NYSE MKT Corporate Governance | Norsat International Inc

NYSE MKT Corporate Governance

The common shares of Norsat International Inc. (the “Company”) are listed on the NYSE MKT LLC (“NYSE MKT”).  Section 110 of the NYSE MKT Company Guide permits NYSE MKT to consider the laws, customs and practices of foreign issuers in relaxing certain NYSE MKT listing criteria, and to grant exemptions from NYSE MKT listing criteria based on these considerations.  A company seeking relief under these provisions is required to provide written certification from independent local counsel that the non-complying practice is not prohibited by home country law.  A description of the significant ways in which the Company’s governance practices differ from those followed by US domestic companies pursuant to NYSE MKT LLC Company Guide standards is as follows:

Section 123 – Shareholder Meeting Quorum Requirement

Section 123, requires a quorum of not less than 33-1/3 of a listed company’s shares issued and outstanding entitled to vote at a meeting of shareholders.

The Company’s quorum requirement is set forth in its Articles and provides that the quorum for the transaction of business at a meeting of shareholders is at least one person who is, or who represents by proxy, one or more shareholders who, in the aggregate, hold at least 5% of the issued shares entitled to be voted at the meeting.

Section 713 – Shareholder Approval Requirement

Section 713, requires shareholder approval as a prerequisite to approval of applications to list additional shares when the additional shares will be issued in connection with a transaction involving the sale or issuance by a company of common stock (or securities convertible into or exercisable for common stock) equal to 20% or more of presently outstanding stock for less than the greater of book or market value of the stock.

The issuance of common stock by the Company in an amount in excess of 20% of the presently outstanding stock for less than book or market value, without shareholder approval, is not prohibited under the rules of the TSX in certain circumstances and does not constitute a default under the TSX rules or any applicable laws in Canada under certain circumstances.

Section 805 – Executive Compensation

Section 805, requires the Company have a compensation committee comprised solely of independent directors.

The Company has a Compensation Committee that is responsible for recommending the compensation of the Company’s chief executive officer to the Company’s board of directors, as contemplated by Section 805.  The Company presently has three independent directors on its Compensation Committee, namely Mr. Joseph Caprio (Chair), Mr. Fabio Doninelli, and Mr. Peter Ciceri.

While the Compensation Committee is currently comprised solely of independent directors, it is possible that future changes to the composition of the Compensation Committee could result in one or more of the members of the Compensation Committee not being independent.

Section 804 – Board Nominations

Section 804, requires that either (i) all members of its nominating committee be independent, or (ii) nominees for the Company’s directors be selected, or recommended for the Board’s selection, solely by a majority of the independent directors of the Company.

The Company presently does not have a nominating committee that is responsible for recommending nominations to the Company’s board of directors, as contemplated by Section 804.  Rather, the process of proposing and assessing potential nominees to the board of directors is undertaken by a majority of the directors that are independent of management of the Company.


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