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Frequently Asked Questions
  Staff Interpretation Letter 2005-39  
Identification Number 886
This is in response to your letter, regarding the company, which is a Foreign Private Issuer as defined in Rule 3b-4 under the Securities Exchange Act of 1934.  You asked whether the exemptive process (the “Exemptive Process”) pursuant to Marketplace Listing Rule 4350(a) (the “Rule”) may be utilized with regard to the requirement under Listing Rule 4350(d)(2)(A) that a company have at least three members on its audit committee (the “Three-Member Requirement”).  You stated that the company intends to have an audit committee consisting of one member.
Pursuant to the Rule, a Foreign Private Issuer may follow its home country practice in lieu of the requirements of Listing Rule 4350, provided, however, that such an issuer shall comply with Rules 4350(b)(1)(B) (Disclosure of Going Concern Opinion), 4350(j) (Listing Agreement) and 4350(m) (Notification of Material Noncompliance). Such an issuer must have an audit committee that satisfies Listing Rule 4350(d)(3), and the members of the audit committee must meet the criteria for independence referenced in Listing Rule 4350(d)(2)(A)(ii) (the criteria set forth in Rule 10A-3(b)(1), subject to the exemptions provided in Rule 10A-3(c) under the Securities Exchange Act of 1934).  As such, the Exemptive Process may be utilized for the Three-Member Requirement such that a Foreign Private Issuer may have fewer than three persons on its audit committee.  Note, however, that any member of the audit committee must meet all applicable requirements of Rule 10A-3.
Pursuant to IM-4350-6, a Foreign Private Issuer that elects to follow home country practice in lieu of a requirement of Listing Rule 4350 must submit to NASDAQ a written statement from an independent counsel in such issuer's home country certifying that the issuer's practices are not prohibited by the home country's laws. This certification is required at the time the company seeks to adopt its first non-compliant practice.  Rule 4350 requires the company to make appropriate disclosures in its annual filings with the Securities and Exchange Commission and also disclose each requirement of Listing Rule 4350 that it does not follow and include a brief statement of the home country practice the issuer follows in lieu of these corporate governance requirement(s).
Publication Date*: 7/31/2012 Mailto Link Identification Number: 886
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