March Delisting Notices Ramp Higher

NEW YORK (TheStreet) -- YRC Worldwide (YRCW) and a handful of other stocks trading under $1 were slapped with a notice in March for failure to meet a bid price requirement laid out by the Nasdaq, although there is still time for these companies to regain compliance.

YRC Worldwide, like several other stocks, has less than six months to satisfy a Nasdaq listing rule that requires a stock to maintain a minimum bid price of $1. Investors in penny stocks like YRC Worldwide need to understand what options are available to the companies and what the future holds if the company they have invested in fails to regain the $1 price threshold.

If a stock closes below the $1 mark for 30 consecutive business days, it is granted a grace period of 180 calendar days to regain compliance with the Nasdaq's listing requirements. To regain compliance, a stock would have to close at or above $1 for a minimum of 10 consecutive trading sessions.

>>10 Companies That Received Delisting Notices in March

Zanett(ZANE), for example, had been in danger of getting the boot from the Nasdaq. However, the company regained compliance with the bid price requirement after the stock closed above $1 for 10 consecutive business days.

The Nasdaq temporarily suspended the minimum bid listing requirement on Oct. 16, 2008, during the height of economic recession. The move allowed stocks trading under $1 to continue trading on the exchange. That temporary suspension was lifted on July 31, 2009, and the Nasdaq resumed sending out delisting warning letters to companies that were not in compliance.

March saw the largest number of notices for the minimum bid price requirement this year with a total of 16 companies on the Nasdaq's deficiency list as of April 6. That compares to only five companies that received notices in January and two in February. March ranks third after September 2009 and December 2009, with 29 and 23 companies, respectively, on the Nasdaq's deficiency list as of April 6.

For companies that received a notice in September, the 180-day grace period has already passed, putting those stocks at risk of immediate delisting. Companies that received a notice in March, on the other hand, still have months to remedy the price deficiency and continue listing on the exchange.