SEC Gives OK on Nasdaq Board Diversity Proposal
Posted on 08/07/2021
A self-regulatory organization, or “SRO,” may propose a change in its rules or propose a new rule by filing the proposal with the Securities and Exchange Commission (Commission) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”). The SEC approved the Nasdaq proposal allowing it to require public companies to publicly disclose the gender/sexual-orientation and racial diversity of their boards and eventually to have at least two diverse directors. Public companies will have one year to comply with the exchange’s disclosure requirement and to have at least one diverse director. Under the Board Diversity Proposal, the Exchange proposes to require each Nasdaq-listed company, subject to certain exceptions, to publicly disclose in an aggregated form, to the extent permitted by applicable law, information on the voluntary self-identified gender and racial characteristics and LGBTQ+ status (all terms defined below) of the company’s board of directors. The Exchange also proposes to require each Nasdaq-listed company, subject to certain exceptions, to have, or explain why it does not have, at least two members of its board of directors who are Diverse, including at least one director who self-identifies as female and at least one director who self-identifies as an Underrepresented Minority or LGBTQ+. Under the Board Recruiting Service Proposal, the Exchange proposes to provide certain Nasdaq-listed companies with one year of complimentary access for two users to a board recruiting service, which would provide access to a network of board-ready diverse candidates for companies to identify and evaluate.
Definitions per Document
Pursuant to proposed Rule 5605(f)(1), “Diverse” would be defined to mean an individual who self-identifies in one or more of the following categories: (i) Female, (ii) Underrepresented Minority, or (iii) LGBTQ+. Also pursuant to proposed Rule 5605(f)(1),“Female” would be defined to mean an individual who self-identifies her gender as a woman, without regard to the individual’s designated sex at birth.
“Underrepresented Minority” would be defined to mean an individual who self-identifies as one or more of the following: Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or Two or More Races or Ethnicities; and “LGBTQ+” would be defined to mean an individual who self-identifies as any of the following: lesbian, gay, bisexual, transgender, or as a member of the queer community.
SEC Order: https://www.sec.gov/rules/sro/nasdaq/2021/34-92590.pdf