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Frequently Asked Questions
  Do lawyers, whose firms provide services to the Nasdaq-listed company, fall under the $120,000 compensation test of Listing Rule 5605(a)(2)(B) or the 5%/$200,000 indirect payment test of Listing Rule 5605(a)(2)(D)?
Identification Number 140
Payments from the Nasdaq-listed company to a law firm would generally be considered under Listing Rule 5605(a)(2)(D), which looks to whether the payment exceeds the greater of 5% of the recipient's gross revenues or $200,000. If the firm is a sole proprietorship, however, Listing Rule 5605(a)(2)(B), which looks to whether compensation exceeds $120,000, applies. For purposes of determining whether a lawyer is eligible to serve on an audit committee, SEC Rule 10A-3 generally provides that any partner in a law firm that receives payments from the issuer is ineligible to serve on that issuer's audit committee.  
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 140
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