U.S. Appeals Court Upholds Nasdaq’s Board Diversity Rule


Summary: A U.S. appeals court has upheld Nasdaq’s board diversity rule, which requires companies listed on the exchange to have women and minority directors or explain why they do not.

In a recent ruling, the 5th U.S. Circuit Court of Appeals upheld Nasdaq’s board diversity rule, which mandates that companies listed on the exchange must have female and minority directors, or provide an explanation for their absence. The rule, approved by the U.S. Securities and Exchange Commission in August 2021, necessitates at least one diverse director by the end of this year, with the requirement increasing to two by 2026. Companies are also required to disclose annually how board members identify in terms of gender and ethnicity. Critics argue that the rule is unconstitutional and restricts free speech, while supporters believe it promotes transparency and standardized information about board diversity.

Tags: Nasdaq, board diversity, U.S. appeals court, diverse directors, SEC