Under Nasdaq Listing Rule 5550(a)(2), every issuer listed on the Nasdaq Capital Market must maintain a minimum bid price of $1.00 per share.
When a company’s closing bid price remains below $1.00 for 30 consecutive business days, Nasdaq will formally issue a Deficiency Notice, signifying that the issuer no longer meets the continued listing standards.
This notification does not immediately result in delisting, but it initiates a structured compliance process that requires timely remedial action and transparent market communication.
What Exactly Is the “Minimum Bid Price Requirement”?
The Minimum Bid Price Requirement serves as a safeguard for market integrity, ensuring that all Nasdaq-listed securities maintain an adequate level of liquidity, investor interest, and public confidence.
The rule evaluates a company’s closing bid price, rather than intraday trading prices, and compliance is measured strictly based on 30 consecutive business days of closing data.
Once the threshold is breached, Nasdaq notifies the issuer through its electronic filing system. The notice is typically disclosed via an 8-K filing or a press release, in accordance with SEC Regulation FD, to maintain fair disclosure to the market.
The 180-Day Grace Period and Possible Extension
Upon receiving a Deficiency Notice, the issuer is granted a 180-calendar-day compliance period to cure the deficiency.
To regain compliance, the closing bid price of the company’s securities must reach at least $1.00 for a minimum of 10 consecutive trading days. In certain circumstances, which many issuers are often unaware of, Nasdaq may require up to 20 consecutive days to confirm stability.
If the company fails to meet the standard within the initial period, Nasdaq may grant an additional 180-day extension — provided the issuer continues to satisfy all other initial listing criteria under Rule 5550(b), including minimum market value of publicly held shares (MVPHS) and shareholders’ equity thresholds.
The extension is not automatic; the company must formally notify Nasdaq of its intent to regain compliance and, where necessary, propose a concrete corporate action, such as a reverse stock split, to restore its bid price.
How Companies Regain Compliance
In practice, Nasdaq recognizes several legitimate methods for regaining compliance:
- Sustained Market Recovery – If investor sentiment and market conditions naturally lift the share price above $1.00 for the requisite period, no further action is needed.
- Reverse Stock Split – A corporate action that proportionally consolidates outstanding shares (e.g., 1-for-10 split) to increase per-share price while preserving overall market capitalization. This action typically requires board and shareholder approval.
- Enhanced Market Communication – Issuers should maintain proactive investor relations through public disclosures, outlining compliance strategies and mitigating market uncertainty. Transparency and timely updates are critical in preserving institutional confidence.
Consequences of Non-Compliance
Failure to regain compliance within the prescribed timeframe will result in a Staff Delisting Determination issued by Nasdaq’s Listing Qualifications Department.
The company then has the right to appeal the decision before a Nasdaq Hearing Panel, typically within seven calendar days of receiving the notice.
During the appeal, trading of the company’s securities generally continues, pending the outcome of the hearing.
However, failure to present a credible compliance plan or evidence of progress may lead to final delisting from the exchange and transfer to the OTC market, which can materially affect liquidity, valuation, and institutional investment access.
Impact on Reputation, Underwriting, and Future Fundraising
A bid-price deficiency often signals heightened market risk and may raise concerns among underwriters, auditors, and institutional investors.
Persistent non-compliance can also limit access to equity financing, as many institutional mandates prohibit investment in sub-dollar securities.
Moreover, analysts and market makers may suspend coverage or reduce liquidity support, further pressuring valuation.
For companies pursuing follow-on offerings, PIPE transactions, or debt restructurings, maintaining Nasdaq compliance is essential for preserving pricing integrity and investor confidence.
Early Action Matters
Nasdaq’s $1 Minimum Bid Price Rule serves as a barometer of market confidence and corporate governance discipline.
Companies that monitor trading performance closely, disclose proactively, and engage experienced counsel and advisors are often able to address compliance risks before they escalate and preserve long-term shareholder value.
If your company has received a Nasdaq deficiency notice or anticipates potential compliance issues, our team at Hexcellence Consulting is available to provide tailored guidance on disclosure strategy, remediation planning, and communication with regulators.
