NYSE American Board Independence Standards
NYSE American Company Guide Rule 803 delineates the requirements independent directors and audit committees. NYSE American Company Guide Rule 802 requires that a majority of the board of directors of a listed company be “independent.” Rule 803 requires that all members of the audit committee be independent and defines independence and Rules 804 and 805 require that all directors on the nominating and compensation committees, if a company has such committees, be independent.
Under NYSE American Company Guide Rule 803, an “independent director” means a person other than an executive officer or employee of a company. The board of directors must make an affirmative finding that a director does not have a relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director for that director to qualify as independent. However, the NYSE American rules specify certain relationships that would disqualify a person from being considered independent. Stock ownership is not on the
Nasdaq Board Independence Standards
Nasdaq Rule 5605 delineates the listing qualifications and requirements for a board of directors and committees, including the independence standards for board members. Nasdaq requires that a majority of the board of directors of a listed company be “independent” and further that all members of the audit, nominating and compensation committees be independent.
Under Rule 5605, an “independent director” means a person other than an executive officer or employee of a company or any individual having a relationship which, in the opinion of the company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In other words, the question of independence must ultimately be determined by the board of directors who must make an affirmative finding that a director is independent. However, the Nasdaq rules specify certain relationships that would disqualify a person from being considered independent. Stock ownership is not on the list and is not enough, without