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Frequently Asked Questions
  Staff Interpretation Letter 2007-12
Identification Number 788
This is in response to your correspondence regarding the applicability of Marketplace Listing Rule 4200(a)(15).  Specifically, 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 certain payments made in connection with investment banking services provided by the Firm.  The Director is an executive officer of the Firm.
According to the information you provided, the Firm has provided investment banking services for the company during the last three years including a firm commitment underwritten offering of the company’s common stock and best efforts placement agency offerings.  You stated that in connection with these services, payments by the company to the Firm were less than 5% of Firm’s revenues (which exceeded $200,000) in the current year or any of the past three years (the “Threshold”).  This includes any payment that may be ascribed in connection with the Firm’s exercising over-allotment options (“Green Shoes”) where the price the Firm paid for the securities was less than the market value.  The purchase price paid by the Firm in the exercise of Green Shoes was the same as that paid by all other purchasers in the respective offerings.  In addition, you stated that any payments made by the Firm to the company in connection with the investment banking services were less than 5% of the company’s revenues (which exceeded $200,000) in the current year or any of the past three years.
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 because the payments were less than the Threshold.  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. You have not asked us to reach, and we have not reached, a conclusion as to whether the Director is eligible to serve on the audit committee.  Such eligibility should be assessed under Marketplace Listing Rule 4350(d) and under Exchange Act Rule 10A-3.
Publication Date*: 7/31/2012 Mailto Link Identification Number: 788
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