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August 09, 2021 at 09:44 AM
What You Need to Know
- Rules will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity
- Rules reflect calls from investors for greater transparency about the people who lead public companies, Gensler said.
- Republican Commissioner Peirce dissented, stating rules outside of the scope of the Exchange Act.
The Securities and Exchange Commission has approved Nasdaq’s proposed rule changes related to board diversity and disclosure.
Nasdaq’s proposed rule changes, SEC Chairman Gary Gensler said in a statement Friday, require issuers to disclose certain information about the diversity of the company’s board and to offer certain companies access to a complimentary board recruiting service.
“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,” Gensler said.
The proposal directs companies to have at least one female board member and at least one who identifies as an underrepresented minority or LGBTQ — or explain why they don’t.
While Gensler stated that the rules ”are consistent” with the requirements of the Exchange Act, Republican Commissioner Hester Peirce dissented, stating the rules are “in fact outside the scope of the Act and contrary to fundamental Constitutional principles.”
