Client Alert: SEC Approves Nasdaq’s New $5 Million MVLS Requirement, Triggering Immediate Delisting Risk

Key Takeaways

• Nasdaq-listed companies must maintain at least $5 million in MVLS.
• Falling below the threshold for 30 consecutive business days can trigger immediate suspension and delisting.
• Unlike most continued listing deficiencies, no standard cure period is available.
• Appeals generally will not stay suspension.
• Companies may need to satisfy initial listing standards to regain compliance.

On July 22, 2026, the Securities and Exchange Commission approved Nasdaq’s proposed rule change (SR-NASDAQ-2026-004, as modified by Amendment No. 1), adopting a new continued listing requirement that companies listed on the Nasdaq Global Select, Global, and Capital Markets maintain a Market Value of Listed Securities (MVLS) of at least $5 million (Securities Exchange Act Release No. 34-105971). The approval order contains no delayed or phased effective date, and no transition period was granted despite requests from commenters, including a request that effectiveness be delayed by at least 12 months.

In practical terms, the new rule creates a bright-line minimum market capitalization threshold below which Nasdaq-listed companies face a substantially accelerated path to delisting. Unlike many existing Nasdaq continued listing standards, companies falling below the threshold will not be afforded a standard cure period before suspension.

The rule represents a significant departure from Nasdaq’s traditional compliance framework and materially increases delisting risk for small-cap and micro-cap issuers.

What the Rule Does

New Nasdaq Rules 5450(a)(3) and 5550(a)(6) require listed companies to maintain an MVLS of at least $5 million. MVLS generally reflects the aggregate market value of a company’s listed securities and is calculated by multiplying the consolidated closing bid price by the number of listed securities outstanding. The operative consequences are set out in amendments to Rules 5810 and 5815:

Immediate suspension and delisting, with no cure period. A company whose MVLS remains below $5 million for 30 consecutive business days will receive a Staff Delisting Determination and its securities will be immediately subject to suspension and delisting. Unlike the bid price requirement and most other quantitative continued listing standards, there is no 180-day compliance period. Amended Rule 5810(c)(3)(C) expressly excludes MVLS deficiencies from cure period eligibility.

No stay of suspension pending appeal. A company may appeal a Staff Delisting Determination to a Nasdaq Hearings Panel, but under amended Rule 5815(a)(1)(B), a timely hearing request will not stay the trading suspension. The company’s securities will generally trade in the over-the-counter market while the appeal is pending. This reverses the ordinary rule, under which a timely hearing request stays suspension until the Panel issues a written decision.

A narrow path back through the Hearings Panel. New Rule 5815(c)(1)(I), added by Amendment No. 1 in response to comment pressure, permits the Hearings Panel either to reverse a delisting decision where the Staff determination was made in error or to grant an exception of up to 180 days from the Staff Delisting Determination. Critically, the exception requires the company to demonstrate compliance with all initial listing requirements, which are materially higher than continued listing standards (for example, a $4 initial minimum bid price versus $1 for continued listing). This is a re-entry standard, not a cure period. Whether to grant the exception is entirely within the Panel’s discretion, and the company’s securities remain suspended from Nasdaq trading during the exception period unless and until compliance is demonstrated.

What the Commission Found

The Commission approved the rule over substantial opposition from issuers, law firms and advocacy organizations, concluding that securities with sustained MVLS below $5 million present heightened susceptibility to manipulative trading and difficulties maintaining fair and orderly markets. The Commission’s own economic analysis found that 65% of issuers that would have failed the requirement historically still had an MVLS below $5 million after 180 days. The Commission acknowledged evidence submitted by commenters, including an empirical study by Professor Craig M. Lewis submitted by the Small Public Company Coalition, showing that a substantial share of companies falling below the threshold later recover, but concluded that the risks identified by Nasdaq justified immediate suspension notwithstanding that some recovering companies will be delisted.

The Commission ultimately prioritized market integrity concerns over issuer arguments that many companies can and do recover after temporary declines in market value.

Open Implementation Questions

As of the date of this alert, Nasdaq has not yet published implementation guidance addressing how the 30-consecutive-business-day measurement period will be applied to companies already trading below the $5 million threshold on the approval date, and Nasdaq’s Listing Center rule filing page has not yet been updated to reflect the approval. Issuers near the threshold should not assume any grace period exists and should monitor for a Nasdaq regulatory alert or Listing Center guidance, which we will summarize when issued.

Practical Considerations for Issuers

Companies with an MVLS near or below $5 million, or that could approach that level in a sustained downturn, should treat this rule as an immediate compliance priority rather than a future contingency. Considerations include:

• Monitoring MVLS daily rather than relying on periodic reviews, since the 30-day clock runs on consecutive business days and a deficiency notice will arrive with no cure period attached;
• Evaluating capital structure alternatives well before any deficiency arises, because financing transactions become substantially harder to execute once securities are suspended and trading over the counter;
• Assessing realistically whether the company could satisfy full initial listing standards if forced into a Hearings Panel exception process, since that, and not mere recovery above $5 million, is the standard for reinstatement; and
• Reviewing disclosure obligations, as proximity to the threshold may warrant risk factor updates in upcoming periodic reports and registration statements.

Boards and management teams should also understand the interaction between this rule and existing standards. The new $5 million MVLS floor operates independently of, and in addition to, the existing tier-specific MVLS standards (such as the $35 million MVLS standard applicable to certain Capital Market companies under Rule 5550(b)(2)), the minimum bid price requirement, and Nasdaq’s recently expanded discretionary delisting authority.

For smaller public companies, the practical impact of the rule may be greater than the nominal $5 million threshold suggests. Because the rule eliminates the traditional cure period and significantly limits a company’s ability to remain listed during an appeal, boards and management teams should evaluate compliance risks before a deficiency develops. Early planning may be critical to preserving Nasdaq listing status.

How Glaser Weil Can Help

Glaser Weil’s Capital Markets practice regularly advises Nasdaq-listed companies on continued listing compliance, deficiency responses, Hearings Panel proceedings and the capital markets transactions, including PIPEs, registered direct offerings and other financings, that issuers frequently use to address listing challenges. Companies with questions about their exposure under the new rule or planning considerations should contact the authors or their regular Glaser Weil attorney.

This alert is provided for general informational purposes only and does not constitute legal advice. Receipt of this alert does not create an attorney-client relationship.