On May 24, 2002, the Nasdaq Stock Market announced that its board of directors has approved several important rule changes, including one that will put audit opinions in the news.

The Nasdaq Stock Market typically lists smaller companies, including many of the technology companies affected by the bursting of the dot-com bubble. The new rules will help protect investors in these companies from surprises by requiring the companies to:

• Issue a press release to disclose the receipt of an audit opinion with a going concern qualification. Currently, some companies do not issue press releases because they trust that inclusion of the qualification in the audit opinion on Form 10-K is sufficient to bring this concern to the attention of investors and potential investors. The audit opinions and 10-Ks are widely accessible to investors in EDGAR and other online resources available from the stock exchanges and commercial providers.
• Ensure that related-party transactions are approved by the company's audit committee or comparable body.
• Ensure shareholder approval for all stock option plans that include executive officers or directors. The current rules provide an exception for "broadly based" plans. This exception will be substantially eliminated in the new rules.
• Tighten the definition of an independent director.

Companies will also be permitted to make greater use of the Internet for disclosures required by Securities and Exchange Commission's Regulation FD. The current rules require that, except in unusual circumstances, companies must make these disclosures through the news media. The rule changes will expand the options to include conference calls, press conferences and webcasts, so long as the public is provided adequate notice and granted access.

In addition, companies will be subject to delisting for misrepresenting material information to Nasdaq. The rule changes must still be approved by the Securities and Exchange Commission.

-Rosemary Schlank