Fifth Circuit rules against Nasdaq board diversity requirements
The Securities and Exchange Commission (SEC) recently adopted new listing standards for Nasdaq, aimed at promoting diversity on corporate boards. Here are the key takeaways and action items you need to know:
1. Diversity Requirements: Nasdaq-listed companies will now be required to have at least one director who self-identifies as female and one who self-identifies as an underrepresented minority or LGBTQ+. Companies will have until August 2023 to comply with these requirements or provide an explanation for non-compliance.
2. Disclosure Requirements: Companies will also be required to disclose board level diversity statistics on an annual basis. This information will be made publicly available to provide transparency on board composition.
3. Implications for Companies: Companies need to start evaluating their current board composition and identify any gaps in diversity. By taking proactive steps to diversify their boards, companies can not only comply with the new standards but also benefit from different perspectives and experiences.
In addition to the Nasdaq diversity listing standards, the SEC also recently approved a rule amendment by the Public Company Accounting Oversight Board (PCAOB) that expands individual auditor enforcement liability. This amendment holds individual auditors personally accountable for violations of professional standards, which is aimed at increasing accountability in the auditing profession.
Stay informed about these regulatory changes and take proactive steps to ensure compliance to avoid any potential liabilities. Diversity and accountability are becoming increasingly important in the corporate world, and companies that embrace these principles stand to benefit in the long run.
