What Public Companies and IPO Candidates Need to Know About Changes at Nasdaq

Nasdaq has announced new rules and proposals aimed at strengthening market integrity, liquidity, and investor protection. These changes impact both current and prospective listed companies. CEOs, CFOs, audit committees, and boards may benefit from understanding these updates to avoid listing challenges and maintain compliance in a shifting regulatory environment.

Below is an overview of recent Nasdaq updates and related considerations for public companies and IPO candidates.

Nasdaq Gains Discretion to Deny Initial Listings Based on Manipulation Risk

Effective December 19, 2025, Nasdaq introduced new interpretive material (IM-5101-3) that gives the exchange expanded discretion to deny an initial listing—even when a company meets all quantitative listing standards.

Previously, listing eligibility was based mainly on objective financial and governance criteria. Under the new rule, Nasdaq may deny a listing if qualitative factors indicate the company’s stock could be vulnerable to manipulative trading, including by unaffiliated third parties.

Nasdaq may evaluate several factors when making this determination, including:

• Company location: Whether legal protections for U.S. shareholders are limited or enforcement is difficult due to foreign jurisdiction issues.
• Ownership structure: Whether individuals or entities with significant influence are located in jurisdictions with enforcement or transparency challenges.
• Liquidity and public float: Whether share distribution raises concerns about concentration or insufficient liquidity.
• Advisor history: Whether auditors, underwriters, law firms, or other advisors have been involved in prior transactions with unusual or concerning trading patterns.
• Management and board experience: Whether leadership has experience operating under U.S. public company and Nasdaq requirements.
• Regulatory history: Any regulatory referrals or investigations involving the company or its advisors.
• Audit considerations: Going concern audit opinions or other indicators of financial instability.
• Overall governance and integrity concerns.

This rule aligns with the SEC’s recent actions to suspend trading in several newly listed companies amid suspected manipulation. Importantly, companies denied listing under this provision will receive a written explanation and may request review by a Nasdaq Hearings Panel.

Higher Liquidity Requirements for Initial Listings Under Income Standards

Nasdaq has raised liquidity requirements for companies listing under the net income standard. Beginning January 17, 2026, companies on the Nasdaq Global Market or Capital Market using income-based criteria must have at least $15 million in unrestricted publicly held shares, up from previous minimums of $8 million and $5 million. Nasdaq found that low public float levels limited liquidity, increased volatility, and hindered orderly trading.

Nasdaq calculates public float based only on shares held by public investors. Shares held by officers, directors, significant shareholders, or subject to resale restrictions are excluded. For IPOs or uplistings, Nasdaq reviews shares sold in the offering to assess liquidity. Raising the minimum public float establishes a more consistent liquidity standard and is intended to support orderly trading.

Stricter Continued Listing Standards and Accelerated Delisting

Nasdaq has adopted and proposed rules to accelerate delisting for companies that fall below minimum price and market value thresholds. These changes reinforce Nasdaq’s commitment to orderly markets and investor protection.

Beginning January 19, 2026, companies with a closing bid price of $0.10 or less for 10 consecutive business days will face immediate trading suspension and delisting, with no grace period. Companies may appeal, but their shares typically trade over the counter during the review. Nasdaq has indicated that companies trading at these price levels historically face significant challenges in regaining compliance.

Nasdaq has proposed a new continued listing rule requiring companies on its Global and Capital Markets tiers to maintain a minimum market value of listed securities of at least $5 million. If a company falls below this threshold for 30 consecutive business days, it will face immediate suspension and delisting, with no opportunity to cure. Appeals are only considered if Nasdaq made a factual error, not to allow additional time for compliance.

Proposed Stricter Offering Requirements for China-Based Companies

Nasdaq has proposed new listing standards for companies based in China, including Hong Kong and Macau. Under the proposal, these companies would be required to raise at least $25 million in gross proceeds from U.S. public investors when listing through an IPO.

The exchange has cited concerns related to transparency, liquidity, and regulatory oversight. The proposed requirements would also apply to de-SPAC transactions, direct listings, and uplistings involving China-based companies. The proposal remains under SEC review. If approved, it would establish additional offering thresholds and listing requirements for companies from these jurisdictions seeking to access U.S. public markets.

What These Changes Mean for Companies

These updates reflect a shift toward stricter listing standards and broader eligibility reviews. While financial thresholds remain important, Nasdaq is placing greater emphasis on governance, ownership structure, advisor credibility, and overall market readiness. Companies planning to go public or remain listed may need to evaluate whether their leadership, governance, and advisor relationships align with Nasdaq’s expanded qualitative review standards.

The rule changes also increase the importance of sufficient public float and trading liquidity. Nasdaq’s updated requirements are intended to support orderly trading and reduce risks associated with volatility or share concentration. These changes may also result in increased scrutiny of stock price, market capitalization, and trading activity, particularly as Nasdaq accelerates delisting timelines and proposes stricter continued listing requirements.

How CRI Can Help

Nasdaq’s evolving rules reflect a stronger focus on transparency, liquidity, and market stability. These changes may impact listing timelines, compliance planning, and overall capital markets strategy.

If your organization is planning to go public, evaluating listing readiness, or seeking to maintain Nasdaq compliance, CRI can help you understand these changes and their potential impact. Contact your CRI advisor to discuss your situation and ensure you are prepared for Nasdaq’s evolving regulatory landscape. Understanding these changes early may help organizations better navigate listing and compliance requirements.