The New York Stock Exchange (NYSE) has recently enacted a temporary rule to adjust its market capitalization requirements for continued listing during the current market difficulties. On January 23, 2009, the NYSE announced it is temporarily lowering the minimum standard under Section 802.01B of the NYSE’s Listed Company Manual of an average market capitalization over a consecutive 30 tradingday period of $25 million to $15 million. The temporary reduction was effective immediately upon filing of the rule change with the Securities and Exchange Commission (SEC) on January 27, 2009 and will apply through April 22, 2009. The NYSE noted that the number of companies listed on the NYSE whose average global market capitalization had fallen over a 30 trading-day window was significantly higher than the historical norm, but it believed in many cases the precipitous stock price declines of these companies was due to unusual market conditions rather than companyspecific problems.
The NASDAQ Stock Market LLC (NASDAQ) has recently lengthened its compliance period for the market capitalization requirement of listed securities for listed companies. On January 13, 2009, the NASDAQ filed an immediately effective rule change with the SEC to extend the compliance period when a listed company falls below the market value of listed securities requirement from 30 days to 90 days. NASDAQ noted that the 30-day compliance period afforded by the existing rules is too short a period, especially during periods of market turmoil. Under the new rule, any company that previously received a delisting notification for failing to meet the market value of listed securities requirements will continue to be subject to delisting for that reason, unless an exception is granted, but the compliance period will be extended so that the company has a total compliance period of 90 days from the original notification. For example, if 25 days have elapsed since the company was notified of its 30-day compliance period under the old rule, the company would now have an additional 65 days before its compliance period expired under the new rule.
In addition, on January 15, 2009, the SEC allowed NASDAQ to extend the temporary suspension of the continued listing requirements related to bid price and market value of publicly held shares, which is a subset of all listed securities of a company. Under the suspended listing requirements, a security is considered deficient if, for a period of 30 consecutive business days, it fails to achieve at least a $1 closing bid price or to have a required minimum market value for publicly held shares. The suspension was originally permitted from October 16, 2008 until January 16, 2008, but has now been extended until April 19, 2009. In its filing with the SEC, NASDAQ stated it believed that “extending the temporary suspension will permit companies to continue focusing on running their businesses, rather than satisfying market-based requirements that are largely beyond their control in the current environment.”