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ARTICLE · 23 AUGUST 2021

SEC Approves Nasdaq Diversity Rule

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On August 6, 2021, the Securities and Exchange Commission ("SEC") approved Nasdaq's Board Diversity Rule (Nasdaq Stock Market LLC Rules 5605(f) and 5606)...

United StatesCorporate/Commercial Law
Sarah Aberg
Sarah Aberg
Matthew T. Lin
Matthew T. Lin
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On August 6, 2021, the Securities and Exchange Commission ("SEC") approved Nasdaq's Board Diversity Rule (Nasdaq Stock Market LLC Rules 5605(f) and 5606), which requires listed companies to have at least two diverse board members or to explain their failure to meet the requirement, with some exceptions.  The Board Diversity Rule also requires companies to publish statistics on the diversity of their board members.  The rule is intended to increase transparency into the diversity of corporate boards, giving investors more information to consider when deciding which companies are worthy of investment.  As investors have increasingly voiced concern over enhanced diversity in corporate leadership, the Board Diversity Rule may not only increase board transparency, but also cause Nasdaq-listed companies to increase board diversity.

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