Nasdaq Proposes Stricter Delisting Rules for Penny Stocks

August 09, 2024 10:25 AM PDT | By Team Kalkine Media

Google News:

Nasdaq Proposes Stricter Delisting Rules for Penny Stocks — Image source: shutterstock

Recent News

Kalkine Broadcom Moves Despite Meeting Estimates in S&P 500 Index Fund

Kalkin Mining Stocks Sector Focused on Rare Earth Elements

Kalkine MAG Silver Shines in Metal & Mining Sector with High-Grade Pro...

Kalkine REV Group Shines Among Best Dividend Stocks with Strong Sector...

Headlines

Nasdaq Inc has proposed rule changes to enforce a stricter and quicker delisting process for penny stocks.

Companies failing to meet the minimum price requirement of $1 per share for 360 days will face immediate suspension and delisting without an option to appeal.

The new rules aim to curb repeated reverse stock splits by financially distressed companies, ensuring better protection.

More Stringent Delisting Process for Nasdaq’s Penny Stocks

Nasdaq Inc (NASDAQ:NDAQ) has introduced proposed amendments to its rules concerning penny stocks, aiming to establish a more stringent and expedited delisting process for non-compliant companies. According to a filing posted on the exchange operator's website on Thursday, the proposed changes could significantly transform the current procedures for companies failing to meet the minimum price requirement.

At present, Nasdaq requires that listed companies maintain a closing price above $1 per share. Companies that fall below this threshold for 30 consecutive trading days are deemed non-compliant and are given 180 days to regain compliance. If the stock price does not recover within this period, companies can request an additional 180-day compliance window. However, under the proposed amendments, Nasdaq would suspend companies from trading if their share price remains below $1 after 360 trading days, removing the option to appeal. The exchange also plans to immediately issue a delisting determination to any company that has undergone a reverse stock split within the previous year and still fails to maintain the $1 minimum.

The filing notes that some companies, particularly financial stocks in distress, engage in repeated reverse stock splits to temporarily boost their stock price. Nasdaq believes that such behavior is often indicative of deep financial or operational distress within such companies, rendering them inappropriate for trading on Nasdaq for protection reasons, the filing states.

The proposed rule changes are now subject to approval by the US Securities and Exchange Commission (SEC).

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media LLC (Kalkine Media, we or us) and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures/music displayed/used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it, as necessary.