October 20, 2021

Volume XI, Number 293

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SEC Approves Nasdaq Board Diversity Requirements

The U.S. Securities and Exchange Commission has approved a Nasdaq proposal regarding new listing rules on board diversity, as described in a previous Client Alert, which can be found here. The new rules will require most Nasdaq-listed companies to have at least two diverse directors, including one director who self-identifies as a female and one director who self-identifies as an underrepresented minority or as LGBTQ+, or to explain why the company does not have at least two directors on its board that self-identify in such a way. These new rules also will require subject companies to disclose diversity statistics about their boards on an annual basis in a prescribed matrix format related to each director’s self-identified gender, race, and self-identification as LGBTQ+.  

The new rules are subject to a phase-in, with most Nasdaq-listed companies being required to comply with the requirements with respect to one diverse director by the later of (1) the date the company files its proxy statement during the 2023 calendar year, or (2) August 6, 2023. 

The board diversity matrix disclosure rules are effective beginning August 6, 2022.

Nasdaq filed a proposal for the new rules with the SEC last December, and then amended the proposal in February to, among other things, provide accommodations for smaller boards and newly listed companies. Companies with five or fewer directors will be required to have, or explain the absence of, one diverse director rather than two, and newly listed companies will be given more time to comply with the rules. The final rules as approved by the SEC are the same as the amended rules proposed by Nasdaq.

Relatedly, the SEC also approved the implementation of a system to provide certain Nasdaq-listed companies with one year of access to board recruiting services that will allow these companies to access diverse candidates outside of their go-to networks.

© 2021 Bracewell LLPNational Law Review, Volume XI, Number 223
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About this Author

William S. Anderson, Securities Attorney, Bracewell Law Firm
Partner

Will Anderson focuses on capital markets transactions, liability management, SEC compliance and disclosure matters and mergers and acquisitions.  He also regularly advises Boards of Directors and Special Committees on fiduciary duties, corporate governance and other matters.

Will has represented issuers and underwriters in well over 100 securities offerings that have collectively raised more than $30 billion.  His experience includes initial public offerings, follow-on equity offerings and high yield and investment grade debt offerings.  He...

713-221-1122
Troy L. Harder, Bracewell, SEC Representation Lawyer, Finance, Capital Markets Attorney
Partner

Troy Harder advises clients in all aspects of corporate and securities law, with an emphasis on corporate finance transactions. He has experience representing both issuers and investment banks in a wide range of capital markets transactions, including initial public offerings, public and private offerings of debt and equity securities, tender offers, consent solicitations and exchange offers. He also counsels clients in connection with SEC reporting and corporate governance and compliance matters, including insider reporting and compliance with the rules of the New York...

713-221-1456
Jason Jean Finance & Energy Attorney Bracewell
Partner

Jason Jean is experienced in advising public and private businesses, including private equity investors, in the financial services sector, upstream and midstream energy sector, and other sectors with respect to mergers and other business combinations, asset and stock purchases and sales, restructurings and joint ventures. Jason also advises businesses in private capital markets transactions, including Rule 144A private placements and PIPEs, and public capital market transactions listed on the New York Stock Exchange (NYSE), NASDAQ, Amex and London Stock Exchange. His capital markets...

713.221.1328
Kathy Witty Medford, Bracewell, Capital markets, securities matters lawyer, general corporate transactions attorney
Associate

Kathy Witty Medford advises and represents business clients on securities matters, corporate finance and general corporate transactions.  With a primary focus on capital markets, she represents issuers and underwriters in public and private offerings of equity securities, high-yield debt securities and investment-grade debt securities.

Kathy advises clients on SEC reporting and disclosure obligations and other corporate governance and compliance matters.  She also assists public and private clients with mergers, acquisitions and commercial...

713-221-1513
Caroline E. Ellis Attorney SEC Joint Ventures Bracewell Law Firm Houston
Associate

Caroline Ellis’ practice focuses primarily on joint ventures, general corporate transactions, and public and private capital markets transactions. In addition, she advises clients on Securities and Exchange Commission (SEC) reporting and disclosure obligations and other corporate governance and compliance matters.

Prior to joining Bracewell, Caroline interned in the Aviation & Admiralty Litigation Section of the Department of Justice, Civil Division, Torts Branch, as well as a pro bono intern with Atlanta Legal Aid.

713-221-1370
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