Global coworking group WeWork again fallen foul of the New York Stock Exchange's listing rules, this time thanks to another senior resignation.
Already facing potential delisting if it fails to get its share price up trading over $1 a share, it has now been issued with a notice of delisting for not having a majority of independent members on the board.
On 23 June 23 Deven Parekh notified WeWork of his resignation from the voard of directors effective immediately. Parekh served as chair of the Compensation Committee of the Board until his resignation and was designated by Insight Partners.
The announcement follows the resignation of Andre Fernandez, the company’s chief financial officer and treasurer, effective from 1 June and that of WeWork CEO Sandeep Mathrani on 26 May for a post at private equity firm Sycamore Partners.
In a filing with the New York Stock Exchange the group said that as a result of Parekh’s resignation on 29 June it notified the New York Stock Exchange that as of 23 June it was no longer in compliance with Section 303A.01 of the NYSE Listed Company Manual, which requires that the majority of the directors comprising the Board be independent.
WeWork says it intends to "cure the deficiency as promptly as practicable", and Daniel Hurwitz, chairman of the board, continues to lead a committee composed of entirely independent directors to search for additional independent directors.
WeWork added: "Mr Parekh’s resignation is not the result of any disagreement with the company with respect to any matter relating to the company’s operations, policies or practices."
Shares of WeWork were down 2.3% after hours Thursday, to close at 26 cents a share. Year to date, shares have plummeted 82%.
WeWork is already battling delisting. On 19 April, it received a non-compliance notice from the NYSE as its share price had refused to budge above $1 a share for 30 trading days. The notice raised the possibility of the company having to delist or conduct a reverse stock split as its shares had sunk 90% from a market value of $9 billion (£6.53 billion) since it listed in March 2021.
If the share price continues to stay below $1, the most likely alternative to "cure" its non-compliance has been a reverse stock split led by majority shareholder Japan's SoftBank.
This is a reduction in the number of a company's outstanding shares in the market which automatically boosts the value of the stock, usually based on a predetermined ratio. For example, a 2:1 reverse stock split would mean that investors would receive 1 share for every 2 shares that they own.
Earlier this month, WeWork shareholders voted for the reverse stock split.