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Nasdaq Plans Tougher Rules

November 12, 1996|From Bloomberg Business News

The Nasdaq Stock Market plans to propose more stringent standards for the 2,000 companies that list on its SmallCap market.

The proposals, to be unveiled Thursday, will come in the wake of problems that prompted the Securities and Exchange Commission to examine the market's listing regulations. Under the proposed rules, a company on the Nasdaq SmallCap Market would have to submit to shareholders for approval any plan that would change significantly its market capitalization, including recapitalizing the firm or buying another business.

A majority of shareholders would have to approve before the company could proceed with any such plans that diluted the shareholders' stake in the company.

Nasdaq also wants to require SmallCap market companies to have a majority of independent directors. It also wants the companies to have an audit committee. Under the proposal, the companies' accountants would undergo peer review.

The proposals would also eliminate alternative listing requirements that allow a company whose stock falls below $1 to remain listed. Now, when the price investors are willing to pay for a company's share drops below $1, the company's stock can remain listed only if it meets other requirements, including higher capitalization.

National Assn. of Securities Dealers members will have 30 days to make comments on the proposals.

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