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Hypothetical 2-Corporate Governance & Other SOX
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| SECTION 1 HOME ON LINE LINKS SEARCH TABLE CONTENTS SECTION 2 SECTION 3 SECTION 4 |
1. AnimateEase is considering putting I.M.Fish, an attorney who is a partner in the firm of Fish and Fowl, the company' outside counsel, on its board of directors and audit committee. Can it do so consistently with Rule 10A-3 and or the NASD rules? 2. Assuming I.M.Fish is being considered as a director and a member of the company's nomination committee. Is he an independent director for purposes of the Nasdaq rule requiring a majority of the members of the board of directors to be independent? As a member of the company's nomination committee? On what it may depend? 3. Same question as 2 above except I.M.Fish is a sole practitioner who represents the company as outside counsel. 4. Assume AnimateEase is considering placing John Jones, an attorney, on its board of directors. Jones represented the company in its original incorporation and for a period of time after that, but no longer represents the company and has not for the past 6 months. Is he independent for purposes of the audit committee? As a member of the compensation committee? On what does it depend. 5. Same question as 4 except Jones at the time he did legal work for the company he was a partner in Fish and Fowl, but withdrew as partner from Fish and Fowl six months ago and has not done any legal work for the company since that time. 6.AnimateEase is considering putting on its board, Tom Smith, owner of Smith printing company which does all of the printing for AnimateEase, including the printing for the forthcoming offering. The company paid the Smith company $70,000 for printing during the past year. Is he an independent director under the Nasdaq rules? Is he independent insofar as Rule 10A-3 is concerned? 7. Look at Section A of the NYSE Frequently Asked Questions and Section 4350(a)(5) of the Nasdaq Rule and be prepared to discuss the parameters of AnimateEase transitioning to the independence standards as a listed company. 8. AnimateEase has been use a small local accounting firm as its auditor. Will it be able to use that firm as the auditor of the financial statements included in the Securities Act registration statement relating to the forthcoming IPO? On what does it depend?
RULE 10A-3
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