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Nasdaq, in a filing with Securities and Exchange Commission, proposes diversity listing requirements for boards of directors.

Nasdaq proposes board diversity rules for listed companies

Exchange plans to mandate at least one woman, one underrepresented minority

Nasdaq is proposing new rules for companies listed on its U.S. exchange to include at least one director who identifies as female and one who identifies as an underrepresented minority or LGBTQ, the exchange said this week.

The New York-based Nasdaq said Tuesday that about a quarter of its listed companies currently meet that standard, which it filed with the Securities and Exchange Commission.

About 35 foodservice companies, ranging from New York-based Ark Restaurants Corp. to Dallas-based Wingstop Inc., trade on the Nasdaq exchange, which tracks about 3,300 companies.

“Our goal with this proposal is to provide a transparent framework for Nasdaq-listed companies to present their board composition and diversity philosophy effectively to all stakeholders,” said Adena Friedman, Nasdaq president and CEO, in a statement. “We believe this listing rule is one step in a broader journey to achieve inclusive representation across corporate America.”

If approved by the SEC, the new listing rules would require all companies listed on Nasdaq’s U.S. exchange to publicly disclose diversity statistics regarding their board of directors.

“Additionally, the rules would require most Nasdaq-listed companies to have, or explain why they do not have, at least two diverse directors, including one who self-identifies as female and one who self-identifies as either an underrepresented minority or LGBTQ+,” the Nasdaq said in a news release. “Foreign companies and smaller reporting companies would have additional flexibility in satisfying this requirement with two female directors.”

Nasdaq said its proposal reflected an analysis of over two dozen studies that found an association between diverse boards and better financial performance and corporate governance.

Under the proposal, all Nasdaq-listed companies would be required to publicly disclose board-level diversity statistics through Nasdaq’s planned disclosure framework within one year of the SEC’s approval of the listing rule.

The timeframe to meet the minimum board composition expectations set forth in the proposal will be based on a company’s listing tier.

Nasdaq said it would also introduce a partnership with Equilar, which provides corporate leadership data, to aid listed companies with board composition challenges. 

“This proposal and partnership give companies an opportunity to make progress toward increasing representation of women, underrepresented minorities and the LGBTQ+ community on their boards,” said Nelson Griggs, president of the Nasdaq Stock Exchange.

In 2018, California required all publicly held companies headquartered in the state to have at least one female director by the end of 2019 and three by the end of 2021 if the board has six or more directors.

Other states, while sidestepping diversity mandates, have enacted disclosure rules. Maryland, for example, in 2019 enacted a mandatory board disclosure requirement for all corporations based in the state. A diversity disclosure reporting measure for state corporate filings goes into effect in Illinois on Jan. 1, 2021.

Contact Ron Ruggless at

Follow him on Twitter: @RonRuggless

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