See also Section 121 for definition of independent director and audit committee requirements.

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American Stock Exchange (AMEX) - Amex Company Guide - PART 8. Corporate Governance Requirements (§§801-809)

 

Sec. 801.

GENERAL

In addition to the quantitative listing standards set forth in Part 1, this Part 8 specifies certain corporate governance listing standards. These standards apply to all listed companies, subject to the exceptions set forth below, to the extent not inconsistent with Rule 10A-3 under the Securities Exchange Act of 1934. However, notwithstanding these exceptions, each listed company must provide prompt notification to the Amex after an executive officer of the listed company becomes aware of any material non-compliance by the listed company with the applicable requirements specified or referenced in Part 8.

(a) Controlled Companies --A company in which over 50% of the voting power is held by an individual, a group or another company (a "controlled company") is not required to comply with Sections 802(a), 804 or 805. A controlled company that chooses to take advantage of any or all of these exceptions must disclose in its annual meeting proxy statement (or in its next annual report on SEC Form 10-K or equivalent if the issuer does not file an annual proxy statement) that it is a controlled company and the basis for that determination.

(b) Limited Partnerships and Companies in Bankruptcy --Limited partnerships and companies in bankruptcy are not required to comply with Sections 802(a), 804 or 805.^*

(c) Other entities --Part 8 is not applicable to asset-backed issuers and other passive business organizations (such as royalty trusts) or to derivatives and special purpose securities listed pursuant to Amex Rules 1000, and 1200 and Sections 106, 107 and 118B. However, issuers of such securities are required to comply with Sections 121 and 803 to the extent required by Rule 10A-3 under the Securities Exchange Act of 1934.

(d) Registered Management Investment Companies --Management investment companies that are registered under the Investment Company Act of 1940 (including closed-end funds and open-end funds) are subject to extensive federal regulation. Accordingly, closed-end funds are not required to comply with the requirement in Section 121 to have a board of directors comprised of a majority of independent directors or with Part 8 other than Sections 802(d) and 803. Open-end funds listed pursuant to Amex Rule 1000A are required to comply with Sections 121 and 803 to the extent required by Rule 10A-3 under the Securities Exchange Act of 1934, and are also required to comply with Section 802(d) and the provision in Section 121B(4) requiring audit committees for investment companies to establish procedures for the confidential, anonymous submission of concerns regarding questionable accounting or auditing matters by employees of the investment adviser, administrator, principal underwriter, or any other provider of accounting related services for the investment company, as well as employees of the investment company.

(e) Business development companies, which are a type of closed-end management investment company defined in Section 2(a)(48) of the Investment Company Act of 1940 that are not registered under that Act, are subject to all corporate governance requirements.

(f) Foreign Issuers --See Section 110.

(g) Preferred and debt listings --Companies listing only preferred or debt securities on the Exchange (including cooperative entities that are structured to comply with relevant state law and federal tax law and do not have a publicly traded class of common stock) are only required to comply with Sections 121 and 803 to the extent required by Rule 10A-3 under the Securities Exchange Act of 1934.

Sec. 802.

BOARD OF DIRECTORS

(a) At least a majority of the directors on the Board of Directors of each listed company must be independent directors as defined in Section 121A, except for (i) a controlled company (see Section 801(a)), and (ii) a Small Business Issuer (see Section 121B(2)(c)). Each listed company must disclose in its annual meeting proxy statement (or in its next annual report on SEC Form 10-K or equivalent if the issuer does not file an annual proxy statement) those directors that the board of directors has determined to be independent pursuant to Section 121A.

(b) Each company shall hold meetings of its Board of Directors on at least a quarterly basis. The independent directors shall meet on a regular basis as often as necessary to fulfill their responsibilities, including at least annually in executive session without the presence of non-independent directors and management.

(c) The Board of Directors of each listed company may not be divided into more than three classes. Where the company's charter provides for classes, they should be of approximately equal size and tenure and directors' terms of office should not exceed three years.^*

(d) A listed company is not permitted to appoint or permit an Exchange employee or Floor Member to serve on its Board of Directors.

(e) Listed companies are urged to develop and implement continuing education programs for all directors, including orientation and training programs for new directors (see also Commentary .01 to Section 807).
Adopted.

December 1, 2003 (Amex-2003-065).

February 24, 2004 (Amex-2004-06).

February 27, 2004 (Amex-2004-15).

Sec. 803

INDEPENDENT DIRECTORS AND AUDIT COMMITTEE

(a) No security is eligible for listing unless the issuer is in compliance with the audit committee requirements of Rule 10A-3 under the Securities Exchange Act of 1934, subject to an opportunity to cure any defects thereof in accordance with the procedures set forth in Section 1009 and Part 12. If a member of the issuer's audit committee ceases to be independent in accordance with the requirements of Rule 10A-3 under the Securities Exchange Act of 1934 (and the corresponding provisions of Section 121B(2)(a)(i)) for reasons outside the member's reasonable control, that person, with prompt notice to the Exchange, may remain an audit committee member of the issuer until the earlier of the next annual shareholders meeting of the issuer or one year from the occurrence of the event that caused the member to be no longer independent. The text of Rule 10A-3 under the Securities Exchange Act of 1934 is reproduced in Commentary .01.

(b) A listed issuer must notify the Exchange promptly after an executive officer of the issuer becomes aware of any material noncompliance by the listed issuer with the requirements of paragraph (a).

(c) Any notification required pursuant to paragraphs (a) or (b) should be provided to the Exchange's Listing Qualifications Department at (212) 306-1331 (telephone), (212) 306-5325 (facsimile).

(d) The requirements of paragraphs (a) and (b) are operative as of

(i) July 31, 2005 for foreign private issuers and small business issuers (as defined in Rule 12b-2 under the Securities Exchange Act of 1934); or

(ii) for all other listed issuers, the earlier of the listed issuer's first annual shareholders meeting after January 15, 2004 or October 31, 2004.

See also Section 121.

Sec. 804.

BOARD NOMINATIONS

(a) Board of Director nominations must be either selected, or recommended for the Board's selection, by either a Nominating Committee comprised solely of independent directors or by a majority of the independent directors.

(b) Notwithstanding paragraph (a) above, if the Nominating Committee is comprised of at least three members, one director who is not independent as defined in Section 121A, and is not a current officer or employee or an immediate family member of such person, may be appointed to the Nominating Committee, if the board, under exceptional and limited circumstances, determines that membership on the committee by the individual is required by the best interests of the company and its shareholders, and the board discloses, in the next annual meeting proxy statement (or in its next annual report on SEC Form 10-K or equivalent if the issuer does not file an annual proxy statement) subsequent to such determination, the nature of the relationship and the reasons for that determination. A director appointed to the Nominating Committee pursuant to this exception may not serve for in excess of two years.

(c) Each listed company must adopt a formal written charter or board resolution, as applicable, addressing the nominations process and such related matters as may be required under the federal securities laws.

l l l Commentary ...

.01 Section 804 is not applicable to a controlled company (See Section 801(a)).

.02 If a company is legally required by contract or otherwise to provide third parties with the ability to nominate and/or appoint directors (e.g., preferred stock rights to elect directors upon dividend default, shareholder agreements, management agreements), the selection and nomination of such directors is not subject to approval by the Nominating Committee or a majority of independent directors.

.03 Section 804 is not applicable to a company if it is subject to a binding obligation that requires a director nomination structure inconsistent with Section 804 and such obligation pre-dates the approval date of Section 804.

Sec. 805.

EXECUTIVE COMPENSATION

(a) Compensation of the chief executive officer of a listed company must be determined, or recommended to the Board for determination, either by a Compensation Committee comprised of independent directors or by a majority of the independent directors on its Board of Directors. The chief executive officer may not be present during voting or deliberations. Compensation for all other officers must be determined, or recommended to the Board for determination, either by such Compensation Committee or a majority of the independent directors on the company's Board of Directors.

(b) Notwithstanding paragraph (a) above, if the Compensation Committee is comprised of at least three members, one director who is not independent as defined in Section 121A, and is not a current officer or employee or an immediate family member of such person, may be appointed to the Compensation Committee, if the board, under exceptional and limited circumstances, determines that membership on the committee by the individual is required by the best interests of the company and its shareholders, and the board discloses, in the next annual meeting proxy statement (or in its next annual report on SEC Form 10-K or equivalent if the issuer does not file an annual proxy statement) subsequent to such determination, the nature of the relationship and the reasons for that determination. A director appointed to the Compensation Committee pursuant to this exception may not serve for in excess of two years.

l l l Commentary ...

.01 Section 805 is not applicable to a controlled company (See Section 801(a)).

.02 The Compensation Committee or a majority of the independent directors is not precluded from approving awards (either with or without board ratification) or from seeking board ratification or approval as may be required to comply with applicable tax or state corporate laws.

Sec. 806.

STOCK OPTION PLANS

See Section 711.
Adopted.

December 1, 2003 (Amex-2003-065).

Sec. 807.

CODE OF CONDUCT AND ETHICS

Each company shall adopt a code of conduct and ethics, applicable to all directors, officers and employees, which also complies with the definition of a "code of ethics" as set forth in Item 406 of SEC Regulation S-K (or Item 406 of SEC Regulation S-B with respect to a company which files reports under SEC Regulation S-B). The code of conduct and ethics must be publicly available.

l l l Commentary ...

.01 While each company should determine the appropriate standards and guidelines for inclusion in its code of conduct and ethics, all codes of conduct and ethics must promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; full, fair, accurate, timely and understandable disclosure in periodic reports and documents required to be filed by the company; compliance with applicable Exchange and governmental rules and regulations; prompt internal reporting of violations of the code of conduct and ethics to an appropriate person or persons identified in the code of conduct and ethics; and accountability for adherence to the code of conduct and ethics. A company may adopt one or more codes of conduct and ethics such that all directors, officers and employees are subject to a code of conduct and ethics that satisfies the definition of a "code of ethics." Any waivers of the code of conduct and ethics for directors or executive officers must be approved by the company's board of directors and disclosed in an SEC Form 8-K within five days.

Adopted.

December 1, 2003 (Amex-2003-065).

 

Sec. 809.

EFFECTIVE DATES/TRANSITION

(a) In order to permit listed companies to make necessary adjustments in the course of their regular annual meeting schedule, to the extent not inconsistent with Rule 10A-3 under the Securities Exchange Act of 1934, Sections 802 - 805 (other than Section 802(d)), as well as the corresponding changes to Section 121, are effective as set forth below. During the transition period between December 1, 2003 and the applicable effective date, listed companies must comply with Section 121 as in effect immediately prior to December 1, 2003 (see Commentary .01).

l July 31, 2005 for foreign private issuers and small business issuers (as defined in Rule 12b-2 under the Securities Exchange Act of 1934); and

l For all other listed companies, by the earlier of: (1) the listed company's first annual shareholders meeting after March 15, 2004; or (2) October 31, 2004.

In the case of a company with a staggered board, to the extent not inconsistent with Rule 10A-3 under the Securities Exchange Act of 1934, if the company would be required to change a director who would normally not stand for election in such annual meeting, the company may continue such director in office until the second annual meeting after the date specified above, but no later than December 31, 2005.

(b) Companies that have listed or will be listed in conjunction with their initial public offering shall be afforded exemptions from all board composition requirements consistent with the exemptions afforded in Rule 10A-3 under the Securities Exchange Act of 1934. That is, for each applicable committee that the company establishes (i.e., nominating and/or compensation) the company shall have one independent member at the time of listing, a majority of independent members within 90 days of listing and all independent members within one year. Such companies will be required to meet the majority independent board requirement (or 50% independent in the case of a small-business issuer) within one year of listing. It should be noted however, that investment companies are not afforded these exemptions under Rule 10A-3 under the Securities Exchange Act of 1934. Companies emerging from bankruptcy or which have ceased to be controlled companies will be required to meet the majority independent board requirement (or 50% independent in the case of a small-business issuer) within one year. Companies may choose not to establish a compensation or nomination committee and may rely instead upon a majority of independent directors to discharge responsibilities under Part 8.

(c) Companies transferring from other markets with a substantially similar requirement shall be afforded the balance of any grace period afforded by the other market. Companies transferring from other markets that do not have a substantially similar requirement shall be afforded one year from the date of listing, to the extent not inconsistent with Rule 10A-3 under the Securities Exchange Act of 1934.

(d) Section 807 is effective June 1, 2004.

(e) Section 808 and the amendments to Sections 110, 120, 401, 402 and 610 are effective December 31, 2003.

(f) The amendments to Section 1009 and the adoption of Section 802(d) are effective December 1, 2003.