The Securities and Exchange Commission (SEC) has approved new Nasdaq rules that will require companies that list shares on its exchanges to meet certain race and gender targets. The announcement by Wall Street’s top regulator marks the end of a months-long debate at the SEC on whether to approve novel changes at one of the globe’s largest market exchange operators.
The rules will ensure company boards meet gender and racial diversity requirements or force firms to explain in writing why they have failed to do so. Nasdaq’s goal for most U.S. companies is to have at least one woman director in addition to another board member who self-identifies as a member of a racial minority or the LGBTQ community.
The rule changes also require firms to release diversity statistics about their boards. Nasdaq found in a study conducted in 2020 that more than 75% of its listed companies wouldn’t have met its proposed requirements. The exchange operator applauded the SEC’s order in a press release. “We are pleased that the SEC has approved Nasdaq’s proposal to enhance board diversity disclosures and encourage the creation of more diverse boards through a market-led solution,” Nasdaq said. “We look forward to working with our companies to implement this new listing rule and set a new standard for corporate governance.”
CNBC
