Nasdaq Proposes Changes to Initial and Continued Listing Standards

The Nasdaq Stock Market LLC (“Nasdaq”) recently proposed modifications to its initial and continued listing standards (“Proposed Listing Standards”). The Proposed Listing Standards were submitted to the U.S. Securities and Exchange Commission (“SEC”) on September 3, 2025, for review.[1] If approved by the SEC, the Proposed Listing Standards would introduce both increased requirements for minimum company public float and capital raised during initial public offerings and stricter suspension and delisting procedures for companies failing to meet Nasdaq’s continued listings standards.

Note that if approved, Nasdaq plans to implement the changes to the initial listing requirements promptly, offering a 30-day window for companies already in the listing process to complete the process under the prior standards. Thereafter all new listings will have to meet the new requirements. As discussed further below, a key aspect of the Proposed Listing Standards is the reintroduction of a minimum public offering proceeds requirement specifically for companies principally operating in China. If approved, this could significantly raise the entry barrier for these companies into U.S. capital markets.

US$15 Million Minimum Market Value of Unrestricted Publicly Held Shares for New Listings

Nasdaq is proposing to raise the minimum Market Value of Unrestricted Publicly Held Shares (“MVUPHS”) requirement for companies listing under the net income standard on the Nasdaq Global Market and the Nasdaq Capital Market. Unrestricted Publicly Held Shares are shares that are not held by an officer, director or 10% shareholder and that are free of resale restrictions.

Currently, a company must have a minimum MVUPHS of US$8 million under the income standard for initial listing on the Nasdaq Global Market[1] or a minimum MVUPHS of US$5 million under the net income standard for initial listing on the Nasdaq Capital Market.[1] The Proposed Listing Standards would increase the MVUPHS requirement to US$15 million for companies listing under the net income standard for both the Nasdaq Global Market and the Nasdaq Capital Market.

As Nasdaq explains in its proposal, the MVUPHS standard is one of the core liquidity requirements of the Nasdaq listing rules. Like the other liquidity requirements, it is meant to ensure there is sufficient liquidity to provide price discovery and support an efficient and orderly market for a company’s securities. However, Nasdaq continues to observe problems with the trading of smaller company listings with low liquidity, including a lack of price discovery and ongoing noncompliance with Nasdaq’s listing rules, and Nasdaq has therefore proposed the increases to the minimum MVUPHS to help address these concerns.

Accelerated Suspension and Delisting if MVLS Is Less Than US$5 Million

Nasdaq is also proposing to amend its rules to accelerate the suspension and delisting process for certain noncompliant companies. Specifically, if a company that has a Market Value of Listed Securities (“MVLS”) of less than US$5 million becomes noncompliant with a quantitative continued listing requirement (minimum bid price, MVLS or market value of publicly held shares), it will be subject to immediate suspension and delisting without a compliance period. Based on the noncompliant-companies list disclosed by Nasdaq as of October 27, 2025, 235 Nasdaq-listed companies are currently failing to meet Nasdaq’s continued listing standards.[1]

Under the current rules, a company listed on Nasdaq that falls out of compliance with quantitative continued listing requirements is typically granted a 180-day grace period to regain compliance. A request for a hearing usually stays the delisting process. The Proposed Listing Standards would eliminate the grace periods for a company whose MVLS has remained below US$5 million for 10 consecutive business days. According to the Proposed Listing Standards, Nasdaq believes it is not appropriate for such a company to continue trading on Nasdaq during the pendency of a hearing and will suspend trading in its securities immediately.

These rules would take effect 60 days after SEC approval.

Heightened Listing Standards for China-Based Companies

Nasdaq is also proposing to adopt new listing requirements for companies headquartered, incorporated or principally administered in China (including Hong Kong and Macau):

• IPOs: Companies seeking to list on Nasdaq must raise a minimum of US$25 million in public offering proceeds.
• De-SPAC Transactions: Following a de-SPAC transaction, the company must have a minimum MVUPHS of at least US$25 million.
• Direct Listings: Companies will be precluded from listing on the Nasdaq Capital Market in connection with a direct listing.
• Transfers From Other Markets: In the case of a company transferring its listing from the OTC market or from another national securities exchange, the company must have a minimum MVUPHS of at least US$25 million and have traded on the other market for at least one year before it is eligible to list on Nasdaq.

A company is considered “principally administered in China” if any of the following tests are met:

1. the company’s books and records are located in China;
2. at least 50% of the company’s assets are located in China;
3. at least 50% of the company’s revenues are derived from China;
4. at least 50% of the company’s directors are citizens of, or reside in, China;
5. at least 50% of the company’s officers are citizens of, or reside in, China;
6. at least 50% of the company’s employees are based in China; or
7. the company is controlled by, or under common control with, one or more persons or entities that are citizens of, reside in or whose business is headquartered, incorporated or principally administered in China.

These rules would take effect 30 days after SEC approval.

Takeaways

Nasdaq’s proposed amendments to its initial and continued listing standards (SR-NASDAQ-2025-068 and SR-NASDAQ-2025-069) remain subject to SEC review and approval, which could take up to 90 days or longer. If adopted, smaller companies, and particularly those based in China, will face higher thresholds to list and maintain their status on Nasdaq.