Board diversity disclosures mandated for Nasdaq-listed companies

By Oliver Rowe

The SEC on Friday approved Nasdaq’s move to increase board diversity in companies listed on the stock exchange.

Nasdaq, based in New York City, is the second largest U.S. stock exchange after the New York Stock Exchange.

Under the Board Diversity Rule listed companies are required to:

  • Publicly disclose board-level diversity statistics using a standardized template; and
  • Have or explain why they do not have at least two diverse directors.

To disclose board diversity data on an annual basis, companies will need to use the Nasdaq’s Board Diversity Matrix or a substantially similar format, the exchange said.

It added that companies that 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+, “would provide an explanation for not doing so, and their explanation could include a description of a different approach.”

SEC chair Gary Gensler said, “These rules will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity, while ensuring that those companies have the flexibility to make decisions that best serve their shareholders.”

He added that the rules were consistent with the requirements of the Exchange Act.

Nasdaq said in a statement, “We look forward to working with our companies to implement this new listing rule and set a new standard for corporate governance.”

Nasdaq issued practical guidance for listed companies. The new rule is similar in some ways to regulations proposed earlier this summer for listed companies in the U.K.

The Financial Conduct Authority on July 28 set out for consultation proposals to its Listing Rules that would require listed companies to publish annually:

  • A “comply or explain statement” on whether they have achieved certain proposed targets for gender and ethnic minority representation on their boards; and
  • Data on the makeup of their board and most senior level of executive management in terms of gender and ethnicity.

Oliver Rowe ( is a JofA senior editor.

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