Considerations for Placing Private Equity Sponsor Representatives on Public Portfolio Company Board Committees

more+
less-

Many private equity sponsors have been or are considering undertaking an initial public offering of a portfolio company. In negotiating stockholder arrangements and committee assignments for their director representatives after a portfolio company completes an IPO, sponsors should consider recently adopted changes to stock exchange listing rules that affect committee membership and other rules promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”), that may affect the ability of sponsor-nominated directors to serve on certain board committees or to satisfy the independence standards imposed by the stock exchanges.

For a listed company that is not a controlled company (that is, more than 50% of the company’s voting power for the election of directors are held by an individual, group or another company), both the New York Stock Exchange (“NYSE”) and Nasdaq require that the board of directors consist of a majority of independent directors. More stringent independence standards apply to service on the audit committee and, upon effectiveness of the recently adopted changes to the NYSE and Nasdaq listing rules, to service on the compensation committee of issuers that are not controlled companies.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Topics:  Compensation Committee, IPO, Listing Standards, Nasdaq, NYSE, Private Equity, SEC

Published In: Business Organization Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ropes & Gray LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »