Nasdaq is going to introduce new restrictions on initial public offerings, or IPOs, to prevent smaller Chinese companies from getting listed.
On May Reuters reported citing anonymous sources claiming Chinese IPO seekers tend to lack accounting transparency and have “close ties to powerful insiders.”
Exclusive: Nasdaq is set to unveil new restrictions on IPOs, a move that will make it harder for some Chinese companies to debut on its stock exchange, sources said https://t.co/OTZSyPV5D6 via @DEER_ECHO_ — Reuters (@Reuters) May 19, 2020
This is why the new rules will reportedly set out a minimum value on the size of IPOs for the first time on Nasdaq.
To be specific, NASDAQ might require companies “from some countries, including China,” to raise at least $25 million in their offering or at least a quarter of their post-listing market capitalization.
The sources clarified that Chinese companies won’t be officially cited as the reason for the adjusted requirements.
Data cited by Reutuers showed that a total of 155 Chinese firms have gone public via Nasdaq since 2000, 40 of those grossed IPOs fall short of $25 million.
All crypto-related Chinese companies listed on Nasdaq and other U.S. stock exchanges (such as Canaan Creative and OneConnect) have surpassed that number.
Rumored and existing applicants Bitmain and Ebang are hoping to raise over at least $100 million, the projected changes are still expected to introduce more scrutiny for all Chinese applicants.
The auditing firms of yet-be-listed Chinese companies will have to ensure that their international franchises comply with “global standards.”
Nasdaq will also examine the auditing of small U.S. firms that audit the accounts of Chinese IPO hopefuls.