Core Insights - The OTC market is increasingly becoming a preferred option for small and medium-sized enterprises (SMEs) from China seeking to enter the U.S. capital market due to its shorter listing cycle and lower listing requirements [2][19]. Group 1: Overview of OTC Market - The OTC market, or Over-the-Counter market, is one of the oldest and largest trading markets in the U.S., accounting for 75% of the total trading volume in American securities [4]. - As of now, there are 12,281 companies listed on the OTC market, including 826 Chinese enterprises [4]. Group 2: OTC Market Listing Conditions - The OTC market is divided into three tiers based on company transparency and financial disclosure: OTCQX (highest level), OTCQB, and OTC ID, with progressively relaxed listing requirements [6]. - OTCQX requires companies to meet specific financial standards, such as having a net tangible asset value of $5 million for companies with less than three years of operating history, or an average revenue of $6 million over the past three years [8]. - OTCQB has more lenient financial and governance requirements, making it suitable for startups or companies that do not yet meet the higher standards [9]. - OTC ID has no strict reporting and financial data submission requirements, allowing companies to choose their level of information disclosure [12]. Group 3: OTC Listing Process - The OTC listing process is relatively simpler compared to other exchanges, with companies typically opting for shell acquisitions or direct listings to enter the market [14][16]. Group 4: Advantages of OTC Market - The OTC market offers lower listing costs compared to major exchanges like NASDAQ and NYSE, making it an attractive option for SMEs [19]. - The listing thresholds are lower, and the time required for listing is shorter, allowing companies to meet market requirements more easily [20]. - The flexible listing rules provide companies with more options to tailor their listing strategy to their specific needs [21].

Core Insights - The article emphasizes that for Chinese companies aiming for global expansion, going public in the U.S. is a significant milestone that presents both opportunities and challenges [1][2]. Group 1: Key Steps for U.S. IPO - The process of going public in the U.S. is distilled into ten critical steps, providing a practical roadmap from the initial idea to the successful listing [2]. Group 2: Step-by-Step Breakdown - **Step 1: Internal Assessment and Feasibility Study (1-3 months)** Companies must objectively evaluate their readiness for an IPO, addressing key questions such as the purpose of going public, financing needs, and compliance with listing standards [3][4]. - **Step 2: Assemble a Top-Tier Advisory Team (1-2 months)** A strong advisory team is crucial, including underwriters, legal counsel, and accounting firms that meet U.S. regulatory requirements [5][6][7][8]. - **Step 3: Company Restructuring and Framework Setup (2-4 months)** This involves reorganizing the company’s ownership structure and ensuring compliance with governance standards necessary for public companies [9][10]. - **Step 4: Comprehensive Due Diligence and Document Preparation (3-6 months)** A thorough examination of the company’s operations and the drafting of the prospectus (F-1 form) are essential to identify and address potential issues [12]. - **Step 5: Confidential Submission** Emerging growth companies can submit their F-1 documents confidentially to the SEC, allowing for greater flexibility and protection of sensitive information [13][14]. - **Step 6: Responding to SEC Inquiries (2-4 rounds, 3-6 months)** The SEC conducts detailed reviews of the F-1 documents, requiring high-quality responses from the company and its advisors [15]. - **Step 7: Public Filing and Roadshow Preparation** After addressing SEC inquiries, the company publicly files the prospectus and prepares for investor presentations [17]. - **Step 8: Global Roadshow (approximately 1-2 weeks)** The management team presents the company to institutional investors in major financial centers, aiming to generate interest and gauge pricing feedback [18][19]. - **Step 9: Pricing and Book Building** The underwriters collect orders and determine the final offering price based on market demand and company valuation expectations [20]. - **Step 10: Official Listing and Bell-Ringing** The final step involves the exchange of funds and shares, culminating in the public trading of the company’s stock [22].

Core Viewpoint - Nasdaq proposes to amend IPO rules and delisting procedures, impacting Chinese companies seeking to list in the U.S. [1] Summary by Relevant Sections Proposed Changes to IPO Standards - Nasdaq aims to enhance liquidity and investor protection by increasing the minimum public float and fundraising thresholds for new listings [3][4] - New minimum public float market value for companies listing based on net profit is set at $15 million [3] - Companies with market values below $5 million will face expedited delisting procedures [3] Fundraising Requirements for Chinese Companies - For companies primarily operating in China, the minimum fundraising requirement for IPOs is set at $25 million [3][4] - This requirement is consistent with previous standards established for "restricted markets" [5] Implementation Timeline - Proposed rules have been submitted to the SEC for review, with an immediate implementation plan upon approval [4] - Companies currently in the initial listing process will have a 30-day grace period to meet the old standards before the new requirements take effect [4] Delisting Procedures - Nasdaq has previously modified rules to accelerate delisting for companies with stock prices below $0.10 for ten consecutive trading days [5] - The timeline for delisting companies with stock prices below $1 will be shortened to 360 days starting January 2025 [5]

Core Viewpoint - For many growing companies, going public in the U.S. is not only a crucial way to raise funds for expansion but also a key step to enhance international influence and optimize governance structure [1] Group 1: When to Initiate? - Companies should decisively decide to initiate the U.S. listing process when internal and external conditions are relatively mature [2] - A clear business model and sustainable growth in the main business are essential, with healthy financial data maintained over several years [2] - Achieving a certain revenue scale (e.g., tens of millions of dollars), with stable or rising key indicators like gross margin and net margin, is important [2] - Companies should be among the leaders in their niche market, possessing core technologies, intellectual property, or differentiated competitive advantages [2] - Products or services must be market-validated, supported by metrics such as user base, repurchase rate, and market share [2] - A well-structured financial system and internal control mechanisms must be in place to meet SEC and exchange audit requirements [2] - Clear equity structure and resolution of any significant disputes related to historical financing and shareholder relationships are necessary [2] Group 2: External Considerations - Companies should also consider external variables such as industry cycles, policy environment, and international market sentiment when deciding the timing for the listing [3] Group 3: Preparation Steps - Once the decision to go public is made, companies must undertake systematic and professional preparation, focusing on several core areas [5] - Review historical operational compliance, including key risk points like taxation, foreign exchange, cross-border data, and intellectual property [5] - If a VIE structure is involved, it should be established early, ensuring compliance with domestic and international legal and financial processes [5] - Financial statements must be converted and adjusted according to U.S. GAAP [5] - Engage a qualified accounting firm to conduct audits, ensuring reports are accurate, complete, and comparable [5] - Highlight the company's core selling points, emphasizing high growth potential, technological barriers, and market size [5] - Prepare the prospectus (F-1/S-1 documents) to systematically disclose business, risks, financials, and management information [5] - Select experienced listing advisory institutions, including sponsors, underwriters, U.S. lawyers, domestic lawyers, and auditing firms [5] - The underwriting and legal teams should be familiar with the listing process for Chinese concept stocks and recent regulatory dynamics [5]

Core Insights - The successful hosting of the IPO conference in Shanghai highlights the strong demand from Chinese companies to enter the global capital markets [5][3] - The event brought together entrepreneurs, investors, and U.S. IPO experts to discuss strategies for Chinese companies to raise funds through U.S. listings [1][3] Group 1: Event Overview - The Shanghai stop of the multi-city IPO conference is significant, following previous events in Shenzhen and Beijing, marking the first large-scale engagement of U.S. IPO experts with local entrepreneurs [3] - The conference attracted numerous founders and entrepreneurs, including students from Fudan University's executive program, showcasing Shanghai's vitality as an innovation and entrepreneurship hub [3] Group 2: Notable Outcomes - Three companies stood out during the roadshow segment, receiving high recognition and scores from the judging panel for their innovative business models and clear growth strategies, indicating strong potential for U.S. listings [3] - The CEO of Boustead APEX emphasized the importance of providing a platform for entrepreneurs to connect with U.S. market experts and showcase their potential on an international stage [5] Group 3: Future Directions - The multi-city IPO conference will continue to provide unique opportunities for more Chinese SMEs to learn, connect, and expand into overseas capital markets [5] - Boustead APEX focuses on assisting high-growth Asian companies in entering the U.S. capital markets through strategic listings, M&A advisory, and capital raising solutions [6]

Group 1: Listing Overview - In July, 13 Chinese companies successfully listed on the US main board, with an additional 8 companies submitting listing applications to the SEC [1] - 12 companies went public through traditional IPOs, raising a total of approximately $288 million, while 1 company (YOUL) used the De-SPAC method for listing [2] Group 2: Fundraising Details - The fundraising was notably uneven, with SPAC company AParadise Acquisition (APADU) leading with $200 million, while New Jun Cashmere (MJID) and MeiHua ChuangFu (MGRT) each raised $15 million, and the remaining 9 IPO companies raised less than $10 million each [2] Group 3: Geographic Distribution - Hong Kong's Kingdian Technology (KMRK) completed its listing in just 195 days, the fastest among the listed companies, while Taiwan's J-Star (YMAT) took 1414 days, highlighting the need for companies to carefully plan their listing timelines based on market conditions [4] Group 4: First Day Performance - Kingdian Technology (KMRK) had the best first-day performance, closing up 23.75%, followed by Creative Greater China (CRE) with a 10% increase, while other companies had first-day gains of less than 5%, with some even experiencing a decline [6] Group 5: SEC Filing Trends - Among the 8 companies that submitted applications in July, 4 submitted preliminary prospectuses (F-1 filings), with 3 of these being rejected by the SEC, indicating the importance of adhering to disclosure regulations [8] - The other 4 companies that submitted formal prospectuses include KBAT, KOKO, ACCL, and AGCC, covering sectors such as consumer goods and logistics, with their future progress being noteworthy [8] Group 6: Company-Specific Details - KBAT Group plans to issue 3.75 million shares at a price of $4-5, aiming to raise between $15 million and $18.75 million, focusing on vacuum packaging machinery [9] - KOKO, a Shanghai-based tech company, is focused on the development and leasing of smart commercial cleaning robots, integrating L4 level autonomous driving and IoT technology [10] - Acco Group Holdings Limited (ACCL) has filed for an IPO on NASDAQ, planning to raise $7 million [11] - Agencia Comercial Spirits plans to issue 1.75 million shares at a price of $4-6, expecting to raise between $7 million and $10.5 million [13]

Regulatory and Legal Compliance Challenges - The introduction of a filing system for overseas listings in China starting in 2023 increases time costs and poses risks of failing to list if the filing is unsuccessful [2] - The SEC in the U.S. has strict disclosure requirements, particularly concerning audit working papers for Chinese companies, despite a cooperation agreement between China and the U.S. [2] - Domestic policies affecting industries like real estate and education may lead to scrutiny of business models [2] - Legal risks include the potential for delisting under the Foreign Company Accountability Act and compliance challenges with the FCPA [2] Strategies for Regulatory Compliance - Companies should plan early and understand U.S. regulatory requirements before preparing for listing [3] - Engaging a professional legal team familiar with both Chinese and U.S. securities laws is essential for compliance [3] - Establishing a robust internal control system is necessary to ensure the accuracy and transparency of financial reporting [3] Differences in Accounting Standards - Significant differences exist between Chinese Accounting Standards (CAS) and U.S. GAAP, affecting revenue recognition and asset impairment, which can impact company valuations [5] - Companies in sensitive industries must handle audit working papers carefully to balance compliance and disclosure [5] Strategies for Accounting Compliance - Companies should adjust financial statements according to GAAP before listing to meet U.S. regulatory requirements [6] - Hiring an auditing firm recognized by the PCAOB can enhance the credibility of financial reports [6] Investor Culture Differences - Information asymmetry may lead to U.S. investors undervaluing Chinese companies due to a lack of understanding of their business models [8] - U.S. investors prioritize long-term growth potential, innovation, and management execution, which may not be effectively communicated by traditional Chinese companies [8] - Short-selling firms may target Chinese stocks, necessitating enhanced financial transparency and crisis management capabilities [8] Strategies for Investor Engagement - Frequent roadshows can help companies understand U.S. investor culture and effectively communicate their core competencies and long-term plans [9] - Establishing a professional investor relations team and improving ESG reporting can enhance transparency and attract U.S. investors [10] Geopolitical Conflicts - Uncertainties in U.S.-China relations, including trade tensions and technology sanctions, can affect the listing process and stock prices [11] - Domestic policy tightening, such as data security reviews, requires timely assessments of listing feasibility [12] Strategies for Managing Geopolitical Risks - Companies should consider diversifying listing locations and financing channels to mitigate market volatility risks [13] - Strengthening communication with investors to convey stable operational information can enhance investor confidence [13] Information Security and Data Privacy - Strict compliance requirements under the Data Security Law and Personal Information Protection Law pose challenges for companies handling user data [15] - Conflicts between U.S. data disclosure requirements and Chinese regulations necessitate compliant data processing solutions [15] Strategies for Data Compliance - Companies should clearly outline data compliance measures in their prospectus and conduct data security assessments before data export [16] - Maintaining close communication with government departments can help secure policy support for cross-border data flow [16] High Listing Costs - The financial burden of listing in the U.S. includes underwriting, legal, accounting, and sponsorship fees, which can be significant for smaller companies [17] - Ongoing compliance costs post-listing, such as regular audit and disclosure expenses, can also be high [17] Strategies for Cost Management - Conducting thorough financial planning and cost-benefit analysis before deciding to list in the U.S. is crucial [18] - Introducing strategic investors prior to listing can alleviate financial pressure and ensure sufficient funding for the listing process and subsequent operations [18]

Core Viewpoint - European and UK stock exchanges are facing a "IPO winter," leading many local companies to consider listing in the US for better capital access and higher valuations [1][2] Group 1: IPO Trends and Comparisons - Many European companies are opting for US listings, with a significant number of them migrating their primary listing to the US to tap into deeper capital pools [1] - A report from Deutsche Börse indicates that about two-thirds of companies listed in Europe, including Germany, see stock price increases on their first trading day, while only about half of European companies listed in the US experience the same [1][2] - Since 2004, German companies listed in the US have seen an average stock price decline of 13%, with specific examples like trivago and Mytheresa showing significant drops post-listing [2] Group 2: Market Dynamics and Responses - The European exchanges, including Deutsche Börse and Euronext, are actively working to counter the perception that US-listed companies have higher valuations by releasing reports and conducting marketing efforts [2] - The London Stock Exchange has also challenged the notion of superior US valuations, indicating a broader trend among European exchanges to retain local companies [2] - European officials are exploring ways to deepen capital markets and improve listing rules to enhance financing channels, as the market depth in the US remains a significant draw for companies [3] Group 3: Market Risks and Opportunities - Deutsche Börse warns that companies listing cross-border face higher litigation risks, although some market participants argue that such risks can provide avenues for shareholder compensation [3] - Recent market turbulence in the US due to tariffs may enhance the attractiveness of European markets, although some experts remain skeptical about the long-term capital flow trends [4]