EFTY

What regulatory or listing compliance requirements must EFTY meet on the Nasdaq Capital Market?

Created August 08, 2025 at 12:01 AM

Regulatory and Listing‑Compliance Landscape for EFTY (Nasdaq Capital Market)

Below is a detailed, step‑by‑step outline of the principal requirements that Etoiles Capital Group Co., Ltd (Nasdaq: EFTY) must satisfy in order to remain listed on the Nasdaq Capital Market after its IPO. The list combines the Nasdaq’s own continued‑listing standards with the U.S. securities‑regulation framework that applies to any foreign‑issuer that trades on a U.S. exchange.

1. Initial Registration & IPO Requirements (already satisfied for the pricing)

Requirement	What EFTY had to do for the IPO	How it is reflected in the news
SEC registration – file an S‑1 (or F‑1 for foreign issuers) with the SEC, including a prospectus, audited financial statements, risk factors, and use‑of‑proceeds.	EFTY’s S‑1/F‑1 had to be declared effective before pricing.	The news states the “Offering” of 1,400,000 Class A ordinary shares was priced at US $4.00 – a step that can only occur after SEC effectiveness.
Nasdaq “Initial Listing” criteria – meet the Capital Market thresholds (e.g., market‑cap, public float, shareholders, bid‑price).	EFTY had to demonstrate ≥ $35 million market‑cap (or net tangible assets) and ≥ 1.1 million public‑shareholders, plus a minimum bid price of US $4.00 (Nasdaq’s “$4.00” rule).	The shares are priced at US $4.00, satisfying the bid‑price floor; the press release notes the “Class A ordinary shares have been approved for listing.”
Corporate‑governance & internal‑control requirements – Sarbanes‑Oxley (SOX) Section 404 compliance, independent audit committee, code of conduct, etc.	EFTY had to adopt a U.S.‑compatible governance framework before listing.	Not explicit in the release, but implied by “approved for listing.”

2. Ongoing Nasdaq Capital Market Listing Standards

Once listed, EFTY must continuously satisfy the “Periodic” and “Continuous” standards that Nasdaq enforces on its Capital Market tier. Failure to meet any of these can trigger a deficiency notice and possible delisting.

Nasdaq Requirement	Minimum Threshold	How EFTY must monitor / maintain it
Market‑Capital‑or‑Net‑Tangible‑Assets Test	≥ $35 million market‑cap or net tangible assets ≥ $35 million (if market‑cap is lower).	Quarterly: compute market‑cap (share price × total shares outstanding) and net tangible assets from audited balance sheets.
Public‑Float Test	≥ 1.1 million shares (or ≥ 2.2 million if the public float is ≤ 10 % of total shares).	Must keep a sufficient number of shares in the hands of non‑affiliates; monitor insider lock‑ups, secondary offerings, and employee stock plans.
Share‑holder‑Equity Test	≥ $5 million shareholders’ equity (for companies with a market‑cap < $35 M).	Track equity on the balance sheet; avoid large, un‑approved write‑downs that could erode equity.
Bid‑Price Test	≥ $4.00 (or ≥ $1.00 if the company is in a “$1.00” tier) – must stay above the Nasdaq “$4.00” rule for at least 30 consecutive days.	Maintain a stable trading price; avoid “price‑manipulation” or excessive volatility.
Corporate‑Governance Standards	• Independent audit committee (≥ 3 members, ≥ 1 independent director). • Independent compensation committee (≥ 3 members, ≥ 1 independent director). • Independent nominating committee (≥ 3 members, ≥ 1 independent director). • Code of conduct for directors, officers, and employees.	Must have these committees in place, with appropriate independence criteria, and file the required disclosures (e.g., Form 10‑K, Form 10‑Q).
Sarbanes‑Oxley (SOX) Section 404	Internal‑control over financial reporting must be evaluated and reported annually.	EFTY must maintain an effective internal‑control framework, have management’s internal‑control report in Form 20‑F (or Form 10‑K) and obtain an auditor’s attestation.
Share‑holder‑Rights & Proxy‑Statement Requirements	Form DEF 14A (proxy statement) must be filed for annual meetings; Form 20‑F for foreign issuers.	Annual filing of proxy statement, election of directors, and disclosure of voting‑rights structure.
Timely SEC Reporting	Form 20‑F (annual), Form 6‑K (quarterly), Form 8‑K (material events).	All reports must be filed within the SEC‑mandated windows (e.g., Form 20‑F within 90 days after fiscal year‑end).
Foreign‑Issuer Requirements	Form 20‑F (annual) and Form 6‑K (quarterly) in lieu of Form 10‑K/10‑Q; Form 40‑ filings for securities‑offering statements.	EFTY, as a Hong‑Kong‑incorporated company, must use Form 20‑F/6‑K and comply with the “Foreign Private Issuer” rules (e.g., Section 14(a) of the Exchange Act).
Nasdaq Corporate‑Governance Rule (Rule 5550(a)(2))	Two‑thirds of directors must be independent; audit and compensation committees must be independent.	Must disclose independence in proxy statements and maintain the required composition.

3. U.S. Securities‑Regulation (SEC) Requirements for a Foreign Issuer

Regulation	Core Obligation	How EFTY must comply
Securities Act of 1933 – Registration (Form S‑1/F‑1)	Full disclosure of the offering, risk factors, use of proceeds, and audited financials.	Already satisfied for the IPO; must keep the registration statement effective (i.e., no “effective‑date” lapse).
Exchange Act of 1934 – Periodic Reporting	• Form 20‑F (annual) – audited financial statements, MD&A, risk factors, corporate‑governance disclosures. • Form 6‑K (quarterly) – unaudited financials, MD&A, material events. • Form 8‑K (material events) – e.g., changes in control, acquisition, delisting notice.	EFTY must file these within the SEC‑prescribed timeframes (20‑F within 90 days of year‑end; 6‑K within 45 days of quarter‑end).
Sarbanes‑Oxley Act (SOX) 404	Management must assess and report on internal controls over financial reporting; external auditor must attest.	Include internal‑control report in Form 20‑F; maintain a documented control environment.
Foreign Private Issuer (FPI) Rules – Form 20‑F/6‑K	Allows use of IFRS (or US GAAP) with reconciliation; provides flexibility on certain disclosures.	EFTY can elect to file under IFRS (common for Hong‑Kong firms) but must still provide the required SEC disclosures.
Rule 144 – Resale of Restricted Securities	Governs how insiders can sell shares after the lock‑up period.	EFTY must monitor insider‑sale windows and ensure compliance with Rule 144 (e.g., holding period, volume limits).
Rule 10b‑5 (Anti‑Fraud)	Prohibits manipulative or deceptive practices.	Must have robust compliance, surveillance, and whistle‑blower policies.
Regulation S‑ (for offshore offerings)	If any portion of the IPO was sold offshore, must comply with the “offshore exemption.”	Not directly relevant to the Nasdaq‑traded shares, but any non‑U.S. sales must be tracked.

4. Practical Steps EFTY Should Institutionalize Immediately After the IPO

Create a “Nasdaq Compliance Calendar” – track filing deadlines (Form 20‑F, 6‑K, 8‑K), periodic audit‑committee meetings, and Nasdaq’s quarterly review dates.
Maintain a “Public‑Float Tracker” – monitor the number of shares held by non‑affiliates; report any changes that could dip the public float below the required threshold.
Implement a SOX‑404 Control Framework – document, test, and certify internal controls; engage the external auditor for the annual attestation.
Adopt Nasdaq‑Standard Corporate‑Governance Policies – formalize independent audit, compensation, and nominating committees; adopt a written Code of Conduct and disclose it in the proxy.
Engage a U.S. Legal Counsel / Compliance Advisor – to interpret any nuances of the “Foreign Private Issuer” rules, especially around the use of IFRS vs. US GAAP, and to handle any cross‑border securities‑law issues.
Set Up a “Trading‑Price Monitoring” System – ensure the share price stays above the $4.00 floor; if the price falls, be ready to submit a “Nasdaq Deficiency Waiver” request (Nasdaq may grant temporary waivers if the company demonstrates a clear plan to regain compliance).
Prepare for Potential “Nasdaq Review” – Nasdaq conducts an annual review of listed companies; EFTY should pre‑emptively compile all required metrics (market‑cap, public float, shareholders’ equity, bid price) and be ready to submit a “Compliance Confirmation” if asked.

5. Potential Consequences of Non‑Compliance

Failure Type	Typical Nasdaq Action	SEC Consequence
Bid‑price below $4.00 for >30 days	Deficiency notice → 30‑day cure period → possible delisting if not remedied.	No direct SEC penalty, but may trigger a “material event” filing (Form 8‑K).
Public‑float falls below 1.1 M shares	Deficiency notice → 30‑day cure; Nasdaq may grant a temporary waiver if a clear plan is presented.	Must disclose the change in Form 6‑K/20‑F; could be deemed a “material change.”
Failure to file Form 20‑F/6‑K on time	SEC may issue a “Form 20‑F delinquency” letter; Nasdaq may issue a “listing deficiency” notice.	Potential SEC enforcement (e.g., cease‑and‑desist, civil penalties).
Lack of independent audit/compensation committees	Nasdaq may issue a compliance deficiency; company must appoint committees within 90 days.	Violation of Nasdaq Rule 5550(a)(2) → possible SEC “Rule 5550” enforcement.
SOX‑404 internal‑control deficiencies	SEC may issue a “Section 404” comment letter; Nasdaq may consider the company non‑compliant with corporate‑governance standards.	Potential for “material weakness” findings, affecting audit opinions and investor confidence.

6. Key Take‑aways for EFTY

What EFTY Must Do	Why It Matters
Maintain ≥ $35 M market‑cap or net tangible assets ≥ $35 M	Core Nasdaq Capital Market market‑capital test.
Keep ≥ 1.1 M public‑float shares	Ensures sufficient liquidity and market depth.
Sustain a share price ≥ $4.00	Meets Nasdaq’s “$4.00 bid‑price” rule.
File timely Form 20‑F (annual) and Form 6‑K (quarterly)	Required by SEC for foreign private issuers; also a Nasdaq compliance metric.
Adopt independent audit, compensation, and nominating committees	Directly tied to Nasdaq’s corporate‑governance standards.
Implement and attest to effective internal controls (SOX 404)	Mandatory for all U.S.‑listed companies; failure triggers SEC enforcement.
Maintain a robust Code of Conduct and disclose it	Required by Nasdaq and SEC proxy rules.
Monitor and manage insider‑sale windows under Rule 144	Prevents illegal resale of restricted securities.
Stay above the Nasdaq “$4.00” floor and public‑float thresholds	Avoids deficiency notices and potential delisting.

Bottom Line

EFTY’s successful pricing of its IPO at US $4.00 per share satisfies the Nasdaq “$4.00” bid‑price floor at the moment of listing. However, to remain on the Nasdaq Capital Market, the company must continuously:

Meet the quantitative thresholds (market‑cap, public‑float, shareholders’ equity, bid‑price).
Comply with the qualitative governance standards (independent committees, code of conduct, SOX 404 internal controls).
Adhere to the SEC’s periodic reporting regime for foreign private issuers (Form 20‑F, Form 6‑K, Form 8‑K).
Observe Nasdaq’s ongoing review and cure‑period processes for any deficiencies that arise.

By institutionalizing the compliance calendar, monitoring the key metrics, and maintaining a strong internal‑control environment, EFTY can fulfill all Nasdaq Capital Market and U.S. securities‑regulation obligations and avoid the risk of a deficiency notice or delisting.