Nasdaq proposes new listing rules related to board diversity
Nasdaq, Inc. (NASDAQ:NDAQ) today announces that it has filed a proposal with the United States Securities and Exchange Commission (SEC) to adopt new listing rules related to board diversity and disclosure.
If approved by the regulator, the new listing rules would require all companies listed on Nasdaq’s U.S. exchange to publicly disclose consistent, transparent diversity statistics regarding their board of directors.
Furthermore, the rules would require most Nasdaq-listed companies to have, or explain why they do not have, at least two diverse directors, including one who self-identifies as female and one who self-identifies as either an underrepresented minority1 or LGBTQ+.
Foreign companies and smaller reporting companies would have additional flexibility in satisfying this requirement with two female directors.
Under the proposal, all Nasdaq-listed companies will be required to publicly disclose board-level diversity statistics through Nasdaq’s proposed disclosure framework within one year of the SEC’s approval of the listing rule. The timeframe to meet the minimum board composition expectations set forth in the proposal will be based on a company’s listing tier.
Specifically, all companies will be expected to have one diverse director within two years of the SEC’s approval of the listing rule.
- Companies listed on the Nasdaq Global Select Market and Nasdaq Global Market will be expected to have two diverse directors within four years of the SEC’s approval of the listing rule.
- Companies listed on the Nasdaq Capital Market will be expected to have two diverse directors within five years of the SEC’s approval.
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.
Nasdaq will also introduce a partnership with Equilar, a provider of corporate leadership data solutions, to aid Nasdaq-listed companies with board composition planning challenges. Through the Equilar BoardEdge platform, the partnership will enable Nasdaq-listed companies that have not yet met the proposed diversity objectives to access a larger community of highly-qualified, diverse, board-ready candidates to amplify director search efforts.
Nasdaq’s Chairman Michael Splinter noted:
“Diversity of experience, gender, race, knowledge, and perspective means that a company is more capable of seeing the full picture, assessing risk and overcoming challenges with forward-looking, innovative solutions.”