---
title: "NASDAQ decides to clean up and proposes stricter enforcement of delisting procedures for \"penny stocks\""
description: "NASDAQ Stock Exchange has proposed to amend its rules regarding low-priced stocks, strengthen the delisting process to protect investor interests. Under the new rules, if a company's stock price remai"
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/211297547.md"
published_at: "2024-08-11T23:29:36.000Z"
---

# NASDAQ decides to clean up and proposes stricter enforcement of delisting procedures for "penny stocks"

> NASDAQ Stock Exchange has proposed to amend its rules regarding low-priced stocks, strengthen the delisting process to protect investor interests. Under the new rules, if a company's stock price remains below $1 for 360 consecutive trading days, the stock will be suspended from trading on NASDAQ and moved to the OTC market. Additionally, if a company artificially inflates its stock price through reverse stock splits but still falls below $1 within a year, NASDAQ will immediately issue a delisting notice. NASDAQ believes that companies engaging in multiple reverse stock splits may have financial problems or operational difficulties, making them unsuitable for trading on their exchange. These amendments also require approval from the U.S. Securities and Exchange Commission

According to a document released on the official website on Thursday, August 8th, the NASDAQ Stock Exchange has proposed to amend its rules regarding low-priced stocks, implementing a faster and stricter delisting process for non-compliant companies.

Under the rules, NASDAQ requires stocks listed on its exchange to maintain a closing price above $1. When a stock's closing price remains below $1 for 30 consecutive trading days, NASDAQ will classify the stock as a "penny stock," not meeting listing standards.

In the Hong Kong stock market, if a stock's price falls below HK$1, it is referred to by market participants as a "cent stock," with "cent" referring to cents; in the U.S. stock market, stocks priced below $1 are called "penny stocks."

Under the current rules, NASDAQ allows a company up to 180 trading days to remedy the situation and regain compliance. If the stock price has not risen above $1 within these 180 days, the company has the right to apply for a second 180-day grace period.

This means that low-priced stocks can avoid delisting for at least over a year. At the end of the second 180-day grace period, if the stock price remains below $1, the company can appeal to NASDAQ's Listing Qualifications Panel, which will pause the delisting process until a hearing is held.

In response, NASDAQ announced two proposed rule changes that may expedite the delisting process for low-priced stocks:

1.  If a company's stock price remains below $1 for 360 consecutive trading days, even if it is still in the appeal stage with the Listing Qualifications Panel, the stock will be suspended from trading by NASDAQ and moved to the over-the-counter (OTC) market. This means that the 360-day grace period will become a strict constraint.
    
2.  If a company artificially raises its stock price through reverse stock splits but the price falls below $1 within a year, NASDAQ will immediately issue a delisting notice to such companies. The company can still appeal and continue trading for 180 days.
    

NASDAQ stated in the document that it has observed some companies engaging in multiple reverse stock splits, "NASDAQ believes that such behavior often indicates underlying financial problems or operational difficulties for these companies. To protect investors, these companies are not suitable for trading on NASDAQ."

Approval from the U.S. Securities and Exchange Commission (SEC) is required for these two rule changes to take effect

### Related Stocks

- [.IXIC.US - NASDAQ Composite Index](https://longbridge.com/en/quote/.IXIC.US.md)
- [.NDXTMC.US - NASDAQ 100 Technology Sector Market-Cap Weighted Index](https://longbridge.com/en/quote/.NDXTMC.US.md)

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.