On July 22, 2026, the U.S. Securities and Exchange Commission (“SEC”) initially approved a significant new rule that would raise the bar for companies seeking to remain listed on Nasdaq; however, just shortly thereafter, the SEC issued a stay, halting implementation of the new rule while it considers petitions.
If adopted, the new rule would require companies listed on the Nasdaq Global Select Market, the Nasdaq Global Market and the Nasdaq Capital Market to maintain a minimum Market Value of Listed Securities (“MVLS”) of at least $5 million, and provides that companies failing to comply with this requirement for a period of 30 consecutive business days will be immediately subject to suspension and delisting, without any cure or compliance period (as is typically granted to issuers that fail to maintain compliance with other continued listing standards such as Nasdaq’s minimum bid price requirement). You can read more about the proposed rule on our blog.
On September 11, 2026, the SEC formally granted petitions for a full review of Nasdaq’s proposed MVLS continued listing requirement. Crucially, for smaller public companies, this action ensures that the controversial rule remains stayed and is not currently enforceable pending the SEC’s final decision.
What the SEC’s Review Means
The SEC will undertake an evaluation of the merits of Nasdaq’s proposal, and the review will likely require the SEC to balance two competing interests:
- Nasdaq’s Stated Goal: Protecting investors from manipulation and market disorder associated with low-priced stocks.
- Industry Concerns: Ensuring the rigid standard does not disproportionately harm micro-cap and emerging growth companies by cutting off their access to critical public capital which is necessary to sustain operations and pursue strategic growth initiatives.
The SEC’s decision to undertake a full review does not predetermine the ultimate outcome, but it does mean the proposal will face much closer scrutiny before it can be enacted.
What Happens Next?
The SEC's review process could take several months. As part of the next phase, the SEC is opening the floor to public input. Any interested party may file a written statement in support of or in opposition to the proposed rule on or before October 6, 2026.
Practical Takeaways for Issuers
For the immediate future, the proposed $5 million MVLS continued listing requirement remains stayed and unenforceable.
However, given the heightened regulatory scrutiny, smaller public companies should not assume the rule will be permanently struck down. Companies should continue to monitor their MVLS to ensure that they remain at or above the $5 million threshold required for ongoing compliance. Additionally, companies should prepare ahead of time in anticipation of the new rule being implemented by evaluating capital structures, exploring strategic options such as financings, if necessary, preparing to pursue a Nasdaq Hearings Panel appeal in the event the rule is adopted, and consulting with securities counsel to closely monitor the SEC’s ongoing review.
Sheppard regularly advises public companies, underwriters, and institutional investors on SEC compliance, exchange listing standards, securities offerings, and corporate governance matters. Companies confronting Nasdaq deficiency challenges should consult with experienced legal and financial advisors promptly, and our firm is available to assist.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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