On July 22, 2026, the SEC approved Nasdaq’s proposed rule adopting a hard $5 million Market Value of Listed Securities continued listing requirement across all Nasdaq tiers. Filed under Release No. 34-105971 (File No. SR-NASDAQ-2026-004), the new rule became effective immediately upon approval without any transition or grace period.
This final action formalizes the proposal that was initially submitted earlier this year, which I analyzed when first introduced HERE. The approval is a hard blow for small cap listed companies struggling with lower market values over the past year. For boards, executive teams, and deal participants, understanding the procedural mechanics of this rule is essential to maintaining listing eligibility and protecting market access.
In light of the significance of the rule, it is not surprising that the SEC received a notice of a petition to review the action. In accordance with SEC’s Rules of Practice, the new rule has been stayed until the SEC orders otherwise. Although the rule is stayed, I’ve included a summary of the rule as enacted below.
The $5 Million Market Value Threshold
Under newly adopted Listing Rules 5450(a)(3) for the Nasdaq Global Select and Global Markets, and 5550(a)(6) for the Nasdaq Capital Market, every listed company must maintain a minimum Market Value of Listed Securities of at least $5 million.
Market Value of Listed Securities is calculated by multiplying total outstanding shares of listed stock by the consolidated closing bid price. While Nasdaq already maintains standard market value requirements for issuers relying on specific financial standards, this new rule establishes a universal floor. It applies to all listed equities regardless of whether the company qualifies under the net income, equity, or total asset standard.
Notice Mechanics and Delivery of Delisting Determinations
Public companies must understand that Nasdaq does not send informal warnings or advance courtesy notices during the deficit period. The staff monitors market capitalization automatically through daily market data.
When a company remains below the $5 million market value threshold for 30 consecutive business days, Nasdaq Listing Qualifications staff generates a formal written Staff Delisting Determination letter under Listing Rule 5810(c)(1). The staff sends this letter directly to the Chief Executive Officer, Chief Financial Officer, and designated legal counsel via electronic mail and formal written delivery on the business day immediately following the 30th consecutive deficient day.
The determination letter notifies the issuer that its securities face immediate trading suspension and delisting. Amended Listing Rule 5810(c)(3)(C) expressly excludes market value deficiencies from cure period eligibility. Consequently, staff will not grant an automatic 180-day compliance window or request a business plan to cure the shortfall.
Immediate Suspension and Delisting and Appeal Procedures
Perhaps the most significant aspect of the rule is not the $5 million threshold itself, but the enforcement mechanics.
Under standard exchange rules, requesting a hearing before the Nasdaq Listing Qualifications Hearings Panel automatically stays a delisting determination. However, under amended Listing Rule 5815(a)(1)(B), an appeal of a $5 million market value determination does not stay the trading suspension. For my three part blog on Nasdaq listing deficiencies and delisting processes see HERE; HERE; HERE; and HERE.
Unless the Hearings Panel grants a rare discretionary stay, Nasdaq will suspend trading in the company’s stock two business days after issuing the delisting determination letter.
A company may still appeal the determination to the Hearings Panel within seven calendar days of receiving notice. Under newly adopted Listing Rule 5815(c)(1)(I), the Panel possesses authority to grant relief under only two specific circumstances:
First, the Panel may reverse the determination if the issuer proves staff committed a factual error in calculating market value and that the security never actually remained below $5 million for 30 consecutive business days.
Second, the Panel may grant an exception of up to 180 days from the initial delisting determination date. To receive this exception, the company must demonstrate full compliance with all quantitative initial listing requirements, including higher initial bid price and equity metrics. This standard operates as a full re-entry requirement rather than a standard cure. Furthermore, the company’s shares remain suspended from trading on Nasdaq throughout the entire exception period until full initial listing compliance is proven.
Mandatory Public Disclosures and SEC Filings
Receiving a Staff Delisting Determination triggers immediate public disclosure duties under federal securities regulations.
Item 3.01 Form 8-K Disclosure: Pursuant to Item 3.01(a) of Form 8-K, the company must file a current report with the SEC within four business days of receiving the determination letter. The report must state the date of receipt, the specific listing rule involved, and the company’s intended course of action regarding an appeal.
Form 25 Filing: If the Hearings Panel upholds the delisting or if the company waives its appeal rights, Nasdaq will file a Form 25 with the SEC pursuant to Exchange Act Rule 12d2-2. The filing officially removes the security from listing and registration under Section 12(b) of the Exchange Act ten calendar days after submission.
Subsequent Form 8-K: Upon actual trading suspension or the filing of Form 25, the company must file a follow-up Item 3.01(b) Form 8-K confirming the suspension of trading on Nasdaq.
Transition to Trading on OTC Markets
A trading suspension on Nasdaq does not cancel the public status of the security or terminate Exchange Act reporting obligations. Instead, trading transitions immediately to the over-the-counter market operated by OTC Markets Group.
When Nasdaq suspends trading, market makers generally move quotations to OTC Markets tiers, including OTCQX, OTCQB, or the Pink Open Market. Because the company remains current in its SEC reporting obligations under Section 13(a) or 15(d) of the Exchange Act, broker-dealers can rely on existing financial filings to maintain compliance with Exchange Act Rule 15c2-11.
However, trading on the over-the-counter market presents operational hurdles for public companies:
Institutional Mandate Restrictions: Many institutional funds and retail brokerages maintain internal policies restricting investment in non-exchange-listed or penny stock securities, leading to immediate selling pressure.
DTC Eligibility and Clearing: Companies moving to OTC Markets must ensure their transfer agents maintain active depository services with the Depository Trust Company to facilitate electronic clearance and settlement.
Reduced Capital Formation Efficiency: Equity financings on OTC Markets typically require greater pricing discounts due to lower daily trading volumes and reduced market liquidity.
Strategic Guidance
For micro-cap public companies, avoiding a market value deficiency requires advance preparation long before stock prices compress. Boards and executive management should incorporate the following practical steps into their governance routines:
Continuous Capitalization Tracking: Public companies trading near micro-cap valuations should track their daily market value of listed securities alongside standard bid price metrics. Monitoring share counts and closing prices daily allows management to identify risks weeks before a 30-day trigger occurs.
Capital Structure Management: If market capitalization approaches critical thresholds, companies should evaluate proactive capital adjustments early. Options such as equity financings, strategic business combinations, or restrring debt can restore market value, provided they are planned cleanly and executed in full compliance with exchange shareholder approval rules under Nasdaq Rule 5635.
Early Engagement with Legal Counsel: Transactions designed to raise market capitalization often involve complex securities rules. Consulting experienced legal counsel before a deficiency notice arrives ensures that any remedial transaction can be structured, approved, and completed within required statutory timeframes.
The Author
Laura Anthony, Esq.
Founding Partner
Anthony, Linder & Cacomanolis
A Corporate and Securities Law Firm
Securities attorney Laura Anthony and her experienced legal team provide ongoing corporate counsel to small and mid-size private companies, public companies as well as private companies going public on the Nasdaq, NYSE American or over-the-counter market, such as the OTCQB and OTCQX. For more than two decades Anthony, Linder & Cacomanolis, PLLC has served clients providing fast, personalized, cutting-edge legal service. The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker-dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions, securities token offerings and initial coin offerings, Regulation A/A+ offerings, as well as registration statements on Forms S-1, S-3, S-8 and merger registrations on Form S-4; compliance with the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers; applications to and compliance with the corporate governance requirements of securities exchanges including Nasdaq and NYSE American; general corporate; and general contract and business transactions. Ms. Anthony and her firm represent both target and acquiring companies in merger and acquisition transactions, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. The ALC legal team assists Pubcos in complying with the requirements of federal and state securities laws and SROs such as FINRA for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the small-cap and middle market’s top source for industry news, and the producer and host of LawCast.com, Corporate Finance in Focus. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.
Ms. Anthony is a member of various professional organizations including the Crowdfunding Professional Association (CfPA), Palm Beach County Bar Association, the Florida Bar Association, the American Bar Association and the ABA committees on Federal Securities Regulations and Private Equity and Venture Capital. She is a supporter of several community charities including the American Red Cross for Palm Beach and Martin Counties, Susan Komen Foundation, Opportunity, Inc., New Hope Charities, the Society of the Four Arts, the Norton Museum of Art, Palm Beach County Zoo Society, the Kravis Center for the Performing Arts and several others.
Ms. Anthony is an honors graduate from Florida State University College of Law and has been practicing law since 1993.
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manolis, PLLC makes this general information available for educational purposes only. The information is general in nature and does not constitute legal advice. Furthermore, the use of this information, and the sending or receipt of this information, does not create or constitute an attorney-client relationship between us. Therefore, your communication with us via this information in any form will not be considered as privileged or confidential.
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