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SEC Approves NASDAQ Board Diversity Rule – What Listed Companies Must Do Next

SEC Approves NASDAQ Board Diversity Rule – What Listed Companies Must Do Next

Author: Thomas H. Herndon, Jr.Date: August 13, 2021

The Securities and Exchange Commission (SEC) recently approved Nasdaq Inc.’s Board Diversity Rule, which will require all companies listed on Nasdaq’s U.S. exchange to publicly disclose consistent, transparent diversity statistics regarding their board of directors. Additionally, the new rule will 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 minority or LGBTQ+.

As we have discussed in prior articles, diversity is becoming an increasingly important consideration when it comes to selecting board members, with shareholders calling on boards to include more women and racial minorities. While federal regulators have not yet established requirements regarding board diversity, states are beginning to take action. In California, boards must have at least one female member. Starting on January 1, 2021, companies based in Illinois are required to disclose the race and gender of their directors.

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