Nasdaq Proposes US$5 Million Market Value Continued Listing Requirement

In the latest of a series of moves to tighten listing standards for small issuers, The Nasdaq Stock Market LLC (“Nasdaq”) proposed on January 13, 2026, to adopt a new continued listing requirement where companies must maintain a market value of at least US$5 million. Under the proposal, securities of companies that do not satisfy the market value minimum would immediately have their trading suspended and be delisted, with no cure period or appeal available except to challenge errors in the initial suspension determination. The proposal reflects Nasdaq’s position that companies with a market value below US$5 million are likely facing challenges too severe to recover from and sustain compliance thereafter. This proposal, alongside other recent regulatory initiatives, creates an increasingly stringent environment for microcap companies seeking to maintain public listings or complete IPOs.

Background and Rationale

As described in its rule proposal, Nasdaq believes that once the market values a company’s securities below US$5 million, that company is no longer appropriate for continued listing and trading on Nasdaq, for two primary reasons:

• The challenges facing such companies, generally, are not temporary and may be so severe that the company is not likely to regain and sustain compliance.
• It is more difficult for market makers to make markets in these securities and for there to be a fair and orderly market.

In general, where Nasdaq rules contain minimum requirements for companies to remain listed, the rules provide compliance periods for companies that fail to maintain compliance for a period of time. These opportunities to cure compliance failures are designed for companies facing temporary business issues, a temporary decrease in the value of their securities, or temporary market conditions. However, Nasdaq has observed that once companies in financial distress or experiencing a prolonged operational downturn have been identified by the market and lost investor interest to the point that their market value drops below US$5 million, challenges are generally not temporary, and they are unable to regain compliance with the listing requirements for the long term.

Proposed Rule Changes

New Continued Listing Requirement

Nasdaq proposes to adopt Listing Rules 5450(a)(3) and 5550(a)(6) to require companies listed on the Nasdaq Global and Capital Markets, respectively, to maintain a minimum Market Value of Listed Securities of at least US$5 million.¹ Nasdaq further proposes to modify Listing Rule 5810(c)(1) to add an additional type of deficiency that results in immediate delisting and suspension from trading of the company's securities. Specifically, Listing Rule 5810(c)(1) would provide that the staff's delisting notice would inform the company that its securities are immediately subject to suspension and delisting when it fails to maintain a Market Value of Listed Securities of at least US$5 million for a period of 30 consecutive business days.

This proposal is similar to that made by NYSE American LLC in November 2024,² except that failure to meet Nasdaq's new requirement is triggered after 30 consecutive business days, whereas NYSE American LLC’s proposal uses a 30 trading-day average.

No Cure or Compliance Period

Listing Rule 5810(c)(3) currently identifies deficiencies for which the rules provide a specified cure or compliance period. Nasdaq proposes to modify Listing Rule 5810(c)(3) to exclude companies failing to meet the Market Value of Listed Securities requirement of at least US$5 million from any cure or compliance period.

No Stay of Suspension During Appeal

Nasdaq proposes to modify Listing Rule 5810(c)(1) to provide that staff's delisting notice in these circumstances will inform the company that its securities are immediately subject to suspension from trading on Nasdaq. Once the company is issued a Staff Delisting Determination under Rule 5810 with respect to that security, the decision can be appealed to a Nasdaq Listing Qualifications Hearings Panel (a “Hearings Panel”). However, Nasdaq believes that it is not appropriate for such a company to continue trading on Nasdaq during the pendency of the Hearings Panel review process, given what it calls “the difficulties with maintaining fair and orderly markets in such low value companies.”

As such, Nasdaq proposes to adopt Listing Rule 5815(a)(1)(B)(ii)f. to provide that, notwithstanding the general rule that a timely request for a hearing ordinarily stays the suspension and delisting action pending a written panel decision, a request for a hearing in these circumstances does not stay the suspension of the securities from trading. A company that is suspended under the proposed rule could appeal the Staff Delisting Determination to a Hearings Panel, but its securities would generally trade in the over-the-counter market while that appeal is pending.

Limited Hearings Panel Discretion

Listing Rule 5815(c) sets forth the scope of the Hearings Panel's discretion and provides that when the Hearings Panel review is of a deficiency related to continued listing standards, in most cases the Hearings Panel may, where it deems appropriate, grant an exception to the continued listing standards for a period not to exceed 180 days, and find that the company has regained compliance with all applicable listing standards.

Nasdaq proposes to amend Listing Rule 5815(c)(1)(H) to provide that in the case of a company that received a Staff Delisting Determination notice due to a failure to maintain Market Value of Listed Securities of at least US$5 million, the Hearings Panel may only reverse a delisting decision where it determines that the Staff Delisting Determination letter was in error and the company never failed to satisfy the applicable requirement. By contrast, the Hearings Panel may not consider facts indicating that the company had regained compliance, nor may the Hearings Panel grant an exception allowing the company additional time to regain compliance.

Effective Date

The specific effective date of the rule proposal will depend on when and if the SEC gives its approval for the proposal. Barring a decision by the SEC to extend its review period, the SEC must within 45 days of the date of publication of the notice of the rule proposal in the Federal Register either approve or disapprove the proposed rule or institute proceedings to determine whether the proposed rule should be disapproved.

Conclusion

This proposed rule change represents a significant enhancement to Nasdaq's continued listing requirements, designed to protect investors by promptly removing companies with sustained very low market values. Unlike other listing deficiencies that provide compliance periods and broad appeal rights, this new requirement will result in immediate suspension and delisting after 30 consecutive business days of non-compliance, with no cure period, no stay during appeal and limited appeal grounds.

The rule proposal follows other recent moves by Nasdaq to enhance its listing standards, including a December 2025 rule granting Nasdaq discretion to deny initial listing to companies if, in Nasdaq’s judgment, the company’s securities could be susceptible to manipulative trading activity, and proposals made in September 2025 adding other initial and continued listing standards based on market value of listed securities.³