Nasdaq Proposes Changes to Listing Roles to Promote Board Diversity

Nasdaq today filed a proposal with the Securities and Exchange Commission to adopt new rules for companies listed on the stock exchange that would require them to “publicly disclose consistent transparent diversity statistics regarding their board of directors.”

Under the proposal, most Nasdaq-listed firms would be required to demonstrate—or explain why they do not have—at least two board members who represent Nasdaq-designated categories, including at least one individual who self-identifies as female and at least one who self-identifies either as a member of a racial or ethnic minority or as LGBTQ+.

Companies would have to disclose this information within one year of the SEC’s approval of the rule, and “all companies will be expected to have at least one diverse director within two years of the SEC’s approval of the listing rule.” (Companies listed on the Nasdaq Global Select Market, Nasdaq Global Market and Nasdaq Capital Market would have slightly longer timeframes to comply.)

Nasdaq added that “for companies that are not in a position to meet the board composition objectives within the required timeframes, they will not be subject to delisting if they provide a public explanation of their reasons for not meeting the objectives.”