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  Staff Interpretation Letter 2007-6
Identification Number 782
This is in response to your correspondence regarding the applicability of Marketplace Listing Rule 4200(a)(15).  You asked whether the Director is eligible to be an independent member of the company’s board of directors under Listing Rule 4200(a)(15)(D) (the “Rule”), notwithstanding the receipt of the company’s common stock by the Investor in connection with a merger between Target and the company (the “Merger”).  The Director is a managing member of the general partner of the Investor.
Prior to the Merger, the Investor was a shareholder of Target.  As a result of the Merger, the outstanding shares of the common stock of Target were cancelled and exchanged for shares of the company’s common stock.  As such, the Investor received merger consideration in the form of shares of common stock of the company in exchange for the shares previously held in Target.  The shares of stock held by the Investor were treated in the identical manner as shares of stock held by other stockholders of Target.  As a result of the Merger, Target became a wholly-owned subsidiary of the company.  You stated that the merger consideration exceeded 5% of the Investor’s revenues, which is greater than $200,000.
Following our review of the information you provided, we have determined that the company’s board of directors is not precluded by the Rule from finding that the Director is independent.  The receipt of merger consideration, on a pro rata basis in the same manner as other stockholders of the Target, is not a payment for property or services within the meaning of the Rule.  Notwithstanding this determination, pursuant to IM-4200, a company’s board has a responsibility to make an affirmative determination that no relationship exists that would impair the independence of any individuals serving as independent directors.  We are not expressing any opinion as to whether it would be appropriate for the company’s Board to make such a finding with respect to the Director.
Publication Date*: 7/31/2012 Mailto Link Identification Number: 782
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