On December 1, 2020, the Nasdaq Stock Market LLC filed a
proposal with the U.S. Securities and Exchange Commission (SEC)
to establish a new rule that would require diversity on corporate
boards of directors and transparency regarding the composition of
boards.
Summary of the Proposed Rule
In its proposal, Nasdaq emphasized that this year's
"social justice movement has brought heightened attention to
the commitment of public companies to diversity and
inclusion." The proposal also cites several academic
publications that studied the relationship between diverse boards
and improved financial performance and corporate governance. As a
result, the proposal seeks to encourage companies to have boards of
directors that better reflect the country's diverse population.
The proposal would accomplish this goal by requiring a few things
from companies.
