Nasdaq to tighten rules amid concerns over Chinese firms – BBC News

A Luckin Coffee store in Beijing Daxing international airport.

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Nasdaq has proposed new guidelines to make it harder for some Chinese language companies to record on its inventory change.

Its proposals would imply firms from sure nations must increase at the least $25m (£14.4m) or 1 / 4 of their post-listing valuation to record.

Harder accounting guidelines will even apply for listings, that are known as Preliminary Public Choices (IPOs).

The announcement comes as tensions improve between the US and China within the wake of the Luckin Espresso scandal.

The proposed rules don’t single out Chinese language companies however do embody extra measures for firms that primarily function in international locations whose legal guidelines make it onerous for American authorities to conduct investigations.

“The dangers to US buyers are heightened when an organization’s enterprise is principally administered in a jurisdiction that has secrecy legal guidelines, blocking statutes, nationwide safety legal guidelines or different legal guidelines or rules proscribing entry to info by regulators of US-listed firms in such jurisdiction,” Nasdaq mentioned.

It comes at a time when rising tensions between Beijing and Washington in current months makes co-operation over monetary market rules far much less seemingly. US-China relations have worsened amid accusations concerning the coronavirus pandemic.

Final week, Donald Trump moved to dam a federal retirement fund from investing in Chinese language firms. The US president additionally mentioned he was taking a look at Chinese language firms which are listed on American inventory exchanges however don’t observe US accounting guidelines.

The plans are topic to approval by the US monetary watchdog, the Securities and Alternate Fee.

Luckin out

Many US buyers are nonetheless reeling after revelations of a multi-million greenback scandal at Chinese language espresso chain Luckin.

Shares within the firm slumped final month after it mentioned that certainly one of its prime executives and different staff had faked gross sales figures.

The corporate mentioned its personal investigation had discovered that fabricated gross sales from the second quarter of final 12 months to the fourth quarter amounted to about 2.2bn yuan ($310m; £250m). That equates to about 40% of its estimated annual gross sales.

The Chinese language espresso chain has since sacked its chief govt and chief working officer, whereas six different staff who had been alleged to have been concerned in or recognized concerning the transactions have been suspended or placed on depart.

The scandal-hit agency mentioned it has been co-operating with regulators within the US and China, who’ve begun an investigation into the corporate.

Luckin’s Nasdaq itemizing had been certainly one of China’s few profitable US inventory market debuts of 2019.

The agency’s shares had been suspended from commerce on 7 April. The Nasdaq change mentioned the shares would stay halted till Luckin had absolutely happy its request for added info.

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