Introduction
On December 5, 2025, the Securities and Exchange Commission (SEC) approved Nasdaq’s proposal to amend its minimum bid price requirements for listed companies.[1] The amended rule establishes an expedited delisting process for securities whose closing bid price falls to $0.10 or below for ten consecutive trading days. This “Modified Low-Price Requirement” became effective on January 19, 2026, and represents a significant departure from Nasdaq’s traditional compliance framework by eliminating the standard grace periods typically afforded to companies facing bid price deficiencies.
Background
- Existing Minimum Bid Price Standards
Under Nasdaq’s continuing listing standards,[2] companies must maintain a minimum closing bid price of $1.00 per share. A deficiency arises when a security’s closing bid price remains below $1.00 for 30 consecutive trading days. Traditionally, upon receiving a deficiency notice, companies are granted a compliance period—typically 180 calendar days—to regain compliance by achieving a closing bid price of $1.00 or more for at least ten consecutive business days. Companies may also be eligible for an additional 180-day extension under certain circumstances.
Previously, under Nasdaq Rule 5810(c)(3)(A)(iii), if a company was already in a compliance period for the $1.00 bid price deficiency and its closing bid price fell to $0.10 or below for ten consecutive business days, Nasdaq would issue an immediate delisting determination under Nasdaq Rule 5810, thereby truncating any remaining compliance period. However, the company could still request a hearings panel review, and such a request would ordinarily stay the trading suspension pending the panel's written decision.
- Nasdaq’s Rationale and SEC Findings
Nasdaq has observed that securities trading at $0.10 or below typically reflect deep financial or operational distress. These circumstances are rarely temporary, and the underlying issues often signal broader compliance concerns beyond mere stock price volatility. Therefore, Nasdaq aims to enhance investor protection and maintain the integrity of its marketplace by accelerating the delisting process for such securities.
The SEC concurred with Nasdaq’s assessment, noting that exchange-listed securities trading at such depressed levels may have characteristics similar to penny stocks yet remain exempt from the penny stock rules, which provide enhanced investor protections against fraud and market manipulation. The SEC found that accelerating the delisting process for such securities is appropriate for investor protection and consistent with maintaining fair and orderly markets.
Summary of the Modified Low-Price Requirement
Under the Modified Low-Price Requirement, if a company’s security trades at or below $0.10 for ten consecutive trading days, Nasdaq will immediately issue a delisting determination under Listing Rule 5810. The security will be suspended from trading immediately, and the company becomes ineligible for any compliance period that would otherwise be available under Rule 5810(c)(3)(A). This applies regardless of whether the company is already operating within a compliance period for the standard $1.00 minimum bid price requirement.
Unlike typical delisting determinations, a company’s request for a hearings panel review will not automatically stay the trading suspension. This marks a departure from standard procedures and underscores the severity with which Nasdaq treats securities trading at such depressed levels.
While the trading of the company’s low-priced security remains suspended during the pendency of the hearings panel review process, pursuant to Rule 5815(c)(1)(A), the hearings panel will continue to have discretion, where it deems appropriate, to grant an exception for up to 180 days from the date of the staff delisting determination for the company to regain compliance with the Modified Low-Price Requirement. In addition, the company will continue to be able to appeal a hearings panel decision to the Nasdaq Listing Council. A company may regain compliance by maintaining a closing bid price of at least $1.00 for ten consecutive business days. Nasdaq retains discretion under Rule 5810(c)(3)(H) to extend the ten-day compliance period if warranted by the circumstances.
Implications for Listed Companies
The Modified Low-Price Requirement reflects Nasdaq’s commitment to protecting investors from securities exhibiting signs of severe distress. The rule change fundamentally alters the compliance landscape for companies experiencing stock price deterioration by eliminating traditional grace periods when securities trade at or below $0.10 for ten consecutive business days.
Nasdaq-listed companies should consider implementing enhanced monitoring systems to track closing bid prices daily, with escalation protocols when prices fall below $1.00. Companies should develop contingency plans well in advance, including maintaining current authorizations for reverse stock splits or other remedial measures to enable swift execution without delay. Early engagement with securities counsel and financial advisors is essential when bid prices begin declining toward critical levels, as the compressed timelines leaves little room for reactive responses.
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