Nasdaq Compliance Risks for Small-Cap Chinese Issuers: A Strategic Analysis of Samfine Creation Holdings Group Limited

The U.S. capital markets have grown increasingly inhospitable for small-cap Chinese issuers, as regulatory scrutiny intensifies and compliance thresholds rise. Nasdaq's recent rule changes, coupled with broader market dynamics, have created a high-stakes environment for companies like Samfine Creation Holdings Group Limited, which now faces a critical juncture in its efforts to avoid delisting. This analysis evaluates Samfine's strategic response to its minimum bid price deficiency while contextualizing its challenges within the evolving regulatory landscape for Chinese firms on U.S. exchanges.

Samfine's Compliance Struggle and Strategic Options

Samfine Creation Holdings Group Limited was notified by Nasdaq in March 2025 that its shares fell below the $1.00 minimum bid price requirement under Listing Rule 5550(a)(2) Samfine Creation Holdings Group Limited Announces Receipt of Nasdaq Notification Letter^[1]. Despite a 180-day compliance period ending in September 2025, the company failed to regain compliance and was granted an additional 180-day extension until March 23, 2026 Nasdaq Issues Minimum Bid Price Warning to Samfine Creation^[2]. During this extension, Samfine has indicated it is monitoring its share price and considering measures such as a reverse stock split to artificially inflate the bid price Nasdaq Proposes Changes to its Listing Standards^[3]. However, recent regulatory amendments complicate this approach.

Nasdaq's revised rules, approved by the SEC in 2024-2025, now restrict the use of reverse stock splits as a compliance tool. Specifically, companies that execute such splits within the prior year are ineligible for compliance periods if they again fall below the $1.00 threshold SEC Approves Changes to NYSE and Nasdaq Minimum Price Rules^[4]. Additionally, reverse splits must now maintain minimum public float requirements (e.g., 500,000 publicly held shares and 300 stockholders) to avoid triggering further deficiencies SEC Approves Nasdaq Rule Change on Reverse Stock Splits^[5]. For Samfine, this means a reverse split could inadvertently violate other listing standards, potentially accelerating delisting rather than resolving it.

Broader Regulatory Trends and Market Implications

The challenges facing Samfine are emblematic of a broader shift in Nasdaq's approach to small-cap Chinese issuers. In September 2025, Nasdaq proposed a $25 million minimum public offering proceeds requirement for companies primarily operating in China, effectively barring smaller firms from U.S. listings Nasdaq plans will make it harder for small Chinese firms to list^[6]. This rule, coupled with the Holding Foreign Companies Accountable Act (HFCAA), which threatens delisting for Chinese firms with PCAOB-inaccessible auditors, has created a dual compliance burden The HFCAA and consequences for US-listed China-based^[7].

The China Securities Regulatory Commission (CSRC) has also tightened its oversight, reducing U.S. IPO approvals for small-cap Chinese firms from 22 in early 2024 to 11 by mid-2024 China slows small-cap US listings over manipulation risks, FT reports^[8]. These measures reflect growing concerns over market manipulation, speculative trading, and the financial fragility of Chinese companies with weak fundamentals. For Nasdaq-listed entities like Samfine, the combination of stricter U.S. rules and domestic regulatory constraints leaves limited room for maneuvering.

Strategic Risks and Investor Considerations

Samfine's reliance on a reverse stock split, while technically feasible, carries significant risks. Analysts caution that such actions often signal underlying operational weaknesses and can exacerbate selling pressure by triggering shareholder dilution and liquidity concerns Dentons - Analysis: U.S. Exchanges Overhaul Bid Price Compliance Rules^[9]. Furthermore, the prolonged period of non-compliance—spanning over a year—raises questions about the company's ability to attract investor confidence or execute a viable turnaround strategy.

For investors, the case of Samfine underscores the heightened volatility and compliance risks associated with small-cap Chinese issuers. The SEC's emphasis on long-term financial viability over short-term fixes means that companies must demonstrate sustainable growth or restructuring plans to retain listing status. Those unable to adapt may face delisting, as seen in recent cases of Chinese firms removed from U.S. exchanges due to repeated compliance failures Nasdaq to tighten rules for small Chinese issuers^[10].

Conclusion

Samfine Creation Holdings Group Limited's struggle to meet Nasdaq's minimum bid price requirement highlights the precarious position of small-cap Chinese issuers in an increasingly regulated U.S. market. While the company's extension until March 2026 offers a temporary reprieve, the regulatory environment now demands more robust, long-term strategies than mere technical adjustments like reverse splits. For investors, the broader lesson is clear: the days of relying on procedural fixes to maintain listing status are over. As Nasdaq and the SEC prioritize market integrity, small-cap Chinese firms must either adapt or face the growing risk of delisting.