Last week, Nasdaq released this interesting paper that sets forth a set of recommendations to improve the capital markets. Nasdaq believes its recommendations not only come out at a critical time when policymakers have real concerns about the state of the public company model in the US, but also at a time when there is a real opportunity to change this dynamic.
Among other topics, the key policy recommendations involve:
- Proxy process modernization – Nasdaq would like a focus on how proxy modernization on plumbing, shareholder access and transparent proxy advisory regulations could help both companies and their shareholders to have a meaningful dialogue on matters that are material and important to the company and its business.
- Scaled disclosure – Nasdaq thinks this is really important to all companies, but particularly for biotechs. Various EGC, SRC and accelerated filer regimes started with different statutory origins. All with good intentions. Nasdaq believes they can be retuned to reflect the needs of current companies.
In addition, Nasdaq highlights other areas for enhancement, ranging from possibly eliminating Form 10-Qs, certain parts of pay versus performance and more. Ultimately, it favors refocusing SEC disclosure requirements on materiality to enhance the information that shareholders receive so they can make more informed investment and voting decisions.
- Smart regulation – Companies are uniformly concerned about audit quality and costs, and Nasdaq seeks reform here. PCAOB’s now-dead NOCLAR proposal alarmed companies for a variety of reasons, including a lack of meaningful cost-benefit analysis.
Nasdaq also highlights a list of litigation reforms that are long overdue, which could make a significant impact on US companies achieving a more level playing field with companies in other countries.
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