On October 5, 2026, the SEC published notice of a proposed rule change, filed by Nasdaq on September 25, 2026, designed to resolve the timing uncertainty created by the ongoing stay of its $5 million Market Value of Listed Securities (“MVLS”) continued listing requirement. The proposed rule change is intended to be immediately effective, though the U.S. Securities and Exchange Commission (“SEC” or “Commission”) may summarily suspend it within 60 days and interested parties may submit comments on the Nasdaq proposal within 21 days of publication in the Federal Register.
The published notice regarding Nasdaq’s proposed rule change would modify the operative date of the MVLS Rule and would start the 30-day non-compliance measuring period on the date immediately following effectiveness of the proposed MVLS Rule. For example, if the stay were hypothetically terminated on September 24, 2026, the first business day counted toward determining non-compliance would be September 25, 2026, and a company would not become non-compliant unless its MVLS remained below $5 million for 30 consecutive business days measured from that date.
Under the original rule, a company becomes non-compliant when it fails to maintain that minimum threshold for 30 consecutive business days. Because the MVLS Rule became operative immediately upon its approval on July 22, 2026, and the automatic stay did not take effect until July 29, 2026, a narrow window existed during which a companies’ compliance was being measured, followed by an extended period during which the rule has remained stayed altogether.
Nasdaq explained that this sequence of events created uncertainty for companies and their advisors in calculating time under the rule, particularly because a company’s MVLS may fluctuate during the stay such that it could be above the threshold at some points and below it at others before the stay is lifted. Nasdaq’s proposed rule change is intended to eliminate the uncertainty of when the measuring period will commence and provides that the MVLS Rule will become operative only upon termination of the stay, and that the first business day Nasdaq will count toward the 30-consecutive-business-day non-compliance period will be the business day immediately following termination of the stay.
As we previously reported, on July 22, 2026, the SEC approved a new Nasdaq continued listing requirement that would require companies listed on the Nasdaq Global Select Market, the Nasdaq Global Market and the Nasdaq Capital Market to maintain a minimum MVLS of at least $5 million (the “MVLS Rule”). Just days later, the SEC received notices of intention to petition for review, triggering an automatic stay of the MVLS Rule. On September 11, 2026, the SEC formally granted the petitions for review and continued the stay pending further order. The stay currently remains in effect pending SEC review of the matter.
Why This Matters
This filing provides companies and their advisors with clarity on how the compliance clock will run once the stay is lifted: neither the pre-stay window nor the stay period itself will be held against a company's compliance retroactively.
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.