Nasdaq’s latest listing reforms may significantly reshape the pathway to U.S. capital markets for companies with substantial operations in China, Hong Kong, and Macau. By raising minimum offering thresholds and expanding its definition of China-linked issuers, Nasdaq has signaled a heightened focus on market quality, liquidity, transparency, and investor protection.
In May 2026, the Securities and Exchange Commission approved Nasdaq’s proposed rule changes under SR-NASDAQ-2025-0XX, establishing enhanced Nasdaq listing requirements for companies with significant ties to China, Hong Kong, and Macau. The new framework includes a $25 million minimum IPO threshold for certain issuers, expanded criteria for determining China-based status, and additional restrictions on alternative listing pathways such as direct listings, reverse mergers, and OTC uplistings.
For organizations considering a U.S. IPO, foreign private issuer (FPI) registration, or other cross-border listings, these developments reinforce the importance of early public company readiness planning. Financial reporting capabilities, governance structures, internal controls, SEC reporting processes, and operational transparency are becoming increasingly important factors in successfully accessing U.S. capital markets.
What’s Driving the Change
Nasdaq’s proposal follows a period of significant growth in China-linked listings across U.S. markets.
According to Nasdaq, a disproportionate number of regulatory referrals involving potential market manipulation have been associated with China-based issuers. Nasdaq noted that many of these companies shared similar characteristics, including:
• Smaller IPO sizes
• Limited public float
• Concentrated insider ownership
• Reduced secondary-market liquidity
Nasdaq’s concern is not solely based on geography. Rather, the exchange believes these characteristics may increase the risk of price volatility, market manipulation, and challenges related to regulatory oversight and enforcement.
Companies with concentrated founder ownership and limited publicly traded shares may face increased scrutiny regarding trading liquidity and market sustainability. Public float has become an increasingly important consideration as exchanges seek to promote healthier aftermarket trading environments and reduce the risk of excessive volatility.
The rule changes are intended to strengthen investor confidence while promoting more sustainable market participation for companies seeking access to U.S. public markets.
A Broader Regulatory Trend
These changes arrive amid continued regulatory focus on cross-border oversight, audit transparency, and investor protection following several years of heightened scrutiny of foreign private issuers and U.S.-listed companies with significant overseas operations.
For companies pursuing a U.S. IPO or evaluating cross-border listings, the implications extend beyond China-linked transactions. Nasdaq’s expanded approach demonstrates that exchanges are increasingly evaluating operational substance alongside legal structure, placing greater emphasis on governance frameworks, financial reporting quality, liquidity, and long-term public company readiness. Organizations with international operations should expect more rigorous review of where business activities, management, and economic interests are concentrated.
What’s Changing
The new Nasdaq listing requirements introduce several notable changes.
Minimum $25 Million IPO Requirement
China-based issuers pursuing an initial public offering on Nasdaq must now complete a firm commitment underwritten offering that generates at least $25 million in gross proceeds.
This higher threshold is expected to reduce the number of smaller transactions entering the market while encouraging greater liquidity and investor participation following a U.S. IPO.
Expanded Definition of a China-Based Company
Nasdaq has broadened how it determines whether a company is considered China-based.
In addition to incorporation or headquarters location, Nasdaq may evaluate factors such as:
• Location of books and records
• Asset concentration
• Revenue generation
• Management and employee location
• Ownership and control structure
As a result, companies with substantial operations in China may be subject to the enhanced listing standards even if they are incorporated elsewhere.
Additional Restrictions on Alternative Listing Paths
The rule changes also impose stricter requirements on:
• OTC uplistings
• Reverse-merger and business-combination transactions
• Direct listings
Notably, China-based issuers utilizing a direct listing structure will no longer be eligible to list on the Nasdaq Global Market.
Collectively, these changes signal a stronger emphasis on liquidity, transparency, and issuer quality.
Key Nasdaq Listing Standard Changes at a Glance
| Area | Prior Approach | New Nasdaq Approach |
| IPO Size | Smaller offerings permitted | $25 million minimum for covered issuers |
| China Status | More formal/legal analysis | Substance-over-form review |
| Direct Listings | Broader eligibility | Additional restrictions |
| Uplistings | Less restrictive | Enhanced scrutiny |
| Focus | Listing eligibility | Listing quality and liquidity |
Potential Impact on Future IPO Candidates
The revised standards may have significant implications for companies considering future Nasdaq listings.
Companies planning offerings below the new $25 million threshold may need to reconsider transaction timing, offering structure, or financing alternatives before pursuing a public listing. Issuers may also need to increase public float and institutional investor participation to support liquidity objectives and satisfy Nasdaq’s heightened expectations.
Some smaller companies may evaluate alternative exchanges or private financing options before pursuing a Nasdaq listing. Existing public companies considering an uplisting should assess whether they remain eligible under the revised standards and whether their governance, reporting, and liquidity profiles align with Nasdaq’s enhanced scrutiny.
What Companies Should Be Thinking About Now
Although the rules are directed at China-linked issuers, the broader implications extend well beyond a single jurisdiction.
Corporate Structure Matters More Than Ever
Companies with international operations should carefully evaluate how Nasdaq may assess their operating footprint.
Jurisdictional analysis now extends beyond incorporation documents and may require a deeper examination of where management, assets, revenue, and decision-making activities are located. Organizations should be prepared to clearly demonstrate the substance of their operations and governance structure.
Governance and Documentation Will Face Greater Scrutiny
Ownership structures, related-party relationships, and operational control arrangements may receive additional review during the listing process.
Companies should expect greater emphasis on supporting documentation, transparency, and governance practices. Board composition, audit committee independence, and oversight processes may become increasingly important factors in demonstrating public-company readiness.
Listing Readiness Requires Earlier Planning
The enhanced requirements reinforce a broader trend already taking shape across capital markets: successful public offerings increasingly depend on strong governance, reporting infrastructure, and operational maturity long before a registration statement is filed.
Organizations considering future public-market access should evaluate whether their financial reporting processes, internal controls, PCAOB audit readiness, and SEC reporting capabilities can withstand heightened regulatory review. Companies should also assess whether they possess sufficient public float, institutional investor interest, investor relations readiness, and governance infrastructure to support a sustainable public market presence following listing.
Although the new standards focus primarily on listing eligibility rather than audit inspection requirements, issuers should continue to evaluate compliance with Public Company Accounting Oversight Board (PCAOB) inspection requirements and the Holding Foreign Companies Accountable Act (HFCAA). These requirements remain important considerations for foreign issuers seeking access to and continued participation in U.S. capital markets.
Increasingly, exchanges and regulators are focusing not only on whether companies qualify for listing, but whether they are positioned to operate successfully in the public markets after listing. The enhanced Nasdaq standards reflect this shift, placing greater emphasis on governance, transparency, liquidity, and overall public company readiness.
Why This Matters
Nasdaq’s rule change does not close the door on China-based issuers seeking access to U.S. capital markets. Rather, it raises the bar for organizations pursuing a public listing.
The message for issuers and their advisors is clear: market access increasingly depends on more than technical eligibility. Listing candidates must be prepared to demonstrate the strength, discipline, and durability expected of a public company.
For many issuers, the question is no longer whether they can meet the minimum requirements to list, but whether they can demonstrate the governance, transparency, liquidity, and operational maturity necessary to succeed as a public company after listing.
Kreit & Chiu CPA LLP’s Perspective
As a PCAOB-registered and CPAB-registered firm serving clients across multiple jurisdictions, Kreit & Chiu CPA LLP views these developments as part of a broader evolution in the public markets.
Regulators and exchanges continue to place greater emphasis on transparency, governance, and investor protection, particularly in situations involving cross-border operations and complex ownership structures.
From our experience providing audit, SEC reporting, and capital markets advisory services to companies operating internationally, successful transactions increasingly require organizations to begin preparing years, not months, before a planned offering.
Financial reporting processes, internal controls, governance frameworks, PCAOB audit readiness, and regulatory preparedness often become key differentiators during the listing process. Organizations that address these areas early are typically better positioned to navigate evolving regulatory expectations, respond efficiently to diligence inquiries, and capitalize on future market opportunities.
While the new Nasdaq standards specifically address China-based issuers, the underlying themes are increasingly relevant for companies operating across global markets. Strong governance practices, high-quality financial reporting, and operational transparency are becoming essential components of public company readiness.
Let’s Start the Conversation
If your organization is evaluating a U.S. IPO, foreign private issuer (FPI) strategy, cross-border listing opportunity, or public company readiness initiative, now is an ideal time to assess how evolving market requirements may affect your plans.
Kreit & Chiu CPA LLP works with companies operating across global markets to support audit readiness, PCAOB audit requirements, SEC reporting compliance, financial reporting excellence, and capital formation initiatives throughout the public-company lifecycle.
Key Takeaways
- Nasdaq has established enhanced listing standards for China-linked issuers.
- Many IPO candidates will be subject to a new $25 million minimum offering threshold.
- Nasdaq may evaluate operational substance, not just legal domicile, when determining whether a company is China-based.
- Governance, transparency, liquidity, and reporting quality will receive greater scrutiny.
- Public company readiness planning should begin well before a registration statement is filed.
- Companies pursuing a U.S. IPO or foreign private issuer (FPI) listing should evaluate their reporting, governance, and audit infrastructure early in the process.
