Last week, Nasdaq filed a proposed rules change with the Securities and Exchange Commission to remove the board diversity rule from Nasdaq's Listing Rules.
As we previously reported, the Nasdaq board diversity rule was recently struck down by the U.S. Court of Appeals for the Fifth Circuit, which found that the SEC exceeded its statutory authority under the Securities Exchange Act of 1934, as amended, in adopting the rule. The rule required Nasdaq-listed companies to disclose certain diversity information regarding their directors and to have a set number of diverse directors on their board by certain dates or explain why they do not.
Pending the SEC's approval of the proposed rules change, the rule change will take effect February 4, 2025, the date the court's mandate implementing its vacatur of the rules takes effect.
While Nasdaq-listed companies will no longer be required to include the specific diversity disclosure previously prescribed by the rules, we expect that many Nasdaq-listed companies (as well as New York Stock Exchange-listed companies) will continue to voluntarily provide diversity information in their proxy statements (in some form or another) to satisfy the expectations of their shareholders, particularly large institutional investors, as well as the proxy advisory firms.
