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NASDAQ Listing Requirements and the Definition of Independent Director - YouTube
Channel: Anthony L.G., PLLC
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I am attorney Laura Anthony founding partner
of Legal & Compliance, a full service corporate,
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securities, and business transactions law
firm.
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Today is the continuation of a LawCast series
discussing NASDAQ listing requirements.
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In the prior LawCast in this series, I gave
a brief summary of the corporate governance
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requirements including the requirement that
a majority of the board of directors be independent
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and that all audit and compensation committee
members also be independent.
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Today I am going to talk about the definition
of independent.
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Under NASDAQ rules an independent director
means a person that is not an executive officer
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or employee of the company and does not have
a relationship with the company, which in
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the opinion of the board of directors could
interfere with the exercise of independent
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judgment and carrying out the responsibilities
of a director.
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NASDAQ provides a list of people that would
definitely not qualify as independent including
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the following: a director who has been employed
by the NASDAQ company at any time during the
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past three years; a director who has or has
a family member who had accepted any compensation
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from the company in excess of one hundred
thousand dollars during any twelve consecutive
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month period within the prior three years
other than compensation for services as the
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director, compensation to a family member
who is an employee but not an executive officer
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of the NASDAQ company or funds received under
certain qualified retirement plans.
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Continuing: a director who is a family member
of an individual who was employed as an executive
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officer of the NASDAQ company at any time
during the past three years; a director who
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is, or has a family member who is a partner,
controlling shareholder, or executive officer
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of any entity that either gave or received
payment for property or services of either
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two hundred thousand dollars or five percent
or more of the company鈥檚 gross revenues,
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whichever is greater during any of the prior
most recent three years.
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Excluded from this disqualification category
would be payments made solely for investments
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in the NASDAQ company鈥檚 securities or payments
under a nondiscretionary charitable matching
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program.
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Next, not qualifying as an independent director,
would be a director who is, or has a family
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member that is employed as an executive officer
of another company where a director of the
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NASDAQ company serves or served on the compensation
committee within the last three years and
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finally a director who is or has a family
member who is a current partner of the company鈥檚
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outside auditor or was a partner or employee
of an outside auditor who worked on the NASDAQ
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company鈥檚 audit at any time during the past
three years.
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I am securities attorney Laura Anthony, founding
partner of Legal & Compliance, and producer
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of LawCast.
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Should you have any questions about today鈥檚
topic, please visit SecuritiesLawBlog.com
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and LawCast.com, or contact me directly.
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Inquiries of a technical nature are always
encouraged.
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