announced on April 17, 2020 that it has temporarily relaxed some of its continuous listing requirements for common stocks and other securities. In particular, the Nasdaq sets until June 30, 2020 the period for any non-compliant business to comply with (1) the requirement to maintain a minimum closing bid price of $ 1 for at least 30 consecutive business days, and (2 ) the requirement to maintain a market value of government securities for at least 30 consecutive business days of at least $ 1 million (on the Nasdaq Capital Market) or at least $ 5 or $ 15 million (on the Nasdaq Global Market ).

The Nasdaq cited in its announcement a recent increase in the number of companies whose listed securities do not meet the Nasdaq continuous listing requirements based on the $ 1 price. As of April 13, 2020, 154 companies were not in compliance, an additional 262 securities had closing bid prices below $ 1 but for less than 30 days, and 117 more securities had closing bid prices between $ 1 and $ 1. $ 50. By comparison, as of March 1, 2019, only 119 companies did not meet the $ 1 requirement. Likewise, as of April 13, 2020, there were seven securities that did not meet the applicable market value requirement for publicly held shares, and 22 other securities that were below the applicable requirement but for less than 30 days. By comparison, between January 1 and April 13, 2019, only 2 companies did not comply with this requirement.

The Nasdaq relaxes the minimum bid price and market value requirements by setting the period for non-compliant companies to comply with these requirements until June 30, 2020. The Nasdaq generally allows non-compliant companies 180 days to comply again. The effect of the temporary toll is to delay the start of the 180-day compliance period for non-compliant businesses until July 1, 2020. Additionally, the compliance period for any business notified of the non-compliance before July 17, 2020 April 2020 will be suspended and resume on July 1, with the company receiving on that date the remaining balance of any compliance period pending as of April 17.

The New York Stock Exchange also offered to waive its 30-day minimum price of $ 1 and minimum capital and market capitalization requirements of $ 50 million on April 3, 2020, but this proposal was rejected by the DRY. These NYSE rules currently provide for six-month and 18-month cure periods, respectively. The NYSE announced on April 6 that it was still in talks with the SEC regarding the proposal. The NYSE has already temporarily suspended until June 30, 2020 its maintain-listing requirement to maintain an average global market capitalization of at least $ 15 million over a consecutive 30-day trading day period, which has provided relief important since failure to comply with this requirement results in immediate radiation (without a cure period). The NYSE also temporarily changed its shareholder approval requirements to make it easier for companies to raise equity through a private offering without shareholder approval.

The last time the two exchanges temporarily waived their ongoing listing standards related to minimum price and minimum market capitalization was in connection with the 2008-2009 financial crisis.

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