Nasdaq’s Board Diversity Rule goes into effect this month. Corporations listed on the U.S. exchange will be required to disclose the ethnic and gender makeup of their boards.
Companies will have one year from the time of submission to provide an explanation as to why they do not have at least two diverse board members currently serving on their board.
It is very likely organizations will be able to meet this new standard of just two diverse board members that identify as women and/or come from another underrepresented group.
The enforcement of the SEC-approved rule is a step in the right direction. However, the SEC does not provide a plan to encourage companies listed on Nasdaq to increase diverse board members beyond two individuals annually. There is room for improvement as revisions and addendums are added to this new rule.
‘Enforcement 40’ for 2020
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