Action Items for Smaller Reporting Companies: Nasdaq Changes Compensation Committee Requirements 01/31/2013Posted by Morse, Barnes-Brown Pendleton in Legal Developments, Public Companies.
Tags: compensation committee, corporate governance, nasdaq, SEC
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The SEC recently approved changes to Nasdaq’s corporate governance requirements regarding compensation committees. These changes apply to any company whose stock is listed on Nasdaq – with certain significant exceptions. Smaller reporting companies, or SRCs, are exempt from many, but not all, of the new requirements. Here is a brief summary of how the changes will affect SRCs.
All Nasdaq listed companies, including SRCs, are now required to have a compensation committee consisting of at least two members each of whom qualify as independent under Nasdaq’s current listing standards. The compensation committee must adopt a formal written charter which includes specific provisions noted here:
- the scope of the compensation committee’s responsibilities, and how it carries out those responsibilities, including structure, processes and membership requirements;
- the compensation committee’s responsibility for determining, or recommending to the board for determination, the compensation of the chief executive officer and all other Executive Officers of the Company; and
- that the chief executive officer may not be present during voting or deliberations on his or her compensation.
Alternatively, in the absence of a compensation committee charter, a SRC may have the Board adopt resolutions specifying the committee’s responsibilities and authority. The compensation committee is required to review and reassess its charter on an annual basis.
Action Item: SRCs that do not have a compensation committee should begin identifying potential compensation committee members.
Action Item: SRCs who do not have a compensation committee charter should begin drafting a charter. SRCs who already have a charter in place should review their charter to determine whether modifications are required.
SRCs have until the earlier of their first annual meeting after January 14, 2014, or October 31, 2014 to comply with the provisions set forth above, Each listed company must certify to Nasdaq that it has met the requirements described above no later than 30 days after such date.
For more information on this topic, please contact Daniele Levy.
Tags: Boston Business Journal, micro-cap, nasdaq
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The Boston Business Journal recently published an article written by MBBP attorneys Daniele Levy and Joe Marrow. The article, titled “A Solution for Smaller Companies”, discusses the BX Venture Market – a new trading platform recently proposed by NASDAQ. Daniele and Joe provide insights into the benefits the BX Venture Market may provide for smaller public companies.
To learn more on this subject, visit the BBJ for the full article.
Tags: cybersecurities, public companies, SEC
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By: Daniele Levy
The U.S. Securities and Exchange Commission (SEC) recently issued guidance to help public companies assess what, if any, disclosure should be provided regarding cybersecurity risks or incidents. While federal securities laws do not specifically require companies to disclose cybersecurity risks, the SEC’s guidance makes it clear that a number of existing disclosure requirements may impose obligations to disclose cybersecurity matters.
The SEC specifically stated that its guidance and the federal securities laws should not be interpreted to require disclosure that would compromise a company’s cybersecurity efforts.
As an action item, companies should consider whether cybersecurity risks and incidents may affect their risk factor disclosure, MD&A, description of the company’s business and operations, legal proceedings disclosure and financial statements.
Disclosure committees, in their periodic review of the effectiveness of disclosure controls and procedures, will want to consider cybersecurity matters as well.
For more information on this topic, please feel free to contact Daniele Levy.
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Smaller Reporting Companies (defined as a company with a public equity float of less than $75 million) have been granted a temporary exemption from Section 14A of the Securities Exchange Act of 1934 regarding shareholder approval of executive compensation by implementing Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
As of January 21, 2011, Smaller Reporting Companies will not be required to conduct a Say-on-Pay Vote or a Frequency Vote until the first annual meeting of the shareholders occurring on or after January 21, 2013. However, this exemption does not apply to a Golden Parachute Vote, which must be included in a merger proxy statement.
Read the full article here: SEC Adopts Rules for Say-on-Pay Advisory Votes for Executive Compensation
Tags: nasdaq, nyse, public company
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NASDAQ has stated that it does not expect to extend the suspension of the minimum bid price requirement past July 31, 2009, the current expiration date. Click here for details. Without further action by NASDAQ, the minimum bid price requirement will be reinstated on Monday, August 3, 2009. Once this requirement is reinstated, NASDAQ-listed companies may face delisting proceedings if their closing bid price falls below $1.00 for thirty consecutive business days. The company will then have 180 calendar days to achieve compliance.
NASDAQ initially suspended the minimum bid price requirement in October, citing extraordinary market conditions, and it extended the suspension in each of December and March.
NASDAQ’s recent action is consistent with the actions of the NYSE. The NYSE’s suspension of the minimum trading price requirement will expire on July 31, 2009.
For more information on NASDAQ listing requirements, please contact Daniele Ouellette Levy.