Understanding Nasdaq’s Proposed Listing Standard Changes

On September 3^rd 2025, Nasdaq proposed changes to its initial and continued listing standards as described below:

Proposed Changes

• New Rule: Increase the minimum market value of publicly held shares (“public float”) to $15 million for initial listings under the net income standard.

Existing Nasdaq Rule: New listings under the net income standard must have $5 million in market value of unrestricted publicly held shares. As of April 2025, companies listing in conjunction with an initial public offering (IPO) must meet this requirement solely with the offering proceeds.

• New Rule: Nasdaq would “accelerate” suspension and delisting for companies that have listing deficiencies and a market capitalization of less than $5 million. Nasdaq has yet to define how many days it will grant companies with deficiencies.

Existing Nasdaq Rule: Issuers are typically sent a Nasdaq deficiency notice if they are out of compliance with the following continued listing requirements:

• Minimum Bid Price: Share price is less than $1.00 for 30 trading days
• Market Value of Listed Securities (MVLS): Market capitalization of less than $35 million for 30 trading days (for Nasdaq Capital Market)
• Market Value of Publicly Held Shares (MVPHS): Public float less than $1 million for 30 trading days (for Nasdaq Capital Market)

Nasdaq gives issuers 180 calendar days to cure the deficiency. The issuer must meet the listing requirements for 10 consecutive trading days to regain compliance.

• New Rule: Companies that principally operate in China must raise at least $25 million in public offering proceeds for new listings.

Existing Nasdaq Rule (Not Applicable to China): A company listing its primary equity security on Nasdaq in connection with an IPO, and that principally administers its business in a “Restrictive Market”, must offer a minimum amount of securities in a firm commitment offering in the U.S. that results in the lesser of (a) $25 million in gross proceeds, or (b) 25% of post-offering MVLS.

“Restrictive Market” means a jurisdiction that does not provide the PCAOB with access to conduct inspections of public accounting firms that audit Nasdaq-listed companies. A company is considered to be principally administered in a Restrictive Market if (i) the books and records are located in that jurisdiction; (ii) at least 50% of the its assets are located in such jurisdiction; or (iii) at least 50% of its revenues are from such jurisdiction.

China is currently not considered a “Restrictive Market” as it granted the PCAOB inspection access in December 2022.

Implementation Timeline

Nasdaq submitted the proposed rules to SEC for review on September 3, 2025. If the changes are approved, Nasdaq will implement them according to the following timelines:

• For the initial listing requirement rule changes (#1 and #3 above), Nasdaq will give companies already in the initial listing process a 30-day grace period before the rule comes into effect. All initial listings thereafter will be expected to adhere to the new rules.
• For the accelerated suspension and/or delisting process (#2 above), Nasdaq has proposed implementing the new rule 60 days after SEC approval.

ARC Group Provides Solutions

ARC Group remains a trusted advisor for initial public offerings, as well as other listing methods. We believe these new proposed rules will make SPAC IPOs, deSPACs, and RTOs more prevalent for companies exploring a listing on Nasdaq. ARC Group is a market-leading advisor for these alternative and flexible listing methods, both for domestic and foreign companies. We stand ready to guide clients in structuring transactions, navigating regulatory updates, and maintaining access to capital markets.

In addition, ARC Group has extensive experience assisting public companies with ongoing regulatory and exchange compliance. This includes assisting companies cure any deficiencies and regaining compliance with Nasdaq listing requirements in a timely manner.

ARC Group will continue to monitor updates to the proposed rule changes and share its thoughts on its website promptly. Please feel free to contact us if you have any questions.