On June 18, 2013, the U.S. Securities and Exchange Commission (the “Commission”) provided notice of the withdrawal of the proposed rule change by The NASDAQ Stock Market LLC (“NASDAQ”) that would have required listed companies to maintain an internal audit function.1

Background

On February 20, 2013, NASDAQ filed with the Commission a proposed rule change which would have required that each NASDAQ listed company establish and maintain an internal audit function to provide management and the listed company’s audit committee with ongoing assessments of the company’s risk management processes and system of internal control. The proposal would have required each company listed on NASDAQ on or before June 30, 2013 to establish an internal audit function by December 31, 2013; companies listed after June 30, 2013 would have been required to establish an internal audit function prior to listing. The Commission received 42 comment letters on the proposal. On May 7, 2013, NASDAQ withdrew the proposed rule change so that it could consider the comment letters. NASDAQ stated in its withdrawal that it remains committed to the underlying goal of the proposal—helping to ensure that listed companies have appropriate processes in place to assess risks and a system of internal controls. NASDAQ also stated that it intends to file a revised proposal.