Nasdaq Proposes Board Diversity Rules

On December 1, 2020, Nasdaq filed a proposal with the SEC to adopt Rules 5605(f) and 5606 regarding board diversity and board composition disclosure, respectively. Nasdaq believes that these new rules, if approved by the SEC, will provide greater transparency to stakeholders and promote diversity within the board selection process.

Proposed Rule 5605(f) would require the board of directors of most Nasdaq-listed companies to:

• have at least one director who identifies as female, and at least one director who identifies as an unrepresented minority or LGBTQ+; or
• explain why the board does not have at least two diverse members who identify in these categories.

Smaller reporting companies and foreign issuers would be subject to slightly different requirements. Smaller reporting companies would be required to have at least one diverse director who identifies as female; however, the second diverse director may identify as female, LGBTQ+ or an underrepresented