New York (Nov. 6, 2003) -- The Securities and Exchange Commission approved new rules proposed by the NASDAQ aimed at strengthening corporate governance.
The changes to the Nasdaq rules include: strengthening the definition of who's considered an independent director; requiring that a majority of each issuer's board be comprised of independent directors; requiring that independent directors approve director nominations and executive officer compensation; and requiring independent directors to meet in executive sessions. The rules also strengthen audit committee standards, expand their responsibilities, and require the audit committee, or a comparable body, to review and approve all related-party transactions.
Commenting on the new rules, SEC Chairman William Donaldson said, "These rule changes are at the core of a broad movement by our markets to enhance the corporate governance practices of the companies traded on them."
The new Nasdaq rules also require companies to establish a publicly available code of conduct for all employees and directors, and would require non-U.S. companies listed on Nasdaq to comply with heightened disclosure standards. The new rules will take effect with a company's first annual meeting occurring after Jan. 15, 2004, but no later than Oct. 31, 2004. The code of conduct requirement takes effect in May. Details are available at: http://www.nasdaq.com/about/Corp_Gov_Summary.pdf.
-- WebCPA staff
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