SEC Approves New Nasdaq $5 Million Market Value Floor With Immediate Delisting And No Automatic Stay

On July 22, 2026, the Securities and Exchange Commission (SEC) approved an overhaul of Nasdaq’s continued listing standards, creating a new baseline market value of listed securities (MVLS) requirement that leaves little room for companies that fall below it. New Nasdaq Rules 5450(a)(3) (for Global Select and Global Markets) and 5550(a)(6) (for Capital Market) will require all listed companies to maintain an MVLS (the consolidated closing bid price multiplied by total shares outstanding of the listed class) of at least $5 million. What makes this rule change notable is not the dollar threshold itself, but the consequences of failing to meet it.

No Compliance Plan, No Cure Period

Under Nasdaq’s existing continued listing framework, a company that falls short of a listing standard receives a deficiency notice and a compliance period (often 180 calendar days) during which it can submit a corrective plan and work toward regaining compliance. The new MVLS requirement dispenses with that process entirely. If a company’s MVLS remains below $5 million for 30 consecutive business days, Nasdaq issues an immediate delisting determination. There is no compliance plan, no grace period and no opportunity to cure before the delisting process begins.

Appeal Available, but No Automatic Stay

A company can still appeal a delisting determination to Nasdaq’s Hearings Panel. Historically, a timely hearing request has stayed the suspension while the appeal is pending (which means the company’s securities continue trading on Nasdaq during that window). That protection does not apply here. Nasdaq amended Rule 5815 so an appeal of an MVLS-based delisting determination does not stay the trading suspension. As a practical matter, this means the company’s securities would move to over-the-counter trading while the Hearings Panel proceeding is pending, with the accompanying loss of Nasdaq’s trading venue, visibility and (for many institutional holders) eligibility to continue holding the position under their investment guidelines.

Panel Relief Is Available, but the Bar Is High

The rule is not entirely without a safety valve. Under new Rule 5815(c)(1)(I), the Hearings Panel has discretion to grant an exception of up to 180 days from the date of the delisting determination if the company presents a credible plan to regain compliance. During that 180-day period, the company must demonstrate compliance not merely with the $5 million continued listing MVLS standard, but with all applicable Nasdaq initial listing requirements, which is a materially higher bar. For example, initial listing on the Nasdaq Capital Market requires a market value of unrestricted publicly held shares of at least $15 million, three times the $5 million MVLS threshold needed simply to maintain a listing. A company using its 180-day window will effectively need to relist, not merely stabilize.

Background and Rationale

Nasdaq first filed the proposal in January 2026, and the SEC extended its review multiple times before instituting formal proceedings in the spring. In June 2026, Nasdaq amended the original proposal in response to comment letters, adding the 180-day Hearings Panel exception described above. Nasdaq’s stated rationale is that a sustained MVLS below $5 million is often a leading indicator of broader compliance and governance problems, and that the current 180-day cure period for microcap deficiencies can prolong exposure to manipulative trading and speculative volatility in effectively worthless securities. Commenters pushed back on that premise, arguing that the combination of a rigid threshold and automatic suspension could itself invite manipulative trading aimed at pushing marginal companies below the line, and that some companies with genuinely low, but recovering, market values would be shut out of relief unnecessarily.

What This Means for Issuers

For companies operating with thin market capitalizations, this rule change meaningfully raises the stakes of a sustained bid-price or valuation decline:

1. Boards and management teams of thinly capitalized Nasdaq issuers should monitor MVLS on a rolling basis, well before the 30-business-day trigger is at risk of beginning.
2. Because there is no cure period once the 30-day trigger is hit, companies approaching the threshold should evaluate options (e.g., capital raises, strategic transactions) proactively, rather than waiting for a deficiency notice that, under the prior rules, would have bought additional time.
3. Companies that do receive a delisting determination should be prepared for their securities to move to over-the-counter trading during any appeal and should factor that into disclosure, investor communications and any credit or contractual provisions keyed to a Nasdaq listing.
4. A Hearings Panel appeal now functions less as a bridge back to the $5 million continued listing floor and more as a compressed, 180-day path back to full initial listing standards, which is a much more difficult bar to meet that should shape how a company builds its record and plan for the panel.

We will continue to monitor Nasdaq’s implementation of these rules and provide updates as they develop.

For More Information

If you have any questions about this Alert, please contact Driscoll R. Ugarte, Darrick M. Mix, James T. Seery, Dean M. Colucci, any of the attorneys in our Securities and Capital Markets Group or the attorney in the firm with whom you are regularly in contact.