1. NASDAQ announced two proposed rule amendments that may accelerate the delisting process of low stock price stocks; 2. NASDAQ stated in the document that it has observed some companies engaging in joint ventures multiple times, "This behavior usually indicates that these companies have deep financial problems or operational difficulties. For the protection of investors, these companies are not suitable for trading on NASDAQ."
According to a document published on the official website on Thursday (August 8th), NASDAQ Exchange has proposed to amend its rules regarding low stock prices and will implement faster and stricter delisting procedures for non-compliant companies.
Under the rules, NASDAQ requires stocks listed on its exchange to maintain a closing price of more than 1 dollar. When a stock's closing price is below 1 dollar for 30 consecutive trading days, NASDAQ will classify the stock as a "penny stock" and it will not meet the listing standard.
In the HK stock market, if a stock price is lower than 1 HKD, it is called a "cent stock," with 'cent' referring to "cents." In the US stock market, a low stock price stock with a price below 1 dollar is called a "penny stock."
Under the current rules, NASDAQ will have up to 180 trading days to remedy the situation and regain compliance. If the stock still fails to rise above 1 dollar within these 180 days, the company has the right to apply for a second 180-day grace period.
This means that low stock price stocks can avoid being delisted for at least over a year. At the end of the second 180-day grace period, if the stock price is still below 1 dollar, the company may appeal to the NASDAQ hearing panel, which will suspend the delisting process until the hearing is held.
In response, NASDAQ announced two proposed rule amendments that may accelerate the delisting process of low stock price stocks:
1. If a company's stock price is below 1 dollar for 360 consecutive trading days, even if it is still in the stage of appealing to the hearing committee, the stock will still be suspended from trading on NASDAQ and will enter the OTC market. This means that the 360-day grace period will become a rigid constraint.
2. If a company raises its stock price through joint ventures (mergers and acquisitions), but the stock price still falls below 1 dollar within a year, NASDAQ will immediately issue a delisting notice to such companies. The company can still appeal and continue to be listed for 180 days.
NASDAQ stated in the document that it has observed some companies engaging in joint ventures multiple times, "NASDAQ believes that this behavior usually indicates that these companies have deep financial problems or operational difficulties. For the protection of investors, these companies are not suitable for trading on NASDAQ."
The approval of the US Securities and Exchange Commission (SEC) is required for these two rule amendments to take effect.
Editor/Lambor