AGM Group reportedly Regains Compliance with Nasdaq Listing Requirement
AGM Group Holdings, an application software company providing accounting and ERP software and FinTech software, have announced that they have regained compliance with Listing Rule 5550(a)(3), following a letter from the Listing Qualifications Department of The NASDAQ Stock Market.
The announcement comes following the firm’s Q1 2020 revelation that it received a notification letter from the Listing Qualifications Department of NASDAQ indicating that the Company was not in compliance with the Minimum Public Holders Rule, which requires AGMH to have at least 300 public holders for continued listing on the NASDAQ Capital Market, the firm said in a press release.
Based on the Company's submission, which was dated July 21, 2020, the Company has greater than 300 public holders. Accordingly, NASDAQ Staff has determined that the Company complies with the Rule, and this matter is now closed.
AGM Group is a Beijing-headquartered organisation which was founded in 2015. The Company mainly provides brokers and institutional clients with trading platform solutions and technologies, according to its Reuters bio.
The compliance of AGM Group means that it re-joins the ranks of the growing number of Chinese companies listed on US exchanges, which according to the US-China Economic and Security Review Commission, represented a total market capitalisation of USD1.2 trillion in February 2019, stemming from 156 companies.
NASDAQ is allegedly aiming to become more stringent in its requirements for Chinese firms, thus restricting the number of Chinese IPOs, driven by concerns surrounding said firms’ lack of accounting transparency and their ties to ‘powerful insiders’, according to an article by Reuters in May 2020.
The new rules would see a minimum requirement of firms from a number of countries, including China, to raise USD25 million in their IPO, according to inside sources, or at the very least a quarter of their post-listing market capitalisation.
This would be the first time that NASDAQ would impose a minimum value on the IPO size, says Reuters, and had such a rule been implemented at an earlier time, it would have meant that a number of listed firms would not have been able to go public.
The resistance of US stock markets to accept Chinese entities, namely due to Securities and Exchange Commission (SEC) pressure for access to Chinese auditors and audits since 2011, and more recently the SEC’s passing of a bill that would allow greater leverage to remove Chinese firms from US stock exchanges, according to a report by Fortune. The bill, according to its sponsor, John Kennedy, was apparently passed to prevent Chinese firms from ‘cheating’ the US stock exchanges.
The friction being witnessed between the US and China has surprisingly resulted in benefits for Hong Kong, as a number of Chinese companies have opted for second listings on the Hong Kong Exchange (HKEX). Hong Kong, which has been struggling since 2019, a year which saw its economy fall into a recession, with the Coronavirus adding salt to Hong Kong’s existing wounds in 2020, witness two multi-billion dollar second listings in the form of NetEase and JD.com, with the former reportedly raising USD2.7 billion, and the latter raising USD3.9 billion, making it the second-largest IPO of the year so far.
Michael Wu, Senior Equity Analyst, Morningstar Investment Management, said: “More of these large companies like Alibaba, JD, NetEase listing in Hong Kong does increase the attractiveness of the listings in Hong Kong.” Wu added that the increasing number of secondary listings "reaffirms" Hong Kong’s capital markets’ status.
However, the point has also been raised that the increasing number of listings by Chinese firms in Hong Kong may diminish the independence of the local, from a market perspective.
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