December 14, 2020

Ying Li

On December 1, 2020, Nasdaq filed a proposal with the U.S. Securities and Exchange Commission (the “SEC”) to adopt new listing rules related to board diversity and disclosure. If approved, the new listing rules would make Nasdaq the first major exchange to demand companies disclose more than the legal requirements. A copy of Nasdaq’s proposal can be found at, and Nasdaq’s press release regarding the proposal can be found at


The two main features of the proposed new listing rules are as follows:

Board Diversity Composition Requirements

Under the proposed rules, each Nasdaq-listed company is required to have at least one director who self-identifies as female and at least one director who self-identifies as Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or as who self-identifies as lesbian, gay, bisexual, transgender, or queer.

If a company fails to satisfy the diversity requirements, it will not be subject to delisting if it provides a public explanation of the board’s reasons for not satisfying such requirements.

Disclosure of Board-Level Diversity Statistics

In addition to the board diversity composition requirements, the proposed rules would also require public disclosure. Nasdaq-listed companies shall disclose statistical information about the self‑identified gender, race, and self-identification as LGBTQ+ of their directors.

Such disclosure shall be updated to the company’s website or in the company’s proxy statement for its annual meeting. If the company elects to provide the disclosure on its website, it will also be required to submit such disclosure and a URL link to such disclosure through the Nasdaq Listing Center within 15 calendar days of the company’s annual meeting.

Exemptions for Certain Companies

– Exemption from Proposed Board Diversity Composition and Public Disclosure Requirements

Special purpose acquisition companies listed under IM-5101-2 would be exempt from both the proposed board diversity and public disclosure rules until one year following the completion of their business combination. In addition, the following companies would be exempt from both of the proposed rule requirements: asset-backed issuers and other passive issuers; cooperatives; limited partnerships; management investment companies; issuers of non-voting preferred securities, debt securities and Derivative Securities; and issuers of securities listed under the Rule 5700 Series.

– Partial Exemption from Proposed Board Diversity Composition Requirements (Smaller Reporting Companies and Foreign Issuers)

Smaller reporting companies would be permitted to satisfy the board diversity requirements by having two female directors.

Foreign Issuers could meet the board diversity requirement by including either another female director, an individual who self-identifies as LGBTQ+ or an underrepresented individual based on national, racial, ethnic, indigenous, cultural, religious, or linguistic identity in the company’s home country jurisdiction. Furthermore, it can also elect to meet the public disclosure requirement through an alternative disclosure matrix template, which could be found at


Nasdaq’s proposal potentially represents an enormous step in the overall move toward board diversity. The goal of the proposal is to provide stakeholders with a better understanding of companies’ current board composition and enhance investor confidence that all listed companies are considering diversity in the context of selecting directors. This is an opportunity to increase representation of women, underrepresented minorities, and the LGBTQ+ community in order to reach better financial performance and corporate governance.

Before the rules are taken up for approval or rejection, the proposed rules are now subject to review by the SEC and a public-comment process. It might take months for the rules to go into effect. On the FAQ page about the proposed rules on the Nasdaq website, Nasdaq states the following about timing: “The SEC will provide a minimum of 21 days from the time they publish the proposed rule changes in the Federal Register for the public (including investors, companies, and their representatives) to have an opportunity to comment on the proposals. After publication in the Federal Register, the SEC has 30 to 240 calendar days to approve the proposal.”

We will continue to closely follow developments on the proposed rules.

If you have any questions or concerns about the matters above, you can contact us via email or phone +1(212) 530-2210.

DISCLAIMER: Hunter Taubman Fischer & Li LLC assumes no responsibility for the accuracy or timeliness of any information provided herein. The information contained herein is for informational purposes only and is not legal advice or a substitute for legal counsel. The information is not intended to create, and receipt of it does not constitute, an attorney-client relationship.