Nasdaq Proposes Changes to Initial and Continued Listing Standards

The Nasdaq Stock Market LLC (Nasdaq) recently submitted proposed enhancements to its initial and continued listing standards to the US Securities and Exchange Commission (SEC), aiming to strengthen its longstanding commitment to capital formation, investor protection, and market integrity.

The updates would introduce heightened requirements for minimum public float and capital raised during initial public offerings—particularly for China-based companies—alongside stricter suspension and delisting procedures for issuers that fail to meet Nasdaq’s continued listing criteria.

If adopted, these changes could raise the entry and retention thresholds for smaller issuers, especially those from China.

MINIMUM $15 MILLION MVUPHS FOR INITIAL LISTING

The current Nasdaq Listing Rules require a company to have a minimum Market Value of Unrestricted Publicly Held Shares (MVUPHS)—i.e., market value of shares that are not held directly or indirectly by an officer, director, or 10% shareholder and which are not subject to resale restrictions of any kind.

For initial listing on the Nasdaq Global Market, a company must have a minimum MVUPHS of $8 million under the income standard, and for initial listing on the Nasdaq Capital Market, a company must have a minimum MVUPHS of $5 million under the net income standard.

Recently, Nasdaq amended the liquidity requirements for initial listing such that shares registered for resale are no longer counted as Unrestricted Publicly Held Shares, as a result of which a newly listing company listing in connection with an initial public offering must meet the MVUPHS based on shares being sold in the offering. However, when Nasdaq made this change, it did not increase any of the numeric requirements for MVUPHS under any of the listing standards.

Now, Nasdaq is proposing to increase the minimum MVUPHS for companies listing under the net income standard on the Nasdaq Capital Market from $5 million to $15 million. In addition, to avoid having the standard on the Nasdaq Global Market be lower than that on the Capital Market, Nasdaq also proposes to increase the minimum MVUPHS for companies listing under the net income standard on the Global Market from $8 million to $15 million.

Nasdaq proposes to make the above rule change operative for companies listing 30 days after the SEC’s approval; in other words, after the SEC’s approval, companies already in the initial listing process have a period of 30 days to complete the process under the original standards, and thereafter all new listings will have to meet the new requirements.

ACCELERATED SUSPENSION AND DELISTING IF MARKET VALUE OF LISTED SECURITIES IS LESS THAN $5 MILLION

Nasdaq Listing Rules establish minimum quantitative standards that companies must meet to remain listed. If a company fails to maintain compliance with these standards, it may be granted a period to regain compliance. Generally, a Nasdaq-listed company is provided a 180-calendar-day compliance period if it fails to meet continued listing requirements related to minimum bid price, market value of listed securities, or market value of publicly held shares; and a 30-calendar-day compliance period may apply if the company fails to meet the requirement for the minimum number of market makers.

For other quantitative deficiencies—such as stockholders’ equity, net income, number of public holders, number of publicly held shares, total assets, or total revenue—Nasdaq does not automatically grant a compliance period. Instead, the company may submit a plan of compliance for Nasdaq’s review. Upon review, Nasdaq may grant an extension of up to 180 calendar days to regain compliance. Based on the noncompliant companies list disclosed by Nasdaq as of September 10, 2025, around 300 Nasdaq-listed companies failed to meet the quantitative continued listing requirements.

If the company fails to regain compliance within the applicable period, or if Nasdaq rejects the compliance plan, Nasdaq will issue a delisting determination letter. Upon receiving this letter, the company may request a hearing in a timely manner. This request generally stays the suspension and delisting process, except in certain circumstances where a stay is not permitted under Nasdaq rules.

In recent years, while Nasdaq has already taken actions to enhance its listing standards and more quickly delist certain companies that have repeated failures to maintain compliance with those standards, Nasdaq now proposes further to provide for suspension from Nasdaq trading and immediate delisting (rather than providing a compliance period) of any company that becomes noncompliant with a numeric listing requirement and that has a market value of listed securities of less than $5 million for a period of 10 consecutive business days.

In addition, Nasdaq also proposes that a request for a hearing shall not stay the suspension of the securities from trading where the matter relates to a request made by a company that received a delisting determination notice due to noncompliance with one or more numeric listing requirements and the company’s market value of listed securities has failed to maintain a value of at least $5 million for a period of 10 consecutive business days.

Nasdaq proposes to make the above proposed rule change effective for new notifications of noncompliance sent beginning 60 days after the SEC’s approval.

STRICTER LISTING REQUIREMENTS FOR CHINA-BASED COMPANIES ON NASDAQ

Nasdaq is also proposing to adopt a new listing requirement for companies based in China specifically. For any company that is headquartered or incorporated in China (including Hong Kong and Macau), or whose business is principally administered in one of those jurisdictions,

• in the case of an initial public offering, the company must offer a minimum amount of securities in a firm commitment offering in the United States to public holders that will result in gross proceeds to the company of at least $25 million;
• in the case of a business combination, the company must have a minimum MVUPHS following the business combination equal to at least $25 million;
• in the case of a direct listing, the company must meet all applicable listing requirements for the Nasdaq Global Select Market or for the Nasdaq Global Market, and such company will not be permitted to list on the Nasdaq Capital Market in connection with a direct listing; and
• 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 $25 million and have traded on the other market for at least one year.

Nasdaq will determine where a company is principally administered based on an analysis of the facts and circumstances, including whether (1) the company’s books and records are located in that jurisdiction; (2) at least 50% of the company’s assets are located in such jurisdiction; (3) at least 50% of the company’s revenues are derived from such jurisdiction; (4) at least 50% of the company’s directors are citizens of, or reside in, such jurisdiction; (5) at least 50% of the company’s officers are citizens of, or reside in, such jurisdiction; (6) at least 50% of the company’s employees are based in such jurisdiction; 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 such jurisdiction.

Nasdaq is proposing a delay of 30 days after approval before the changes become effective. Therefore, companies listing on or after 30 days from the date the SEC’s approval order must comply with the proposed rules.

NEXT STEP

Nasdaq’s proposed amendments (SR-NASDAQ-2025-068 and SR-NASDAQ-2025-069) remain subject to the SEC review and approval. The SEC will make its decision within 45 days of the date of publication of the proposals in the Federal Register or within such longer period (1) as the SEC may designate up to 90 days of such date or (2) as to which Nasdaq consents.

Once adopted, smaller issuers may face higher thresholds when seeking to list on Nasdaq or maintain their listing status. The proposed rules may also deter speculative or low-float listings, aligning with broader efforts to protect investors and ensure robust trading activity.

Companies considering a US listing—particularly those with China-based operations—should closely monitor developments. Early strategic preparation could play a key role in adapting to the shifting regulatory environment.