Market Issues, page-17

Process of Delisting on NASDAQ When Stock Price Drops Below $1

The delisting process for a company's stock on the NASDAQ when its price falls below $1 involves several structured steps designed to maintain market integrity and protect investors. Here is a detailed breakdown:

1. Stock Price Trigger: The trigger for delisting begins when the stock's price consistently drops below $1 per share. NASDAQ has established a minimum price threshold to ensure the market operates efficiently.

2. Notification to NASDAQ: The company must notify NASDAQ upon the price drop. This notification initiates the formal process, allowing the exchange to assess whether delisting is necessary.

3. Review and Verification by NASDAQ: NASDAQ will review the notification to confirm that the stock meets the criteria for delisting. There may be a five-day period during which the stock price must remain below $1 for delisting to proceed.

4. Investor Notification by Market Operators: Brokers and other market operators are required to inform their clients about the potential delisting, giving them time to act on their shares.

5. Legal and Appeal Considerations: The company may appeal if they believe there were procedural issues, typically within a specified timeframe, often through legal means unless an injunction is secured.

6. Final Delisting Action: If all criteria are met, the stock is removed from NASDAQ. Investors lose access to trading or owning the shares, affecting the company's liquidity and funding capabilities.

Consequences for the Company: Delisting can lead to loss of investor confidence and financial difficulties, as public companies rely on visibility and access to capital markets.This process ensures fairness, transparency, and investor protection by maintaining orderly market conditions.