Nasdaq Adopts Changes to Corporate Governance Exemption Process

The NASDAQ Stock Market, Inc. (NASDAQ) has adopted changes to NASD Rule 4350 to permit foreign private issuers1 to follow their home country corporate governance practices rather than certain practices prescribed by Rule 4350 without first seeking an exemption from NASDAQ. These modifications went into effect on March 3, 2005.

Under the prior rule, a foreign private issuer that desired to follow the corporate governance practices of its home country in lieu of those prescribed by Rule 4350 was required to formally request an exemption from NASDAQ. The issuer had to demonstrate that the NASDAQ requirement was contrary to the laws, rules, regulations or generally accepted business practices of the issuer’s home country. In addition, the issuer had to disclose in its annual report filed with the Securities and Exchange Commission the receipt of the NASDAQ exemption and a description of the home country practice, if any, followed by the issuer in lieu of the NASDAQ requirement.

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