Nasdaq Tightens Rules On Chinese Companies

 Nasdaq Tightens Rules On Chinese Companies

Nasdaq Tightens Rules On Chinese Companies

The Chinese companies may face tightened rules on the Nasdaq exchange. Getting listed will become tough. At least a $25 million fund is to be raised or 25 percent of their listing valuation. Simultaneously, the accounting rules will become strict for IPOs.

The Luckin Coffee scandal has given rise to tensions between China and the United States lately, but the proposed changes have not been formed only for China. However, it is true that American investigators find difficulties while conducting investigations in companies that are operated in foreign countries with completely different laws.

Risk to investors is extremely high with such companies as their jurisdictions are completely different. Simultaneously, the tensions between the two countries were high in recent months. The US president said they are such Chinese companies that are being searched which are listed on the American exchanges but fail to follow the US rules.

Meanwhile, the shares of Luckin dropped after an official statement that some of the employees have faked the sales figures. Investigations have the company has fabricated the sales.

Meanwhile, the company has sacked its chief operating officer and chief executive. About six more employees have been put on leave as they are alleged to have helped in the wrongdoing.

The company said they are cooperating with the regulators in China as well as in the US.

Luckin is one of the most successful Chinese companies listed on the Nasdaq. Its shares have been put on suspension since April 7 and to remain as it is unless the company satisfies the regulator fully. It is important the companies abide by the local rules.

Both Nasdaq and NYSE have lately taken several steps to protect American investors from any potential fraud or risk while investing in foreign companies.

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