Nasdaq ISE Pushes Paperwork Updates for Corporate Governance
Published Date: 10/1/2025
Notice
Summary
Nasdaq ISE, LLC wants to update the official rules and documents of its parent company, Nasdaq, Inc., to match new Delaware laws and modern business practices. These changes affect how Nasdaq runs things behind the scenes but won’t cost anyone extra or change trading. The updates are set to roll out soon after approval, keeping Nasdaq sharp and up-to-date.
Analyzed Economic Effects
8 provisions identified: 5 benefits, 0 costs, 3 mixed.
Officer Exculpation Added to Certificate
NASDAQ's Certificate would add the words "or officer" to Article Sixth so certain officers can be exculpated from monetary liability for breaches of the duty of care, consistent with Delaware law (8 Del. C. §102(b)(7)). NASDAQ's Board approved this change April 23, 2025 and stockholders approved the Certificate amendments June 11, 2025.
Removing 'Acting in Concert' Language
The By-Laws would delete references to stockholders "acting in concert" (e.g., in advance-notice and special-meeting provisions) and replace them with narrower phrasing such as "knowingly coordinating." The Exchange says this is intended to reduce litigation targeting of stockholders.
Proxy/Nomination Rules Aligned with Universal Proxy
The By-Laws would (a) limit the number of nominees a Proposing Person may nominate when the board size increases so nominees do not exceed the number of directors to be elected, (b) allow the Corporation to disregard nominees who fail to comply with the SEC's universal proxy Rule 14a-19, including requiring reasonable evidence no later than five business days prior to the meeting, and (c) make Section 3.6's proxy access exclusive method carve out nominees included pursuant to Section 14a-19.
Narrower Information Requests for Nominees
The By-Laws would limit the additional information NASDAQ may request about a proposed director nominee to information reasonably required to determine whether the nominee is qualified under the Certificate, the By-Laws, applicable stock exchange rules, or any law or regulation. The change was approved by NASDAQ's Board April 23, 2025.
Clearer Definitions for 'Affiliate' and 'Principal Competitor'
The By-Laws would clarify that "affiliate" references are to entities reflected on NASDAQ's most recent Form 10-K and that "principal competitor" is as defined for purposes of Section 8 of the Clayton Antitrust Act of 1914. These clarifications apply to advance-notice disclosure requirements.
Board Composition Flexibility — More Issuer Directors
The By-Laws would remove the prior limit that the Board include "at least one, but not more than two" Issuer Directors, allowing NASDAQ to have more Issuer Directors on its Board. The Exchange states this provides greater flexibility to add officers of NASDAQ-listed companies.
Committee Powers and Term Flexibility Expanded
NASDAQ proposes to opt into Delaware Section 141(c)(2), remove certain limits on committee authority (including actions related to stock authorizations), delete fixed one-year committee term language, and change quorum rules for committees to be based on members then serving. The Exchange says these amendments align the By-Laws with Delaware law and current Board practices.
Audit Committee Chair Requirement Relaxed
The By-Laws would remove language requiring the Chair of the Audit Committee to be a Public Director and clarify that the Audit & Risk Committee (or successor) shall be known as the "Audit Committee." The Exchange notes SEC and NASDAQ independence standards still apply.
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