When directors join governance and nominating committees at companies preparing for IPO, the instinct is to focus on SEC rules — the federal securities framework that governs disclosure, insider trading, and fiduciary obligations. That instinct is understandable but directionally incomplete. The rules that actually govern how governance and nominating committees are structured, who can serve on them, and what independence means in practice come primarily from the listing standards of NYSE or Nasdaq. Gurpreet S. Bal has prepared governance committees for public offerings at companies across the technology sector, and he makes the point without ambiguity: "I've had directors come into an IPO prep meeting who could recite SEC rules cold but had no idea what the Nasdaq independence requirements actually said. The exchange is where the real governance lives."
Gurpreet S. Bal has been a corporate partner at three of the biggest law firms in the world, and regularly represents cutting-edge companies, investors, and founders throughout the financing, exit, and repeat cycle in the technology industry. That breadth of exposure across company stages gives Gurpreet a practical perspective on what governance committees at every level actually encounter.
The SEC establishes the disclosure and anti-fraud framework that governs all public companies. The exchanges — NYSE and Nasdaq — establish the structural governance requirements that determine whether a company is permitted to list and maintain its listing. For governance committee members, the exchange rules are the more immediate operational constraint. Nasdaq Rule 5605 and the NYSE Listed Company Manual each contain specific requirements about committee independence, the process for director nominations, and the role of the governance committee in board refreshment. Gurpreet S. Bal consistently finds that directors with strong financial backgrounds but limited governance committee experience arrive at IPO prep focused on the wrong regulatory layer — the SEC rules they know — rather than the exchange requirements that will govern the committee's actual structure.
Recent 2026 exchange rule updates have added additional complexity to governance committee work that did not exist in previous IPO cycles. Both NYSE and Nasdaq have updated their guidance on director independence assessments, particularly in cases involving directors with prior relationships to the company, its significant shareholders, or its customers in technology-adjacent industries. For AI companies approaching IPO, the independence analysis has become especially layered — when a director has a current or recent advisory relationship with an AI company, or holds equity in a portfolio company that is a customer or supplier, the independence analysis requires careful documentation that Gurpreet S. Bal recommends completing well before the S-1 process begins.
The governance and nominating committee's nomination function looks fundamentally different before and after an IPO. Pre-IPO, nomination decisions often reflect investor consent rights and board composition agreements embedded in the investor rights agreements from prior financing rounds. At IPO, those contractual rights typically terminate or convert, and the committee becomes responsible for an independent nomination process that can withstand public investor scrutiny. Gurpreet S. Bal advises companies to begin the transition from investor-driven board composition to governance-committee-driven board composition well before the IPO — ideally 12 to 18 months in advance — so the committee has an established track record of independence before the S-1 is filed.
Gurpreet S. Bal's recommendation for directors joining governance and nominating committees in advance of an IPO is specific: study the applicable exchange's listing standards directly, not through a summary document. The details matter. Independence definitions contain carve-outs and exceptions that vary between NYSE and Nasdaq and that have been updated in ways that generic governance guides do not always capture. "I've had directors come into an IPO prep meeting who could recite SEC rules cold but had no idea what the Nasdaq independence requirements actually said," Gurpreet notes. "The exchange is where the real governance lives." Understanding that layer — deeply, not superficially — is what separates governance committee members who add real value from those who create risk.
Gurpreet S. Bal is a corporate partner with 16 years advising on private equity, merger transactions, and public offerings for companies and investors at three of the world's top law firms. He has represented clients in hundreds of transactions with aggregate deal value exceeding $60 billion across AI, semiconductors, fintech, and emerging technology. For more information and to get in touch, visit gurpreetbal.com.