SEC Stays Nasdaq’s New $5 Million MVLS Delisting Rule
Just a week after it approved Nasdaq’s new $5 million Market Value of Listed Securities continued listing requirement (the “MVLS Requirement”), the SEC automatically stayed the rule change and thus gave a lifeline to many small-cap listed companies. The stay was triggered after the Small Public Company Coalition (“SPCC”), a coalition representing small public companies, investors, financial institutions, and other participants in the small and microcap markets, filed a notice of intent to petition for review of the approval. As a result, the MVLS Requirement is not currently in effect, and no company can be suspended or delisted under it unless and until the Commission lifts the stay.
A Pause, Not a Reprieve
As discussed in the prior Crone memo on this topic, the MVLS Requirement was particularly strict: no cure period, no stay of trading during an appeal, and a Hearings Panel with little power to grant extra time. The SEC’s stay means none of that currently applies. While the stay is in place, no Nasdaq-listed company can be suspended or delisted under the MVLS Requirement, and the 30-business-day countdown that would otherwise trigger a Staff Delisting Determination is not running for anyone.
That said, clients should not treat this as the final word on the matter. While the SEC stay is automatic and mechanical, it says nothing about how the SEC will ultimately rule on this after further review. The rule could be affirmed, modified, or sent back for further review, and there is no deadline for that decision, leaving market participants with no sense of certainty about what may come next. This is a pause, not a reprieve, and the underlying pressure on small-cap issuers has not gone away.
Effect on the Market, For Now
For issuers whose MVLS has been hovering near or below the $5 million line, this is genuine, if provisional, relief. Companies that had been rushing to raise capital or engineer a market-value bump purely to avoid an imminent determination now have the opportunity to make that decision on the merits rather than under duress.
We would encourage clients in this position to use this opportunity productively: keep monitoring MVLS on an ongoing basis, keep any remedial plans in motion, and treat this window as a chance to get ahead of the issue before the rule potentially returns. We at Crone remain ready for conversations on how companies who may be affected by this can proactively plan for the potential effects.
If you have any questions, please contact Anand Saha (asaha@cronelawgroup.com), Liang Shih (lshih@cronelawgroup.com), Daisy Dai (DDai@cronelawgroup.com), Hongye (Eve) Mao (hmao@cronelawgroup.com) or your usual Crone contact.
