The fiduciary duties of boards of directors are governed by the laws of the particular jurisdictions in which their companies are incorporated. However, since the early 2000s, in response to accounting scandals and the financial crisis, a considerable number of substantive governance and related disclosure requirements have been imposed on boards and board committees through federal legislation, implementing rules and stock exchange listing standards.
The following chart summarizes the requirements applicable to boards of directors of companies that have equity securities listed on the New York Stock Exchange (the “NYSE”) or the Nasdaq Stock Market (“Nasdaq”). The sources of these requirements are:
- the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”),
- the Sarbanes-Oxley Act of 2002, as amended (“SOX”),
- the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
- rules of the U.S. Securities and Exchange Commission (the “SEC”), and
- the corporate governance listing standards of the NYSE and Nasdaq (the “Listing Standards”), which are very similar but not identical.
As noted in the chart, certain of these requirements do not apply to “foreign private issuers” (“FPIs”) “controlled companies,” “smaller reporting companies,” companies in bankruptcy proceedings, limited partnerships, investment companies registered under the Investment Company Act of 1940, as amended (the “ICA”), cooperatives and passive investment entities such as royalty trusts and securitization vehicles.