SEC Approves Nasdaq Setting Minimum Listing Threshold for China-Based Issuers

The SEC granted accelerated approval to Nasdaq Stock Market rule changes that (i) impose a $25 million minimum proceeds or market-value threshold on initial listings by companies principally operating in China, and (ii) bar those issuers from listing on the Nasdaq exchanges. 

In the Order Granting Accelerated Approval on the additional initial listing criteria for these companies, the SEC said that the new criteria apply to China-based issuers that seek to list 30 days or more after the date of the SEC's approval. The SEC said new Nasdaq Rule 5210(l) defines a "China-based Issuer" as a company headquartered or incorporated in mainland China, Hong Kong, or Macau, a company whose business is principally administered in any of those jurisdictions, or a company under common control with persons or entities in those jurisdictions. Nasdaq applies a seven-factor holistic test that includes the location of books and records and 50 percent thresholds for assets, revenue, directors, officers, and employees.

The Order states that the $25 million minimum threshold applies differently depending on the path to listing. An initial public offering must raise at least $25 million in gross proceeds through a firm commitment offering to U.S. public holders. A business combination must result in at least $25 million in market value of unrestricted publicly held shares after the combination.  A transfer from the over-the-counter market or another exchange requires at least $25 million in unrestricted publicly held shares and at least one year of prior trading on another market.

Nasdaq said the rule responds to manipulation risk among small-cap China-based issuers. The exchange said 70 percent of its referrals to the SEC and FINRA for potential market manipulation involved Chinese emerging-market companies, even though those companies represent less than 10 percent of Nasdaq listings. Of 151 China-based initial public offerings Nasdaq listed between August 2022 and April 2025, 143 raised less than $25 million in gross proceeds, and nearly half were cited for non-compliance with the listing rules.