NASDAQ plans to tighten IPO rules due to Chinese companies

The New York NASDAQ exchange is going to unveil new restrictions on initial public offerings (IPOs), which will make it difficult for some Chinese companies to IPO, Free News reports, citing sources. The move is allegedly driven mainly by concerns about the lack of transparency in the accounting of some Chinese IPO contenders and close ties to influential insiders.

NASDAQ unveiled some restrictions on listings last year to deter IPOs of small Chinese companies. The new stricter listing standards reflect the exchange operator’s concerns about some Chinese companies seeking IPOs in the US. Last month, Luckin Coffee, which held an IPO in the US in early 2019, announced that an internal investigation revealed that its chief operating officer and other employees had fabricated sales deals.

The new rules will require companies from some countries, including China, to raise $25 million in an IPO, or at least a quarter of the market capitalization after listing, sources said.

According to Dealogic, the total amount raised by companies conducting IPOs on NASDAQ was $32.4 billion in 2019, compared to $ 26.2 billion for the NYSE. At the same time, the NYSE claims that it surpasses NASDAQ in the total amount of funds raised through it (that is, not only during the IPO but also in other ways). Both NASDAQ and NYSE have had 11 IPOs since the beginning of the year, and the number of funds raised during each of them exceeded $500 billion.

NASDAQ is traditionally the IPO site for many technology companies, while companies from a wide variety of industries are listed on the NYSE.

Tags: ,