There has, I gather, been some discussions/speculation about the circumstances under which a publicly traded company can be delisted from a stock exchange. I don’t claim to be an expert in this. It’s different for each exchange and I guess not set in stone. But as there seems to be some interest, I thought I’d lay out what I found out about the process for the NASDAQ market.

Direct from the NASDAQ web site, here are the requirements to continue being listed.

1. For continued listing under Standard 2, a company must satisfy one of the following: the market value of listed securities requirement or the total assets and the total revenue requirement. Under Marketplace Rule 4200(a)(20), listed securities is defined as “securities listed on NASDAQ or another national securities exchange”.
2. Publicly held shares is defined as total shares outstanding, less any shares held by officers, directors or beneficial owners of 10% or more.
3. Total shareholders include both holders of beneficial interest and holders of record.
4. An electronic communications network (ECN) is not considered a market maker for the purpose of these rules.
5. Marketplace Rules 4350, 4351 and 4360

There, isn’t that simple? And I have no idea what Marketplace Rules 4350, 4351 and 4360 in footnote 5 are and am unlikely to go find out. Basically, like it says, a listed company has to meet all the criteria for one of the two standards shown. If you’re really curious you can go HERE and read about it to your heart’s content.

Most of the stuff on the list is pretty self explanatory and I imagine what everybody is focused on right now is the bid price of $1.00. What happens if that isn’t maintained?

If a company, for example, doesn’t meet the minimum bid price for 30 consecutive business days, NASDAQ sends it a deficiency notice stating that it has 90 calendar days to correct the deficiency. The deficiency is cured if the company meets the standard for ten consecutive business days during the 90 day period after they receive the deficiency notice. The exchange can and has shown occasional flexibility in applying these standards. But generally, they are pretty strict as the standards are not considered very rigorous.

But never mind all this. It doesn’t matter right now if you’re a NASDAQ listed company. Effective October 16, 2008, due to “current extraordinary market conditions, NASDAQ has determined to suspend the bid price and market value of publicly held shares requirements through Friday, January 16, 2009.” Here’s the link to the announcement: www.nasdaq.com/about/IA_2008-005.pdf.

So whatever might or might not happen in our little corner of the world, NASDAQ companies don’t have to worry about it until next year.

Jeff Harbaugh is a consultant for the action sports industry and works with companies to identify and focus on critical business issues and opportunities fundamental to the bottom line. For more information, visit www.jeffharbaugh.com.

Tags: delisting a stock, jeff harbaugh, Market Watch

This entry was posted on Thursday, November 20th, 2008 at 9:53 am and is filed under Data & Statistics, FEATURES, Market Watch. You can leave a response, or trackback from your own site.