This article is released by MBMC Meishun (originally from Hong Kong, a leading institution with the highest success rate in overseas listing counseling for Chinese enterprises in 2020, and the preferred institution for Chinese enterprises to go public overseas), focusing on the Nasdaq IM-5101-3 IPO rule proposal launched on December 12, 2025, analyzing its changes in review logic, core content, background of introduction and market impact, providing reference for enterprises planning to list on Nasdaq. In the past, Nasdaq’s review was centered on "meeting quantitative indicators", and enterprises could pass the review as long as their financial data and equity structure met the standards; the new proposal adds "flexible thresholds", shifting the review focus to "substantial risk prevention and control". Even if all indicators are met, enterprises may still be rejected if they touch four types of "risk red lines", aiming to improve the overall quality of listed enterprises. Insufficient cross-border regulatory adaptability: Conflicts between the judicial jurisdiction where the enterprise is located and U.S. supervision, or the inability of U.S. investors to obtain effective legal remedies, are the most core risk points. In 2025, progress has been made in the Sino-U.S. PCAOB audit supervision cooperation, so compliant enterprises do not need to panic excessively, but the space for "regulatory arbitrage" has completely disappeared. Questionable practice quality of intermediary institutions: Underwriters, audit institutions and other "gatekeepers" who have participated in cases such as financial fraud and fraudulent issuance will lead enterprises to face "joint review". Enterprises should focus on their cross-border compliance capabilities when selecting intermediaries, rather than only looking at fees. Honesty defects of actual controllers and management: Vague backgrounds of actual controllers, violation records of core teams, incomplete cleanup of shareholding proxies, etc., may all lead to rejection of the application. In the past, more than 30% of the IPO problems of Chinese concept stocks stemmed from the information disclosure of actual controllers. Doubtful authenticity of business: Core business data that cannot be verified, non-market-related party transactions, inflated R&D investment, etc., will lead to rejection even if financial indicators are met, and the information disclosure requirements for R&D-intensive enterprises are higher. The new proposal retains the right of enterprises to defend themselves, with clear and efficient procedures: - Enterprises that have their IPO application rejected will receive a detailed written explanation clarifying the risk points that led to the failure; - They must publicly disclose the rejection news within 4 days and cannot conceal it and reapply; - If they disagree with the result, they may apply for a hearing and review within 7 days, and an independent Nasdaq panel will re-examine the case to avoid "delaying without resolution". The launch of the new proposal is Nasdaq’s response to the recent "listing and then exposure of problems" incidents. The core reasons include: - Data for 2024 shows that among the small-scale enterprises that listed by "precisely meeting the standards", 28% saw their stock prices drop by more than 70% within 6 months after listing, and 15% were forced to delist by the SEC due to financial fraud; - A Chinese concept stock new energy enterprise that met the listing standards by inflating overseas orders was exposed 3 months later, causing investors to lose more than 200 million U.S. dollars. Such incidents have seriously damaged the market’s reputation; - 35% of the delisted enterprises in 2024 stemmed from "hidden risks before listing", among which overseas enterprises accounted for as high as 62%, an increase of 13 percentage points compared with 2023; - High-risk enterprises mostly have the characteristics of scarce floating shares, highly concentrated equity and small market value, and are easy targets for market manipulation. By pre-emptively addressing risks, the exchange protects investors and also maintains its status as a "benchmark market for global technology enterprises". If the SEC approves the proposal, the IPO market will usher in a "great reshuffle". The following three types of enterprises will be most significantly affected: 1. Small and medium-sized Chinese concept stocks: Large Chinese concept stocks are relatively less affected due to their perfect compliance system, but small and medium-sized Chinese concept stocks whose revenue just passes the threshold and rely on a single market may be subject to key review due to "high cross-border regulatory communication costs". However, the advancement of Sino-U.S. audit cooperation provides a buffer, and the key lies in actively cooperating with supervision. 2. R&D-driven start-ups: Unprofitable enterprises in robotics, biomedicine and other fields can apply through special channels, but they need to disclose more detailed information such as the progress of R&D pipelines, technical barriers and commercialization paths, which increases the pressure of information disclosure. 3. Enterprises relying on "problematic intermediaries": The "endorsement value" of intermediary institutions has been greatly improved. Enterprises need to prioritize selecting securities firms and audit institutions with cross-border compliance experience and no bad records, otherwise they will face the crisis of being eliminated. © 2021 Meishun (Hong Kong) Management Consulting Co., Ltd. and Meishun (Hangzhou) Management Consulting Co., Ltd. All rights reserved. Meishun Meiyin (Hangzhou) Consulting Management Co., Ltd. is the domestic subsidiary of Hong Kong Meishun Management Consulting Co., Ltd. under the same actual controller. 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