SRO Proposed Rule Change Re: Greater China Companies (pending administrative approval)

Effective to-be-determined and pursuant to decision by the Commission re-scheduled for 17 May 2026.

The Nasdaq National Stock Market LLC has proposed a series of rule changes specific to "greater China" companies which is pending approval by way of administrative decision by the Commission. See Release No. 34-104969; File No. SR-NASDAQ-2025-069 (extending the Commission's date for decision).

-The proposed Rule 5210(l) would apply to a company that is headquartered or incorporated in China (including the Hong Kong Special Administrative Region and the Macau Special Administrative Region) or whose business is principally administered in one of those jurisdictions. See also IM-5210 (providing the initial listing standards presently in effect).

-The proposed Rule 5210(1) would require "Chinese designated" companies that list do so by way of a Firm Commitment Offering [footnote omitted] in the United States to Public Holders [footnote omitted] that will result in gross proceeds to the company of at least $25 million. 

-"In the case of a business combination, as described in Rule 5110(a) or IM-5101-2, Nasdaq believes that such transactions, when involving Chinese companies, presents similar risks to U.S. investors as IPOs of Chinese companies. However, such a business combination would typically not involve an offering. Therefore, Nasdaq is proposing to adopt a new Rule 5210(l)(ii) that would impose a similar new requirement as applicable to IPOs but would reflect that the listing would not typically be accompanied by an offering. Specifically, proposed Rule 5210(l)(ii) would require a company to have a minimum Market Value of Unrestricted Publicly Held Shares following the business combination equal to at least $25 million." [FN1]

-"In the case of a Direct Listing (as defined in Rule IM-5315-1) Nasdaq is proposing to adopt Rule 5210(l)(iii) which requires a Chinese company to meet all applicable listing requirements for the Nasdaq Global Select Market (NGS) and the additional requirements of IM5315-1, or the applicable listing requirements for the Nasdaq Global Market (NGM) and the additional requirements of IM-5405-1. However, a company that is headquartered or incorporated in the People’s Republic of China (including the Hong Kong Special Administrative Region and the Macau Special Administrative Region), or whose business is principally administered in such jurisdiction, will not be permitted to list on the NCM in connection with a Direct Listing."

-For transfers, "Nasdaq proposes Rule 5210(l)(iv) that would require a Chinese company that transfers its listing from the OTC Market or from another national securities exchange to first trade on that other market for at least one year before it is eligible to list on Nasdaq. This will provide sufficient time for the company to establish a trading history of operations upon which investors can rely, and which Nasdaq could consider in determining whether the company is ready for the rigors of being public company and adhering to the regulatory requirements."

. . .

"[Such listings sans] offering, [must] have a minimum Market Value of Unrestricted Publicly Held Shares of at least $25 million. "

https://listingcenter.nasdaq.com/assets/rulebook/nasdaq/filings/SR-NASDAQ-2025-069.pdf

The Exchange cites the Commission's mission to protect investors and that, "[the Exchange] believes that trading in Chinese companies present[sic] unique potential risks to U.S. investors [thus justifying the heightened scrutiny standards]" and cites its IM-5210(k) Restrictive Market Requirements as being comparable to the greater-China listings proposed rules summarized herein supra. [FN2]

[FN1] 

"Market Value of Unrestricted Publicly Held Shares excludes securities subject to resale restrictions from the calculation of Publicly Held Shares because securities subject to resale restrictions are not freely transferrable or available for outside investors to purchase and therefore do not truly contribute to a security’s liquidity upon listing."

[FN2] 

"'Restrictive Market' means a jurisdiction that does not provide the Public Company Accounting Oversight Board with access to conduct inspections of public accounting firms that audit Nasdaq-listed companies. A Company’s business will be considered to be principally administered in a Restrictive Market if: (i) the Company’s books and records are located in that jurisdiction; (ii) at least 50% of the Company’s assets are located in such jurisdiction; or (iii) at least 50% of the Company’s revenues are derived from such jurisdiction." See IM-5210(k) (providing the "Restrictive Market Requirements" as:

"(i) Any Company that is listing its Primary Equity Security on Nasdaq in connection with its initial public offering, and that principally administers its business in a Restrictive Market, must offer a minimum amount of securities in a Firm Commitment Offering in the United States to Public Holders that: (a) will result in gross proceeds to the Company of at least $25 million; or (b) will represent at least 25% of the Company’s post-offering Market Value of Listed Securities, whichever is lower.

(ii) Any Company that is conducting a business combination, as described in Rule 5110(a) or IM-5101-2, with an entity that principally administers its business in a Restrictive Market, must have a minimum Market Value of Unrestricted Publicly Held Shares following the business combination equal to the lesser of: (a) $25 million; or (b) 25% of the post-business combination entity’s Market Value of Listed Securities.

(iii) Any Company that is listing its Primary Equity Security on Nasdaq in connection with a Direct Listing, as defined in IM-5315-1, and that principally administers its business in a Restrictive Market, is permitted to list on the Nasdaq Global Select Market or Nasdaq Global Market, provided that the Company meets all applicable listing requirements for the Nasdaq Global Select Market and the additional requirements of IM-5315-1, or the applicable listing requirements for the Nasdaq Global Market and the additional requirements of IM-5405-1. A Company that principally administers its business in a Restrictive Market will not be permitted to list on the Nasdaq Capital Market in connection with a Direct Listing notwithstanding the fact that the company may meet the applicable initial listing requirements for the Nasdaq Capital Market and the additional requirements of IM-5505-1.").

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