Nasdaq filed a rule proposal today with the SEC that would require its listed companies to:
- Disclose board diversity data in a prescribed board matrix format within one year of the date of SEC approval of the proposal
- For companies listed on The Nasdaq Global Select Market or The Nasdaq Global Market tiers: (i) have or explain the absence of one Diverse director within two years of SEC approval of the proposal, and (ii) have or explain the absence of at least two Diverse directors (at least one Female and one Underrepresented Minority or LGBTQ) within four years of SEC approval of the proposal
- For companies listed on The Nasdaq Capital Market tier: (i) have or explain the absence of one Diverse director within two years of SEC approval of the proposal, and (ii) have or explain the absence of at least two Diverse directors (at least one Female and one Underrepresented Minority or LGBTQ) within five years of SEC approval of the proposal
The proposed rule defines "Diverse" as a director who self-identifies as: (i) Female (individual who self-identifies her gender as a woman, without regard to the individual’s designated sex at birth), (ii) an Underrepresented Minority (as categorized by the EEOC), or (iii) LGBTQ+ (individual who self-identifies as lesbian, gay, bisexual, transgender or a member of the queer community). Smaller Reporting Companies and Foreign Issuers (including Foreign Private Issuers) may meet the requirements with two Female directors. Proposed Foreign Issuer requirements also take into account home country jurisdictional variations of diversity and other carve-outs.
All companies would be required to make the proposed board diversity data disclosure annually in their annual shareholder meeting proxy or information statement or on their corporate website in a format substantially similar to the Board Diversity Matrix attached to the proposal as Exhibit 3 (page 259 - 261). The diversity data is required to be based on voluntary self-identification. Directors who choose not to self-identify would be reflected in an "Undisclosed" category.
Newly listed companies would have a one-year (from listing) phase-in period to comply, and certain types of companies are exempt (p. 263). The proposal includes a cure period for non-compliance.
See these articles from The New York Times, WSJ, ESG Today, and Reuters. We will be posting additional resources on this development real-time on our Board Diversity page.