On December 1, NASDAQ asked the SEC to approve disclosure standards of Board diversity for listed companies. The proposals are not harsh and rest on the concept of disclosure and not requirements; interestingly, NASDAQ had attempted to have the SEC initiate some board diversity requirements for all trading platforms but the current Commission not surprisingly declined.

Stripped of some complexities for foreign issuers and some relief for a “smaller reporting company (small float/annual revenue tests),” an issuer will be required to report as to whether it has one female and one (different) minority/LGBTQ+ member, or to explain publicly why it does not; and to optionally disclose in grid the actual board composition demographics.

The proposal would not permit delisting unless a company both failed to meet the test and failed to make public disclosure. This standard should be viewed in light of the laws of several states also addressing mandatory board diversity in various ways.

Those of us working with boards, both for-profit and not-for-profit, have noted intense attention being paid to achieving diversity for a variety of reasons, ranging from studies finding that diverse boards are better at profit and governance to desire to have “representation” of cohorts important to the business or charitable mission of the entity. And surely the new awareness fostered by BLM and current writings demanding pro-active response to prejudice cannot be discounted. Further, I would be remiss to not mention that fundamental justice also informs one’s response to the issue.