Zbao Technology has opted to follow home-country governance practices instead of standard Nasdaq regulations, invoking provisions available to foreign private issuers. According to a July 21 announcement by the company, the shift affects eight key corporate governance requirements on the Nasdaq Capital Market.
Nasdaq Rules Waived Under Foreign Private Issuer Status
According to Zbao Technology’s filing, the company exercised its right under Nasdaq Listing Rule 5615(a)(3) to adopt home-country practices permitted in the Cayman Islands. This decision exempts the firm from specific portions of the Nasdaq Rule 5600 series, replacing them with compliance under Cayman Islands company law and corporate bylaws.
The exemptions remove eight specific governance mandates, including requirements for board independence and routine shareholder approvals. Under standard Nasdaq Rule 5605(b)(1), listed companies must maintain a majority of independent directors, while Rule 5605(b)(2) mandates regular executive sessions of those independent directors. Additionally, the company is no longer bound by Nasdaq Rule 5620(a)—which requires an annual shareholders meeting within one year of the fiscal year-end—or Rule 5620(b), which mandates proxy solicitation for all shareholder meetings.
Impact on Shareholder Approvals and Equity Issuances
The transition also waives several shareholder approval thresholds governing corporate financing and equity structures. According to Nasdaq rules, transactions involving the acquisition of stock or assets that increase voting power or common shares by 20% or more (Rule 5635(a)), changes in corporate control (Rule 5635(b)), the establishment of equity compensation plans (Rule 5635(c)), and large issuances below market price (Rule 5635(d)) normally require shareholder consent. By adopting Cayman practices, Zbao Technology bypasses these specific Nasdaq-mandated voting triggers.
Ogier, acting as the company’s Cayman Islands legal counsel, issued a legal opinion confirming that Zbao Technology’s chosen practices do not violate Cayman Islands law or the company’s memorandum and articles of association. Public records cited in the legal opinion show that the firm was established on January 11, 2023, and adopted amended articles of association via a special resolution on March 29, 2024.
Financial Projections and Market Outlook
Financial forecasts indicate robust revenue expansion for the firm despite the governance changes. According to market projections, Zbao Technology’s revenue is expected to reach $6.42 million by June 2026, marking a 66.69% increase compared to the previous year. Further growth is anticipated into the following fiscal period, with projections estimating an additional 34.66% increase to reach $8.646 million by June 2027.
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