Late yesterday, the NASDAQ Stock Market LLC (“Nasdaq” or “the Exchange”) filed a proposed rule change with the Securities and Exchange Commission (“SEC”) to suspend the continued listing requirements related to bid price and market value of publicly-held shares through January 16, 2009. This is the first time Nasdaq has proposed such a change since September 2001.
The proposed rule change cited a dramatic decline in investor confidence as a result of the recent financial crisis. The number of listed companies on Nasdaq presently trading below the minimum bid price of $1.00 per share has increased by over 500% since September of last year.
Nasdaq claimed that the change will enable struggling companies to focus on their operations rather than on meeting listing requirements in an environment that is largely beyond their control. The Exchange further stated that because the change is temporary, it will have little effect on investor protection.
Any deficiencies in bid price or market value will be tolled until January 16, 2009. Nasdaq has requested the SEC to waive the 30-day operative delay period in order to immediately implement these changes, which we expect will be granted and the effectiveness of the rule change will be retroactive to October 16, 2008.
Alston & Bird has issued an Advisory describing this temporary suspension and its requirements.