NASDAQ Proposes Rule Changes! Impacting Chinese Companies Listing in the U.S.

On September 3 local time, the NASDAQ Stock Market (hereinafter referred to as "NASDAQ") announced on its official website a proposal to amend listing standards, aiming to address issues such as liquidity of listed companies in the U.S. market environment. The revisions not only raise the minimum public float size and fundraising amount thresholds for companies during the initial public offering (IPO) stage but also establish stricter suspension and delisting mechanisms for companies that fail to meet the standards.

According to the document released by NASDAQ, the revised standards include:

(1) For new listings under the net profit standard, the minimum market value of the public float is set at $15 million;

(2) Accelerated suspension and delisting procedures for companies with listing deficiencies and a market value of listed securities below $5 million;

(3) A minimum fundraising requirement of $25 million for IPOs of companies primarily operating in China.

Compared to the New York Stock Exchange, NASDAQ has always had lower financial requirements and a shorter listing cycle. Its focus on tech stocks, which command significant premiums, allows it to assign higher valuations to companies in sectors such as artificial intelligence, autonomous driving, and new energy. This has attracted many Chinese technology innovation companies seeking to list in the U.S.

The core of the new rules is a comprehensive upgrade of IPO thresholds. According to the details, all companies listing in the U.S. must meet stricter mandatory standards for the Market Value of Unrestricted Publicly Held Shares (MVUPHS). Notably, registered resale shares (Resale Shares) will no longer be included in the MVUPHS calculation. Companies need to reassess their fundraising scale to ensure that the issuance of new shares meets the minimum MVUPHS standard.

NASDAQ stated in the rule amendment: "Resale shares do not create genuine liquidity in the same way as new issuances."

Additionally, the listing门槛 for OTC-turned-exchange companies has been raised. The new rules mean that companies must not only pass valuation tests but also ensure that their free-floating shares at the time of listing possess substantial market value, directly eliminating speculative companies reliant on "paper valuations."