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Frequently Asked Questions
  Staff Interpretation Letter 2004-26
Identification Number 924
Rule 4350(c)(5):  A Controlled Company is exempt from the requirements of Listing Rule 4350(c), except for the requirements of subsection (c)(2), which pertain to executive sessions of independent directors.  A Controlled Company is a company of which more than 50% of the voting power is held by an individual, a group or another company.  A Controlled Company relying upon this exemption must disclose in its annual meeting proxy statement (or, if the issuer does not file a proxy, in its Form 10-K or 20-F) that it is a Controlled Company and the basis for that determination.
 
Relevant Facts:  A company represented that two separate corporate entities currently together own in excess of 50% of the voting power in the company’s securities.  The company stated, and Staff verified, that each of the entities has a Schedule 13D on file with the Securities and Exchange Commission, wherein each acknowledges that it may be considered to be acting as a member of a group with the other.
 
Issue:  Is the company considered a “Controlled Company,” as defined in Listing Rule 4350(c)(5), and thus eligible for the exemptions from certain independent director requirements set forth in Listing Rule 4350(c)?
 
Determination:  Yes.  Based on these representations, NASDAQ has no reason to disagree with the company’s assertion that it is a “Controlled Company.”  As such, the company is eligible for exemptions under Listing Rule 4350(c), except for the “executive sessions” requirements of subsection (c)(2).  NASDAQ also reminded the company that the Rule requires the company to disclose its status as a “Controlled Company” in its next annual meeting proxy statement and to provide the basis for that determination.
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 924
material_search_footer*The Publication Date reflects the date of first inclusion in the Reference Library, which was launched on July 31, 2012, or a subsequent update to the material. Material may have been previously available on a different Nasdaq web site.
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