The Nasdaq Stock Market Inc. says that the Securities and Exchange Commission has approved proposed new rules to strengthen listing standards on the exchange.

Key changes approved by the SEC include:

    strengthening the definition of who is considered an independent director;

  • requiring a majority of each issuer’s board to be comprised of independent directors;
  • requiring independent directors to approve director nominations and executive officer compensation;
  • requiring independent directors to meet in executive sessions;
  • strengthening audit committee standards and expanding their responsibilities;
  • requiring the audit committee to review and approve all related-party transactions;
  • requiring companies to establish a publicly available code of conduct for all employees and directors;
  • and requiring non-U.S. companies listed on Nasdaq to comply with heightened disclosure standards.

The new rules will take effect with a company’s first annual meeting occurring after Jan. 15, 2004, but no later than October 31, 2004. The code of conduct requirement will be effective beginning May 2004.

“Adopting significant changes that are both clear and objective is part of Nasdaq’s continuous commitment to increase confidence in the markets,” said Nasdaq’s president and CEO Robert Greifeld, in a news release.

“In addition to enhancing disclosure and transparency, these changes will empower shareholders, independent directors and audit committees.”