At Torres & Zheng at Law, P.C., we advise foreign private issuers—particularly those based in China—on structuring public company access through IPOs, business combinations with a Special Purpose Acquisition Company (“SPAC”) transactions, and other creative financing tools. This article outlines the comparative pros and cons of each approach, with special attention to the latest regulatory developments affecting the IPO and uplisting environment.
Traditional IPOs: Still the Gold Standard, But Harder to Achieve
A traditional IPO through a firm commitment underwriting offers several advantages: broad market exposure, credibility with institutional investors, and access to long-term capital. However, for many emerging-market issuers, particularly China-based firms, this path is increasingly difficult.
Under current Nasdaq rules, companies seeking to list on the Capital Market must meet one of three standards:
- Equity Standard: At least $5 million in stockholders’ equity, 1 million publicly held shares, and $4/share minimum bid price
- Market Value of Listed Securities Standard: At least $50 million in market value of listed securities
- Net Income Standard: At least $750,000 in net income in the latest fiscal year or in two of the last three fiscal years
The March 2025 rule change, approved by the SEC, significantly tightened eligibility by excluding previously issued shares registered for resale from counting toward the $15 million market value of publicly held shares (“MVUPHS”)—a major hurdle for issuers with limited new capital commitments.
For many China-based issuers, the result is clear: without substantial investor commitments in hand and an engaged underwriter, a traditional IPO may no longer be feasible within tight timelines or constrained financial conditions.
Nasdaq Uplisting: A Limited Pathway Under New Standards
For private companies already trading on the OTC market or planning to go public via a registration statement, uplisting to Nasdaq remains an option—but one that has become increasingly difficult to execute.
As discussed above, Nasdaq’s revised rules now require that MVUPHS be met solely through new issuances. This presents a practical challenge for companies that lack access to institutional investors or have not yet engaged a committed underwriter. For those that fall short on net income or equity, the only viable option may be the market value route—now significantly harder to reach.
Companies under tight deadlines—such as those with fiscal year-end disclosures approaching—may find themselves out of time to secure an uplisting before their window closes.
Registration Without an Underwriter: A Strategic Disclosure Tool
If the primary goal is to demonstrate regulatory readiness or restore investor confidence, filing a registration statement (e.g., Form F-1 or S-1) without naming an underwriter may serve as a smart interim step.
The SEC’s March 2025 interpretive guidance permits issuers to omit the name of the underwriter in initial submissions, provided the information is added in a later amendment. This gives companies the ability to move forward with a confidential or live filing while continuing to negotiate financing, finalize internal audits, or build investor interest.
This strategy does not result in an immediate listing, but it can be a powerful signal to investors and partners that the company is actively working toward a public offering and complying with U.S. securities laws.
SPAC Transactions: Fast Track, with Cost Trade-Offs
Merging with a SPAC remains a popular alternative for China-based companies with compelling growth stories. A deSPAC transaction can result in a listing on Nasdaq or NYSE, often on a faster timeline than a traditional IPO.
However, the economics of SPAC deals have shifted in 2025. With many SPACs under pressure to close deals before their redemption deadlines, it is now common for targets to bear significant transaction expenses—often exceeding $1.2 million. In addition, SPAC-focused advisors may charge advisory or facilitation fees of $600,000 or more.
This route is viable for companies that can handle the cost burden and have the financial and operational transparency required to withstand SPAC and SEC due diligence.
Reverse Mergers: Quick Access, With Caution
Reverse mergers—where a private company acquires a U.S. public shell company—offer a shortcut to public company status. While historically associated with regulatory risk and poor governance, reverse mergers have regained attention in 2025 as a last-mile alternative for companies unable to complete traditional IPOs or SPAC deals.
That said, risks remain. Shell companies may carry unknown liabilities, and the resulting public entity must still comply with full SEC reporting, governance, and audit standards. Reverse mergers can be viable, but only when paired with careful diligence and a clear post-merger capitalization and investor relations plan.
Final Thoughts
In a capital market environment marked by shifting standards and investor caution, China-based private companies must consider all available options for accessing public markets. While the traditional IPO remains the preferred route in theory, today’s reality demands a more flexible, strategy-driven approach.
At Torres & Zheng at Law, P.C., we help clients understand their financing options, evaluate uplisting readiness, and pursue SPAC or reverse merger transactions tailored to their structure and timeline.
If your company is exploring financing or listing strategies in the U.S., contact our team for a confidential consultation.
Contact Person: Nick L. Torres, Esq. and Zhiqi Zheng, Esq.
