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SEC Issues C&DI on Disclosure of Self-Identified Director Diversity Characteristics

On February 6, the staff of the Division of Corporation Finance of the Securities and Exchange Commission released two identical Compliance and Disclosure Interpretations (C&DIs). These C&DIs provide guidance on disclosure required under Items 401 and 407 of Regulation S-K in circumstances where a director or board nominee self-identifies specific diversity characteristics, such as race, gender, ethnicity, religion, nationality, disability, sexual orientation or cultural background. Item 401(e) requires that companies disclose the “specific experience, qualifications, attributes or skills that led to the conclusion that the person should serve as a director.” Item 407 requires that companies describe how its board (or nominating committee) implements policies that it follows, if any, with regard to the consideration of diversity in identifying director nominees.

In C&DIs 116.11 and 133.13, the staff stated that, to the extent the board or nominating committee considered any such self-identified diversity characteristics of a director in its evaluation of the specific qualifications and attributes applicable to the director’s service on the board, they would expect the company to identify those characteristics in its Item 401 disclosure and describe how they were considered. They also indicated that they expect that any description of diversity policies followed by the company, as required by Item 407, would include a discussion of how the company considers the self-identified diversity attributes of nominees.

The full text of the staff’s new C&DIs are available here and here.

©2019 Katten Muchin Rosenman LLP


About this Author

Mark Reyes Securities Lawyer Katten Muchin law firm Chicago office

Mark J. Reyes concentrates his practice in corporate and securities matters, including representing issuers and investors in public offerings and private placements of equity and debt securities and advising clients in complex corporate transactions such as mergers, acquisitions, private investments in public equity (PIPEs), private equity investments and joint ventures. He also counsels public companies on securities law compliance, disclosures and corporate governance matters.

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Mark D. Wood, corporate securities lawyer Katten Muchin Chicago Law firm

Mark D. Wood is head of Katten's Securities practice and concentrates in corporate and securities law. Mark represents public companies, issuers and investment banks in initial public offerings (IPOs) and other public offerings, private investment in public equity (PIPE) transactions, debt securities and other securities matters.

Mark also represents clients in complex corporate transactions, including tender offers, mergers, acquisitions, dispositions, going-private transactions, private equity investments, joint ventures and strategic alliances.  He is a leading practitioner in representing investors, public companies and placement agencies in private investment in public equity (PIPE) transactions. In addition, he also counsels public companies on securities law compliance, disclosures, corporate governance and compensation-related issues. Many of his clients are middle market and upper middle market companies in the technology, oil and gas, manufacturing, health care and commercial banking industries.