Nasdaq company update
Sign up for myFT Daily Digest and become the first person to learn about NASDAQ company news.
The U.S. Stock Exchange has been approved by the split Securities and Exchange Commission like never before proposal.
The US Securities and Exchange Commission signed the Nasdaq’s proposed listing rules on Friday, which will require companies to disclose consistent board diversity statistics and have two diverse directors-including one identified as a female and one Identified as an underrepresented minority or lesbian, gay, bisexual, transgender, or queer.
If the company does not meet the quota, they will have to explain why. Companies need to release information on board diversity starting next year, and the rules for diversified directors will be implemented for 2-5 years from now, depending on the size of the board.
Nasdaq said that companies with five or fewer board members only need one diversified board member. Foreign companies will also gain some flexibility.
Two Republican members of the US Securities and Exchange Commission opposed the approval. “Although this is a decision I have been struggling with, I don’t believe [SEC] It has fulfilled its obligation to approve the exchange proposal,” said Commissioner Elad Rothman.
As the board members of the new diversified company surged, the US Securities and Exchange Commission expressed support for Nasdaq’s request. Headhunting firm Heidrick & Struggles said that in 2020, the number of new black directors will increase to 28% of the board seats of Fortune 500 companies, almost three times the 10% of new directors appointed in 2019.
According to data from ISS Corporate Solutions, a provider of corporate governance affairs data, 33% of NASDAQ groups with six or more board directors currently have no representatives from diverse or minority ethnic groups. ISS stated that 8% of companies listed on the Nasdaq have no gender, race or ethnic diversity.
Nasdaq said in a statement that it will cooperate with its listed companies to implement the new rules.
Nasdaq’s proposal has also received support from asset management companies and some companies. “We encourage the SEC to approve this proposal,” private equity firm Apollo Global Management wrote in a letter to the agency on June 3. Jay Clayton, former chairman of the US Securities and Exchange Commission, is a member of the Apollo board of directors.
But Republican senators once called on the US Securities and Exchange Commission to reject Nasdaq’s proposal. “All the risks associated with the Nasdaq proposal may cause some private companies to avoid going public at all,” Senator Pat Tumi, Republican of Pennsylvania, and 11 other conservatives sent a letter to the agency in February. Said in the letter. “The Nasdaq seems to be driven by inappropriate desires that affect social policy.”
Betty Huber, an attorney at Davis Polk & Wardwell Law Firm, said that Nasdaq’s new rules codify the requirements of large asset management companies and agency consultants for companies in recent years.
It’s right [Nasdaq] She said to be the first mover in the exchange to require diverse board members, adding that it is unlikely that the company will flock to the New York Stock Exchange to evade the new requirements.
“I don’t think it will be a big boost,” she said of Nasdaq’s diversity rules.