What’s going on:
WeWork is facing a potential delisting from the New York Stock Exchange (NYSE), but not only for its share price trading below $1. The coworking company announced on Thursday that it has been issued a separate notice of delisting for not having a majority of independent members on the board, according to MarketWatch.
Section 303A.01 of the NYSE Listed Company Manual requires that the majority of the directors of the Board be independent. This notice was set into motion after Deven Parekh, one of WeWork’s senior board members, announced his resignation on June 23. Parekh, who officially resigned on June 29, served as the chair of the Compensation Committee of the Board.
Why it matters:
The departure of a board member and the subsequent compliance issue can raise questions about corporate governance and management stability within WeWork. The company was already facing a number of internal leadership switch-ups, with its CEO Sandeep Mathrani and CFO Andre Fernandez leaving the company within a week of each other — on top of navigating the company’s low share price on the NYSE.
Company shareholders recently approved a reverse stock split in the hope of positively impacting the share price and boosting investor interest.
How it’ll impact the future:
As one of the largest competitors in the coworking industry, WeWork’s performance and ability to navigate internal challenges have an impact on investor and customer sentiment about the coworking industry as a whole. Any setbacks experienced by WeWork could also provide an opportunity for other coworking companies to gain market share.
WeWork rents nearly 20 million square feet of office space, which according to The New York Times is more than any other company in the U.S. If the company collapses, it’s possible already weak commercial real estate sectors could be hit hard.
