Nasdaq Raises Bar for Chinese Firms Eyeing U.S. Stocks
Published Date: 12/23/2025
Notice
Summary
Nasdaq wants to add new rules for companies from China, including Hong Kong and Macau, that want to list their stocks on its exchange. These extra checks aim to make sure these companies meet higher standards before going public in the U.S. The SEC is now deciding whether to approve these changes, with a decision expected by December 18, 2025, which could affect how quickly and easily Chinese companies raise money here.
Analyzed Economic Effects
6 provisions identified: 0 benefits, 5 costs, 1 mixed.
IPO minimum $25M offering size
For an initial public offering (IPO), a China-based company would have to sell at least $25 million in gross proceeds to public holders in a firm-commitment U.S. offering. Nasdaq states this $25 million minimum is required to satisfy proposed Nasdaq Rule 5210(l)(i).
Business-combination $25M public float floor
If a China-based company becomes listed via a business combination, it must have a Market Value of Unrestricted Publicly Held Shares of at least $25 million following the business combination, per proposed Nasdaq Rule 5210(l)(ii).
Which firms count as 'China‑based'?
Nasdaq would treat a company as "China-based" (including Hong Kong and Macau) if, based on facts and circumstances, it meets elements such as: its books and records are located there; at least 50% of assets, revenues, directors, officers, or employees are in that jurisdiction; or it is controlled by persons or entities based there. If a company is designated China-based under these factors, it would be subject to the additional listing requirements in proposed Nasdaq Rule 5210(l).
Direct‑listing restrictions for China firms
A China-based company choosing a Direct Listing must either meet all Nasdaq Global Select Market listing requirements plus IM-5315-1, or meet the Nasdaq Global Market requirements plus IM-5405-1. A China-based company would not be allowed to list on the Nasdaq Capital Market via a Direct Listing, under proposed Nasdaq Rule 5210(l)(iii).
Transfers from OTC/other exchange need $25M and one year
A China-based company transferring a listing from the OTC market or another national securities exchange must have a Market Value of Unrestricted Publicly Held Shares of at least $25 million and must have traded on the other market for at least one year, per proposed Nasdaq Rule 5210(l)(iv).
When the new rules would start
If approved by the Commission, Nasdaq proposes the new China-based listing requirements would take effect 30 days after the Commission's approval and apply to companies listing on or after that date. The Commission set December 18, 2025 as the date by which it should approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change.
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