Cydney S. Posner is special counsel at Cooley LLP. This post is based on a Cooley memorandum by Ms. Posner.
Time to catch up on some of the recent proposals at the Exchanges.
Nasdaq
Family member. Most recently, at Nasdaq, there is a new proposal to modify the definition of a “family member” for purposes of Listing Rule 5605(a)(2). The proposal would exclude “stepchildren” and domestic employees from the definition of “family member” in the context of defining director independence. Under the proposed new definition, a “family member” would mean a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares the person’s home.
Rule 5605(a) identifies relationships that preclude a finding of director independence, including relationships involving a family member of the director. Currently, “family member” refers to a person’s spouse, parents, children and siblings, whether by blood, marriage or adoption, or anyone residing in such person’s home. “Children by… marriage” includes stepchildren. Nasdaq believes the category of “stepchildren” became a part of the definition in 2002 inadvertently when the definition was revised to simplify it—not with the intent of making any substantive change. That revision has apparently not worked out the way it was intended, particularly because, as revised, the Nasdaq definition was not consistent with the NYSE’s. Nasdaq also believes that the category of “stepchildren” may represent too attenuated a relationship for purposes of determining director independence. Nasdaq is now proposing to modify the definition to revert to the language of the rule before it was “simplified.”
