The NASDAQ Stock Market has both quantitative and qualitative listing requirements which a company must meet to maintain its status as a listed company. Recent changes to composition, independence standards and size of committees and initial and continued listing criteria affect all public companies listed on any of the NASDAQ Stock Market’s three listing tiers. Within each tier, NASDAQ provides several quantitative alternatives for each listing requirement to enable a company to continue to be listed on that tier. However, the qualitative standards (including the corporate governance standards) are the same for all tiers (see Continued Listing Requirements Chart: NASDAQ Stock Market and Qualitative Listing Requirements Chart: NASDAQ Stock Market).

If a company cannot maintain compliance with the continued listing criteria, NASDAQ will notify the company of the nature of the deficiency and the action necessary to regain compliance. Receipt of this notification must be publicly announced by the company by filing a Form 8-K, where required by SEC rules, or issuing a press release within four business days (see Practice Note, Disclosing Nonpublic Information: How to Give Notice to NASDAQ and Form 8-K Reporting and Filing Deadlines Chart).

Some of the reasons for a company being deficient relate to board independence, composition of the compensation committee and the audit committee. All boards and committees should regularly review their composition against the applicable standards, especially considering how those standards have been moving toward greater independence. For guidance on the current requirements, see Director Independence Standards Chart.

In some circumstances, the failure to meet the continued listing criteria could immediately result in the issuance of a delisting letter. If the company receives a delisting letter, it has the opportunity to appeal to the NASDAQ Hearings Panel.

Each trading day, NASDAQ publishes a list of companies that are non-compliant with its continued listing standards. In the event of a bankruptcy, a company is added to the list two business days after notification by NASDAQ. In all other instances of non-compliance, a company is added to the list five business days after notification. Companies are removed from the list one business day after NASDAQ determines that it has regained compliance or the company no longer trades on NASDAQ.

If a company cannot correct the deficiency and is delisted, there are various ways, both voluntary or involuntary, in which an issuer may exit the Exchange Act reporting regime by delisting and deregistration of its securities (see Standard Document, Memorandum to Board: Delisting and Deregistration Under the Securities Exchange Act).