Nasdaq Issues Second Removal Warning to Egyptian Transport Disruptor SWVL in Just 5 Months

Swvl Holdings Corp, an Egypt-born provider of tech-enabled mass transit solutions, has again received a notice from The Nasdaq Stock Market stating that it is not in compliance with Listing Rule 5450(b)(2)©, which requires companies listed on the Nasdaq Global Market to maintain a minimum market value of publicly held shares of $15,000,000. 

The company has until September 25, 2023, to regain compliance by ensuring that the minimum market value of publicly held shares must close at $15,000,000 or more for a minimum of 10 consecutive business days prior to the Compliance Date. Failure to do so would result in delisting, which could lead to a loss of confidence among investors.

On November 4, 2022, Swvl first received a notice from NASDAQ that it was not in compliance with Listing Rule 5450(b)(2)©. This was due to the company’s shares trading for more than 30 straight days below $1.

read also SWVL Lays Off More Staff As It Risks Nasdaq Delisting

When SWVL received its first removal warning from Nasdaq in November 2022, the company responded by approving a reverse stock split of its Class A ordinary shares. This split was approved by the company’s Board of Directors at a ratio of one-for-25, which meant that every 25 issued shares would be combined into one share with a par value of $0.0025 each. The company also restated its articles of association and revised them to reflect the reverse share split, which did not require any shareholder permission according to the British Virgin Island’s Business Companies Act, where SWVL was registered

The reverse share split took effect on January 25, 2023, after which SWVL’s ordinary shares started trading on the Nasdaq Global Market on a split-adjusted basis from January 26, 2023.

Swvl provides intercity, intracity, B2B, and B2G transportation services, offering semi-private alternatives to public transportation for individuals who cannot afford private options. The company’s parallel mass transit systems aim to make mobility safer, more efficient, accessible, and environmentally friendly. Customers can book their rides using a proprietary app with various payment options and access to high-quality private buses and vans.

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SWVL co-founders. Sources: SWVL

The notice from Nasdaq is a significant development for Swvl, as failure to regain compliance with the minimum market value requirement could lead to delisting and a loss of confidence among investors. While the company has 180 days to regain compliance, it will need to take prompt action to address the issue.

read also Why Is Egypt’s Leading Telco Freezing Customers’ Mobile Money Accounts, All Of A Sudden?

Swvl has stated that it intends to actively monitor its minimum market value of listed securities and may consider implementing available options to regain compliance. The company may also choose to transfer the listing of its ordinary shares to The Nasdaq Capital Market. However, there is no assurance that the company will be able to regain compliance or maintain compliance with any other listing requirements.

When securities are delisted from an exchange, it means that they are no longer available for trading on that particular exchange. This typically occurs when a company fails to meet the listing requirements or violates the exchange’s rules and regulations. Delisting can also occur voluntarily, when a company decides to move to a different exchange or go private. Once a security is delisted, it can still be traded over-the-counter, but liquidity may be reduced, and investors may face difficulty finding buyers or sellers. Additionally, delisting can have negative implications for a company’s reputation and investor confidence.

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Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. 
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard