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from these provisions apply to limited partnerships, international private issuers, initial public
offerings, and regulated entities. The table below provides a summary of the NASDAQ’s
12
requirements for corporate governance .
Corporate Governance Description Listing Rule
Requirement
Distribution of Annual The organization needs to
or Interim Reports make its yearly and 5250(d)
provisional reports, either by
mail or digitally via the
company's website,
accessible to shareholders.
Independent Directors The board of directors of the 5605(b)
organization is expected to be
made mostly of independent
directors.
Audit Committee The organization is expected 5605(c)
to have an audit committee
composed entirely of
independent directors who
also comply with SEC Rule
10A-3 standards and who can
read and understand simple
financial reports. There must
be a minimum of three
members on the audit
committee. One audit
committee member must
have a background that
contributes to the financial
sophistication of that person.
Compensation of A compensation committee 5605(d)
Executive Officers composed entirely of
independent directors and
having a minimum of two
members is expected by the
company. Furthermore, Rule
5605(d)(2)(A) provides an
extra independence test for
members of the
compensation committee.
The compensation committee
must decide the pay for the
chief executive officer and all
other top executives, or
propose it to the full board
for consideration.
12 https://listingcenter.nasdaq.com/assets/initialguide.pdf
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