Nasdaq Deficiency Notices: Bid Price, Equity and Late Filing Rules

The short version

Nasdaq-listed companies must keep meeting continued listing standards: a minimum bid price, a minimum level of equity or market value, enough publicly held shares and holders, and timely SEC filings. When a company falls short, Nasdaq's Listing Qualifications staff sends a letter called a deficiency notice. The company must disclose it, usually on an 8-K under Item 3.01 within four business days.

A deficiency notice is not a delisting. Most deficiencies come with a compliance period or a chance to submit a plan. Delisting happens only if the company fails to cure within the time allowed and loses any appeal, at which point Nasdaq files a Form 25 with the SEC.

The main deficiency types

A Capital Market company needs to satisfy only one of the three equity-type standards: $2.5 million of stockholders' equity, $35 million of market value of listed securities, or $500,000 of net income. Global Market companies have parallel, higher standards in the 5450 series; bid price there is Rule 5450(a)(1).

The bid price rule step by step

A bid price deficiency exists once the closing bid has been below $1.00 for 30 consecutive business days. Nasdaq then notifies the company, which has 180 calendar days to regain compliance. Compliance means a closing bid of at least $1.00 for 10 consecutive business days, which staff can extend in its discretion (Rule 5810(c)(3)(H)).

If the company has not cured at day 180, a Capital Market company may receive a second 180-day period if it meets the market value of publicly held shares requirement and all other initial listing standards except bid price, and notifies Nasdaq that it intends to cure, for example by a reverse split. A Global Market company can transfer to the Capital Market to become eligible.

Shortcuts to a delisting determination

Some situations skip the compliance period entirely and go straight to a delisting determination, which the company can appeal to a Hearings Panel:

• a closing bid of $0.10 or less for 10 consecutive trading days during a compliance period (Rule 5810(c)(3)(A)(iii));
• a bid price failure after the company effected one or more reverse splits over the prior two years with a cumulative ratio of 250 shares or more to one (Rule 5810(c)(3)(A)(iv));
• since January 2025, a bid price failure within one year after any reverse split, regardless of ratio and even if the company was compliant when it split.

The 2024 and 2025 rule changes

Three changes approved in October 2024 and January 2025 tightened the process:

1. No stay after 360 days. Normally a timely request for a hearing stays the suspension. Since January 2025, a company that received the second 180-day period and still failed to cure is suspended from trading on Nasdaq while its appeal is pending, so its shares trade over the counter during the appeal (Rule 5815(a)(1)(B)(ii)d). The Hearings Panel can still grant up to 180 days.
2. One-year reverse split rule. As described above, a bid price failure within a year of a reverse split gets no compliance period.
3. Reverse splits that break another rule. If a reverse split cures the bid price but pushes the company below another numeric standard, such as 500,000 publicly held shares, the company is not considered compliant with the bid price rule until it cures the new deficiency and then meets the $1.00 bid for 10 consecutive business days, all within the original compliance period.

Late filing deficiencies

Under Rule 5250(c)(1), a company that does not file a 10-K, 20-F or 10-Q on time receives a deficiency notice. A filing made within the extension provided by an NT 10-K or NT 10-Q is treated as timely; see NT 10-K and late filings. If the report is still missing after any extension, the company has 60 calendar days to submit a plan, and staff can grant up to 180 calendar days from the original due date to file. A second missed report while the first is outstanding compresses the timeline.

The reverse split mechanics Nasdaq requires

Nasdaq requires advance notice of a reverse split through its company event notification process, and Rule 5250(b)(4) requires the company to publicly disclose the split at least two business days before the market effective date. These requirements are why reverse split press releases tend to arrive a few days before the split takes effect.

NYSE in brief

The NYSE measures price differently: a company is below standard when its average closing price is under $1.00 over 30 consecutive trading days, and it generally has six months to cure. Since January 2025, Section 802.01C of the NYSE Listed Company Manual denies a compliance period to a company that effected a reverse split in the past year, or reverse splits with a cumulative ratio of 200 or more to one over two years. NYSE American has its own standards.

How to check a company on Signal8

• The delisting screener lists companies with exchange deficiency notices.
• Item 3.01 8-Ks appear in the live SEC filings feed.
• A company's share count history and past reverse splits matter here; the Dilution tab on a company page summarises dilution data where coverage exists.

FAQ

How long does a company have to fix a Nasdaq bid price deficiency?

An initial 180 calendar days from the notice. A Nasdaq Capital Market company that meets the other initial listing standards and states its intent to cure can receive a second 180 days. Compliance requires a closing bid of at least $1.00 for 10 consecutive business days. Companies that did a reverse split in the past year, or reverse splits totalling 250 to 1 or more in two years, get no compliance period.

Does a deficiency notice mean the stock will be delisted?

No. A deficiency notice starts a compliance process. Many companies regain compliance through a higher stock price, a reverse split, raising equity, or catching up on filings. Delisting follows only if the company fails to cure within the allowed period and any appeal to a Hearings Panel is unsuccessful. The outcome for a given company is not knowable from the notice alone.

What is Item 3.01 on an 8-K?

Item 3.01 is Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing. A company files it within four business days of receiving a deficiency notice, a delisting determination, or deciding to transfer its listing or delist. The filing names the rule, the deadline to regain compliance, and the company's intended response.

What is the Nasdaq 250 to 1 reverse split rule?

If a company falls below the $1.00 bid price after effecting reverse splits over the prior two years with a cumulative ratio of 250 shares or more to one, it gets no compliance period and receives a delisting determination immediately. For example, a 1-for-25 split followed by a 1-for-10 split is a cumulative 250 to 1. The company can still appeal to a Hearings Panel.