Uplist Series Part II: Corporate Governance [Guest Post]

Guest Post By: Todd Heinzl

Uplis Series

Uplist Series Part II: Corporate Governance [Guest Post]

Welcome to Part II of our Uplisting Series: Corporate Governance – for many CEOs this subject is like watching paint dry. At the same time most realize that not only is Corporate Governance a mandatory requirement for your company to list on the NASDAQ Capital Markets (“NASD”) or the New York Stock Exchange American (“NYSE”) but it provides a layer of focused stewardship for the C-Suite management and Board of Directors. In fact, during your uplisting process it is an area that both exchanges will pay close attention in their review of your application.

Why Is Corporate Governance Important?

Lets briefly explore why this topic is important. We know that companies must adhere to additional governance requirements including the quantitative exchange listing metrics in order to uplist to a higher exchange. However, many companies overlook how good corporate governance can attract a stronger Board of Directors, provide operational assurances for your Investment Banker and other professionals. In addition, it demonstrates to the regulatory and investing community that management is serious about being a quality, compliant oriented public company.

Exchange Corporate Governance Requirements

Next, lets examine the requirements rather than the definition of what it means to have an independent Board of Directors.


Both Nasdaq and NYSE require listed companies to maintain certain corporate governance standards and outlines what and how an independent Board of Directors is defined. Generally, independence is defined by applicable exchange rules as the director have no relationship with the company or management that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Nasdaq and NYSE rules include a list of relationships that indicate the director would not be deemed independent in their respective rules or guidelines which is located on the exchanges’ respective websites. In addition, legal counsel can often be a good sounding board for many CEO’s in determining if the directors are independent.


Once your independency requirements are satisfied the Board of Directors will be required to form committees handling a variety of aspect involving Board governance. Upon submitting your application, the Board of Directors and the company C-Suite will become familiar with the four required Committees – audit, compensation, nominating & corporate governance, and each must comprise only independent directors. In the case of the Audit and Compensation committee the exchanges will expect that committee members should meet a subject matter expertise test for compliance. It should be noted that many Board of Directors today recognize that both shareholders and the marketplace suggest the formation of additional committees that deal with social media, AML requirements, risk management and cybersecurity. At UpListing.com we suggest to our clients to create these additional committees a part of the company stewardship from day one.


One final thought – many companies that contemplate uplisting often leave the decisions of corporate governance to the 11th hour or until they receive comments from the exchange. Many issuers are surprised by the number of comments in regards to governance. Corporate governance is mandatory requirement, and – without sounding repetitious, we reiterate, start planning and organizing your company’s’ governance items – early.

In Part Three of our Series we will talk about the Investment Banking relationship and why it is one of your company’s most important partnerships in the uplist process.


Click this link to see Uplist Series Part I: UpListing to a Senior Exchange in 2018


About Todd Heinzl:

Currently Managing Director of The Governance Box (GBX) and UpListing.com, Todd Heinzl holds over 25 years of experience in the investment and financial services industry. With a focus on assisting globally minded micro and small cap companies achieve up-listing results for their shareholders, UpListing.com offers CEO’s and their Board of Directors uplist strategic plans, through collaboration, in the development and implementation of effective uplist strategy and governance policy. As managing director of both financial advising enterprises, Mr. Heinzl works with companies from a variety of industries with a focus on their corporate governance and subsequently to facilitate their uplisting to senior exchanges such as NASDAQ and NYSE American. Mr. Heinzl is a member in good standing with the National Association of Corporate Directors (NACD), European Corporate Governance Institute (ECGI), and the Royal Canadian Military Institute (RCMI).


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This post is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.


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