Nasdaq Set to Tighten Listing Rules, Impacting Chinese IPOs
Nasdaq Inc. is planning new rules that would make initial public offerings more difficult for some Chinese companies, thrusting the U.S. exchange into the middle of an increasingly contentious debate over financial linkages between the world’s largest economies.
The proposed regulations include minimum fundraising thresholds and stricter requirements for auditors, according to Nasdaq filings with the Securities and Exchange Commission seen by Bloomberg News. While the rules wouldn’t only apply to China, companies from there would be among the most affected.
Nasdaq’s proposal follows a string of accounting scandals at Chinese firms that have burned some of the biggest names on Wall Street and drawn the attention of Donald Trump. The U.S. president said last week he’s “looking at” Chinese companies that don’t follow American accounting rules, while his administration moved to stop a federal retirement savings fund from investing in the Asian nation’s stocks. Relations between the superpowers have deteriorated in recent months across multiple fronts, from trade to the coronavirus.
Nasdaq’s proposals include requiring companies from certain countries to raise at least $25 million in their IPO, or alternatively, an amount equal to at least a quarter of their post-listing market capitalization. Of the 29 Chinese companies that went public on the Nasdaq last year, 10 raised less than $25 million, data compiled by Bloomberg show.
May 22, 2020