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Non-U.S. Companies Should Prepare for Nasdaq's New Board Diversity Rules

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  • Non-U.S. Companies Should Prepare for Nasdaq's New Board Diversity Rules

On August 6, 2021, the Securities and Exchange Commission (the "SEC") approved new listing standards of the Nasdaq Stock Market LLC ("Nasdaq") regarding director diversity. Generally, the new rules require Nasdaq-listed companies, including foreign issuers, to:

  • have, or explain why they do not have, at least two diverse members on the board of directors, including one female director and one director of a historically underrepresented community; and
  • annually disclose board-level diversity data in a prescribed tabular format.

Except for a small category of "exempt" companies, Nasdaq's new rules broadly apply to all Nasdaq-listed companies, including foreign issuers. The new rules broadly define "foreign issuers" to include (i) foreign private issuers (as defined in Rule 3b-4 of the Securities Exchange Act of 1934) as well as (ii) foreign companies that are headquartered outside the United States but that are not foreign private issuers under Rule 3b-4 and that may file domestic SEC reports.

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