Zynga Inc., the online video-game company, got a delisting notice from NASDAQ. The document says that the company did not follow the listing rules of the stock market. According to NASDAQ, most companies’ directors, whose securities are trading on the stock, are supposed to be independent specialists not being among their employees. But Zynga put the number of independent directors below the NASDAQ minimum thus breaking the rule.
The filing suggests that Zynga has 45 days until July 27 to submit a plan on aligning its listing with the NASDAQ established rule. Otherwise, Zynga shares are to be eliminated from the circulation on the market. “The company expects to identify and add two independent directors to the board and regain compliance with the rule in the coming months,” Zynga stated. In case the company fulfils the NASDAQ requirement by this time, the latter will give Zynga a respite until December 9.
In April, Zynga reported that Reid Hoffman, the co-founder of Linkedln Corp., and Jeffrey Katzenberg, the CEO of DreamWorks Animation SKG Inc. (DWA) would not stand for reelection. Eventually, the number of the company’s directors fell to 7.
An important point to remember is that Zynga developed the extremely popular “social games” like FarmVille and CityVille as well as Café World, Draw Something, Words with Friends, etc. However, the number of their users fell twice as much annually posting 123 million in Q1. Since the beginning of the year, the company’s stock lost over 18% on NASDAQ. On Friday, June 13, the shares closed at the level of $3.1 U.S. dollars.