SEC Approves Nasdaq Board Diversity Rules

August 18, 2021

On August 6, 2021, the SEC approved two proposed changes to Nasdaq’s rules, which the SEC referred to as the “Board Diversity Proposal” and the “Board Recruiting Service Proposal” in its Order Approving Proposed Rule Changes.

The approved Board Diversity Proposal has two prongs. First, Nasdaq-listed companies will be required to publicly disclose on an annual basis information on the voluntary self-identified gender and racial characteristics and LGBTQ+ status of the company’s board of directors. Such disclosures will be made in an aggregated form using a standardized “Board Diversity Matrix.”

Second, each Nasdaq-listed company will be required to have, or to explain why it does not have, at least two diverse directors, including at least one who self-identifies as female and at least one who self-identifies as an underrepresented minority or LGBTQ+. Although Nasdaq will verify that companies that do not have at least two diverse directors have submitted explanations as to why they do not, Nasdaq will not assess the substance of the explanations.

Under the approved Board Recruiting Service Proposal, Nasdaq will provide Nasdaq-listed companies that do not have at least two diverse directors as described above with one year of complimentary access to a recruiting service that is intended to provide access to a network of diverse candidates that are suitable for board positions for companies to identify and evaluate.

The approved rule changes will be phased in over several years, with different compliance deadlines for different groups of issuers. The SEC’s approval of these Nasdaq rule changes is another sign of its commitment to diversity in the marketplace.

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If you have any questions regarding the information discussed above, please contact your Investment Management Group attorney at Seward & Kissel LLP.


1 SEC Release No. 34-92590 – Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order Approving Proposed Rule Changes, as Modified by Amendments No. 1, to Adopt Listing Rules Related to Board Diversity and to Offer Certain Listed Companies Access to a Complimentary Board Recruiting Service, available at: