New Board Diversity Requirements for Nasdaq-Listed Companies
The SEC has approved a proposal submitted by Nasdaq that would introduce new diversity, equity and inclusion (DE&I) requirements for companies listed on their exchange.
The new listing rules will require these publicly traded companies to disclose diversity information for their boards of directors. As it stands, companies will be required to have at least two diverse members within their board of directors – or be able to explain why they do not meet those requirements. Specifically, boards will need to include (1) at least one self-identified female member and (2) at least one self-identified minority or LGBTQ+ member.
Companies will be required to disclose the diversity statistics of their boards by August 8, 2022 or by the date of their next proxy statement for their annual meeting – whichever comes later.
Any company that does not meet the new diversity standards will be required to explain via its annual proxy statement, annual report or on its website why it does not or cannot meet the required diversity objectives.
Smaller Reporting Companies
SRCs have slightly more flexible requirements; they may meet the diversity requirements with two female members amongst their board.
Special purpose acquisition companies (SPACs) are exempt from the board diversity requirements under the new listing rules,
For more details and specific transition and phase-in periods applicable to your company, please refer to the SEC’s rule.
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