11 September 2023
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On September 5, 2023, the Securities and Exchange Commission
(the “SEC”) posted and declared effective a Nasdaq rule
proposal modifying requirements related to a waiver of the code of
conduct in Listing Rules 5610 and IM-5610. The new rules allow
committees of a company’s board of directors to approve waivers
of the code of conduct for directors or executive officers.
Additionally, the new rules set the public disclosure time for such
waivers made by Nasdaq-listed foreign private issuers
(“FPIs”) to four business days, like any other
Nasdaq-listed company. The rules become effective on September 20,
Listing Rules 5610 and IM-5610 require all Nasdaq-listed
companies to adopt a code of conduct meeting the definition of a
“code of ethics” set out in Section 406(c) of the
Sarbanes-Oxley Act. The code of conduct must be applicable to
directors, officers and employees, publicly available and have an
The changes will provide more flexibility for the approval
process and will require Nasdaq-listed FPIs to promptly disclose
waivers. Following the changes (underlined below), the waiver of
the code for directors or executive officers must be:
- approved by the listed company’s board or a board
- publicly disclosed, also by FPIs, within four business days, in
the manner described above.
Providing companies with oversight flexibility aligns
Nasdaq-listed companies with NYSE-listed companies, which have been
allowed to place oversight of such waivers with a committee of the
board, according to NYSE Rule 303A.10. Nasdaq-listed companies
s،uld review their codes of conduct for any appropriate changes
and consider whether it would be more efficient and ،nt to
transfer oversight of waivers to a board committee.
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