NASDAQ Notification Regarding Minimum Bid Price Deficiency

Now days the markets are RED , I found that many small companies have published the following PR:

" Company [Name] Receives Nasdaq Notification Regarding Minimum Bid Price Deficiency". In other words, Company is not in compliance with the minimum bid price requirement set forth in Nasdaq Rules for continued listing on Nasdaq.

So, what is the Minimum Bid Price deficiency?

Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of US$1.00 per share.

The essence behind that is: A stock that has experienced a steep price decline and is trading below $1 is very risky because a relatively small price movement could result in a huge percentage swing (just think—with a $1 stock, a difference of $0.10 means a change of 10%).

Deficiencies for which the Rules Provide a Specified Cure or Compliance Period: Bid Price

A failure to meet the continued listing requirement for minimum bid price shall be determined to exist only if the deficiency continues for a period of 30 consecutive business days. Upon such failure, the Company shall be notified promptly and shall have a period of 180 calendar days from such notification to achieve compliance. Compliance can be achieved during any compliance period by meeting the applicable standard for a minimum of 10 consecutive business days during the applicable compliance period.

How Delisting Works

The criteria for delisting depend on the exchange and which listing requirement needs to be met. For example, on the Nasdaq, the delisting process is set in motion when a company trades for 30 consecutive business days below the minimum closing bid price requirement or less than the required market value.

At this point, Nasdaq's Listing Qualifications Department will send a deficiency notice to the company, informing it that it has 90 calendar days to get up to standard in the case of the market value listing requirement or 180 calendar days if the issue is regarding the minimum bid price listing requirement.

Trading After Delisting

When a stock is officially delisted in the United States, there are two main places it can trade: the over-the-counter bulletin board (OTCBB) and the pink sheets.

See the full detailed Rule on: 5800. FAILURE TO MEET LISTING STANDARDS