Nasdaq tolls compliance period for certain continued listing requirements

Nasdaq tolls compliance period for certain continued listing requirements

Cydney Posner on April 20, 2020

The SEC has declared immediately effective a Nasdaq rule proposal providing relief to listed companies that, in light of market conditions resulting from the impact of COVID-19, have fallen out of compliance with two of the Nasdaq continued listing standards. The relief will provide companies with a longer period to regain compliance with the bid price and “market value of publicly held shares” continued listing requirements by tolling the compliance periods through June 30, 2020. Nasdaq believes that this temporary tolling will permit companies to focus on their business operations and the health and safety of their employees, customers and communities, rather than on Nasdaq listing requirements. In addition, Nasdaq believes that temporary tolling will allow investments in these shares without concern for near-term delisting.

Starting on July 1, 2020, when the tolling period is over, companies will still have available the balance of any pending compliance period that remained at the start of the tolling period to come back into compliance with the applicable requirement. Here is the example provided by Nasdaq:

“If a company is 120 days into its first 180-day compliance period for a bid price deficiency when the tolling period starts and the company does not regain compliance before June 30, 2020, the company would have an additional 60 days, starting on July 1, 2020, to regain compliance. The company may be eligible for a second 180-day compliance period if it satisfies the conditions for eligibility at the conclusion of the first compliance period.”

Companies that are initially identified as non-compliant during the tolling period will have 180 days to regain compliance after the end of the tolling period, beginning on July 1, 2020. Nasdaq will continue to monitor securities to determine if they regain compliance with the two requirements during the tolling period.

For companies that are in the hearings process, at the end of the tolling period, they will return to that process at the same stage they were in when the tolling period began. If the company had received a temporary exception from the Hearings Panel before the tolling began, the company would receive the balance of the exception period beginning on July 1, 2020. However, if a company is in the hearings process, has had an oral or written hearing before a Hearings Panel and the Panel has reached a determination to delist, even if the Hearings Panel has not issued the written decision required by Rule 5815(d)(1) and Rule 5840(c) prior to the proposed rule change taking effect, the company would still be delisted and not receive the benefit of the tolling period.