Nasdaq Rule 5210(l) (2026): What the US$25 Million Threshold Means for China-Based Issuers
Effective 13 June 2026, Nasdaq Rule 5210(l) adds a set of listing conditions that apply only to China-based issuers: a firm commitment offering raising at least US$25 million, US$25 million in unrestricted public float after a business combination, direct listings limited to the Global Select Market, and a one-year seasoning period before uplisting from OTC. Here is what it changes for your listing route and your team.
What actually changed: a rule aimed at China-based issuers
On 14 May 2026 the SEC accelerated approval of Nasdaq Rule 5210(l), effective 13 June 2026. It does not raise the general thresholds for everyone. It adds a separate set of listing conditions that apply only to China-based issuers, on top of the existing financial and liquidity standards.
In practice a Chinese company now clears two gates: the exchange-wide financial standards (equity, market value of listed securities, or net income) plus the public float threshold, and then this additional set. Fail either one and you do not list.
That distinction matters. Meeting the general standards no longer means you can list — China-based issuers have to answer the new conditions separately.
Who counts as China-based: a look-through test, not a place of incorporation
The test is look-through and covers mainland China, Hong Kong and Macao. It does not turn on where the company is incorporated but on substance: whether more than 50% of assets, revenue, directors, officers or staff are China-linked.
This has real consequences for structuring. Moving the holding company offshore does not change the outcome. The most common mistake is assuming a new jurisdiction of incorporation gets you out; the look-through test looks at where the business actually is.
So before any route is chosen, the first question is not which exchange — it is whether you will be classified as China-based at all. Get that wrong and everything downstream is built on sand.
The four conditions, one at a time
First, an IPO must be a firm commitment offering raising at least US$25 million in gross proceeds from US public holders. Best-efforts offerings no longer qualify, and a large share of small-cap China-related IPOs historically relied on exactly that structure.
Second, after a business combination — a SPAC merger, a reverse merger or similar — the Market Value of Unrestricted Publicly Held Shares must be at least US$25 million. The old "shell first, raise later" route is tightened in the same stroke.
Third, direct listings are limited to the Nasdaq Global Select Market. Companies that wanted to list without raising capital now have a defined tier to aim at.
Fourth, uplisting from OTC requires at least one year of continuous trading on the prior market, plus US$25 million in unrestricted publicly held share value at the time of uplisting. Treating OTC as a short layover is now an expensive assumption.
For comparison: the general threshold moved too
One companion change is easy to miss. On the Nasdaq Capital Market the unrestricted public float requirement for all issuers rose from US$5 million to US$15 million, effective 17 January 2026.
Keep the two numbers apart. A China-based issuer faces US$25 million on combination transactions; other issuers face US$15 million on that tier. The gap bites hardest on small offerings and shell-based deals.
For reference on the financial side, the net income standard requires at least US$750,000 of net income from continuing operations in the latest fiscal year or in two of the last three. The financial tests did not move — the float and offering-structure tests did.
Four mistakes we expect to see this year
The first is designing the offering on a best-efforts basis. The rule requires firm commitment. Discovering this at filing stage means starting over, and the timetable slips at least a quarter.
The second is treating US$25 million as a target rather than a floor. Size the deal close to the threshold and an under-subscription puts you out of compliance. The real objective is a margin of safety, not clearing the bar by a hair.
The third is under-estimating the twelve months on OTC. Many plans treat OTC as a transitional step and never schedule it as a full year, then stall at the uplisting window.
The fourth is assuming this is a finance problem. It is equally an offering-structure problem, an underwriting problem and a scheduling problem — it needs someone who can read the rule text and the offering document at the same time.
Where this lands: on people
A US$25 million firm commitment test really asks three questions. Can the offering be structured so an underwriter will commit? Can the financials be brought to a standard an underwriter will sign? Can the timetable be sequenced so the rule does not catch you?
Those map onto three kinds of people: a CFO or finance lead who has built a US offering structure, a reporting team that can convert Chinese books to US GAAP and deliver 10-Q and 10-K filings, and someone who can carry SEC comment rounds. For Chinese companies the usual gap is not the first — it is the second and third.
51CFO works only on the US listing leg: we place Western CFOs who have completed a full US IPO cycle, and other C-level roles on the listing team, for Chinese and Chinese-founded companies. We do not work on Hong Kong, A-share or Beijing Stock Exchange listings, nor Singapore or London, and we do not do general finance recruiting unrelated to a listing.
If you are already moving under the old assumptions, the cheapest next step is a rule review before a hiring plan. Reverse that order and the person you hire cannot be used.
Common questions
When does Nasdaq Rule 5210(l) take effect?
It was approved by the SEC on 14 May 2026 and took effect on 13 June 2026, applying specifically to China-based issuers. Always check the exchange's current rulebook for the operative text.
My company is incorporated in the Cayman Islands or BVI — does it still count as China-based?
Yes. The test is look-through, not based on place of incorporation. It looks at whether more than 50% of assets, revenue, directors, officers or staff are linked to mainland China, Hong Kong or Macao. An offshore holding structure does not change the classification.
Is US$25 million a fundraising number or a public float number?
It depends on the route. On an IPO the requirement is a firm commitment offering raising at least US$25 million in gross proceeds from US public holders. After a business combination — SPAC, reverse merger or similar — the requirement is US$25 million in Market Value of Unrestricted Publicly Held Shares. They are different measures and one does not substitute for the other.
Can we still use a best-efforts offering?
For China-based issuers on the IPO route, no — the rule requires a firm commitment offering. A deal designed on a best-efforts basis does not comply and has to be restructured at the planning stage; the later you find out, the more it costs. Check the exchange's current rulebook.
We have already started — is it too late to add people?
No, but reverse the order: review the offering structure and timetable against the new rule first, then define the role. 51CFO answers whether we can take a brief on the day it is submitted, starts targeted search within 24 hours of the deposit, delivers a first shortlist within 24 hours, and averages 11 days to signing. If no suitable candidate emerges, the deposit is refunded in full.
Keep reading
Send the business, the target timetable and where your financials stand today. We answer the same day on whether we can take it on — and if we do, the 30-minute route diagnosis is free and carries no obligation.
Book a call