Nasdaq Announces Diversity Requirements

On December 1, 2020, Nasdaq introduced new listing rules aimed at increasing diversity among directors at companies listed on its exchange.  In particular, under its proposal, companies listed on the Nasdaq would be required to either have, or explain why they do not have, at least two diverse directors and to publish diversity statistics on an annual basis about their board of directors.  The proposed new rules would be the first federal rules that are targeted at mandating diverse board members.

The diversity objectives include at least one director who "self-identifies as female" and another who "self-identifies as either an underrepresented minority or LGBTQ."  Foreign and smaller companies will have some flexibility in satisfying the requirement by retaining a minimum of two female directors.  Once approved by the SEC, businesses must have one diverse director within two years.