The NYSE extended the cure periods available to listed companies who have fallen out of compliance with ongoing listing requirements based on their share prices. Beginning April 21, 2020, the extension will give more time to a number of companies whose stock price and market capitalization have suffered since the beginning of the COVID-19 crisis. According to the NYSE rule filing (available here), there were 10 times as many listed companies with a share price below $1.00 on April 21, 2020 as there were on the last trading day of 2019. This NYSE relief mirrors similar steps taken by Nasdaq on April 16 (see our prior post here).
NYSE-listed companies now have additional time to cure a deficiency if their stock has closed under $1.00 for 30 consecutive trading days. Now, days between April 21, 2020 and June 30, 2020 will not be counted toward the normal 6-month compliance period. Compliance periods will recommence on July 1, 2020 from the point at which they were suspended on April 21.
Listed companies will also have additional time if their average global market capitalization has fallen under $50 million for 30 consecutive trading days at a time when their stockholders’ equity is also under $50 million. These companies would normally have a maximum 18 months to cure the deficiency. These compliance periods are similarly suspended until July 1, 2020.
The NYSE will continue to identify and notify listed companies that fall below these standards. Those companies will still need to issue a press release and file a Form 8-K with the SEC.
The NYSE previously also suspended through June 30, 2020 its rule that would immediately begin delisting procedures against companies with an average global market capitalization of under $15 million over a 30-trading day period. That suspension remains in place.
On the same day that NYSE adopted its changes, Nasdaq adopted additional rules that remind us that there are limits to the relief it will provide. First proposed in January, prior to the COVID‑19 crisis, the most recent Nasdaq change will shorten compliance periods for particularly distressed companies. Nasdaq-listed companies with a closing bid price of $0.10 or less over a period of ten consecutive trading days will now immediately receive a staff delisting notice. Likewise, companies that fall out of compliance with the $1.00 minimum bid price standard after implementing one or more large reverse stock splits in the prior two years, representing a cumulative ratio of 250:1 or more, will also receive a staff delisting notice. In either case, a company can still appeal to a hearings panel which can grant 180 additional days in its discretion, but the company will not have the benefit of one or more automatic compliance periods. Nasdaq views these companies as likely to have underlying conditions so severe they are unlikely to regain compliance, so that a faster delisting process without the usual compliance periods would better protect investors.
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