Nasdaq Proposes Changes to Continued Listing Standards
 
June 16, 2008
 

Change to Definition of “Independent Director”

On June 6, 2008, Nasdaq filed a proposed rule change with the SEC that would modify Nasdaq’s definition of “independent director.” If the SEC approves the proposal, the amount of compensation that a director could receive and remain independent would be increased from $100,000 to $120,000. The dollar threshold was increased to be consistent with the SEC’s threshold for disclosure for related-party transactions under Item 404 of Regulation S-K and to be consistent with the NYSE’s definition of independent
director.

Change to Round Lot Holder Requirement

In addition, on May 7, 2008, the SEC published a Nasdaq proposed rule change that would require listed companies to maintain a certain amount of public or total shareholders, rather than a certain amount of round lot holders as is currently required for continued listing. This change would make Nasdaq’s rules consistent with the Amex rules, which require 300 public shareholders, and the NYSE rules, which require 400 total shareholders for continued listing.

If the SEC approves the proposal, Nasdaq would generally require 300 public shareholders for continued listing on the Nasdaq Capital Market. As proposed, the definition of public holder would include both beneficial holders and holders of record, but would exclude any holder who is an executive officer, director or more than 10% beneficial holder.

The proposed rules would also clarify that the definition of “round lot holders” includes beneficial holders in addition to holders of record, consistent with current practice.

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