December 07, 2020
Nasdaq on Tuesday announced it asked the Securities and Exchange Commission for permission to require companies listed on its United States stock exchange to increase board diversity by having at least one woman and one person who self-identifies as underrepresented or LGBTQ and to publish board diversity reports, which would make it the first major exchange to demand companies disclose more than the legal requirements.
The companies will be mandated to publish board diversity data within a year of approval, to have at least one underrepresented or LGBTQ board member within two years and large companies must have at least two diverse directors in four years.
Companies that don’t publicly disclose the data could be removed from the stock exchange and ones that fail to meet the diversity requirements will need to publish a reason.
Nasdaq CEO Adena Friedman told the New York Times it would be ideal for the SEC to adopt a similar rule because it would be applied to public companies and the private equity companies it regulates.
Friedman said the decision is based on data showing the positive impact board diversity has on a company’s financial performance and said it increases investors’ confidence in the “future sustainability” of the company.
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