ABPRO Holdings Inc. (NASDAQ:ABPR) experienced a sharp premarket decline of 9.4% after disclosing that Nasdaq has delivered notices asserting the company is not in compliance with multiple listing requirements. The deficiencies stem from the resignation in January of two members of ABPRO’s board of directors, Anthony D. Eisenberg and Sooyoung Lee, who stepped down from the board and all committees.
According to the company’s disclosure, the departures left ABPRO without a majority of independent directors on its board and without the minimum of three independent members required on its audit committee under Nasdaq rules. Nasdaq informed the company on February 5 that these shortfalls represent "additional bases for delisting the Company’s securities," and it has asked ABPRO to submit its views to the Nasdaq Hearings Panel by February 12.
In a separate communication, the exchange said ABPRO no longer satisfies the rule requiring at least two independent directors on its compensation committee. For that particular violation, Nasdaq has provided a cure period that extends until the company’s next annual shareholders’ meeting or until January 30, 2027, or July 29, 2026 if the next annual meeting occurs before that date.
ABPRO stated that it has begun a process to identify and appoint qualified independent directors to remedy the governance deficiencies. The company noted, however, that the notices themselves do not cause an immediate change to its listing status. It also acknowledged there is "no assurance that the Panel will grant the Company’s request for continued listing" or that ABPRO will be able to regain compliance within the timeframes set by Nasdaq.
The governance shortfalls cited by Nasdaq relate specifically to the composition of the board and the membership thresholds for the audit and compensation committees. ABPRO’s response plans are focused on restoring the required independent director counts, while it awaits further action from the Nasdaq Hearings Panel.
Summary
Nasdaq has told ABPRO that it is out of compliance with several listing rules after the January resignations of two directors. The firm’s shares fell about 9.4% in premarket trade. Nasdaq has asked for the company’s views by February 12 and has provided a separate cure period for compensation committee composition linked to the next annual meeting or specified calendar deadlines. ABPRO is seeking qualified independent directors but warned there is no guarantee it will regain compliance or keep its listing.
Key points
- ABPRO stock declined roughly 9.4% in premarket trading following Nasdaq notices about listing noncompliance.
- Nasdaq cited failures to maintain a majority of independent directors and at least three independent audit committee members after two directors resigned in January.
- The exchange also flagged a compensation committee composition violation, for which the company has been given a cure period tied to upcoming meeting dates; ABPRO is searching for qualified independent directors to address the gaps.
Risks and uncertainties
- Potential delisting - Nasdaq indicated the compliance failures could constitute additional bases for delisting; the Hearings Panel's decision is uncertain.
- Timing and ability to replace directors - while ABPRO has started the process to appoint independent directors, there is no assurance it will secure suitable candidates and regain compliance within required timeframes.
- Market reaction - the stock's immediate decline reflects investor concern; continued uncertainty around governance and listing status could affect the company’s market perception.