This post from Bryan Cave Leighton Paisner outlines a series of substantive changes Nasdaq made to its proposed board diversity listing rule (which we initially reported on here) in response to public comments:
- Smaller boards. Companies with five or fewer directors would only need to include one diverse director, instead of two.
- Grace period for vacancies. A one-year grace period would be provided for companies that no longer meet the diversity objective as a result of a vacancy on the board.
- Timing of disclosure. Diversity information would need to be made publicly available before annual shareholder meetings, to align with disclosures for other proxy-related governance matters.
- Extra time for newly-listed companies. Newly-listed companies that become listed after the phase-in period for the new rules ends would have an additional two-year period after the phase-in period to fully meet the diversity objective.
- Trigger date. The operative date for disclosure would be the later of (1) one calendar year from the date of SEC approval of the revised proposal or (2) the date the proxy statement is filed for a company’s annual meeting during the calendar year of such SEC approval date.
- Location of disclosure. Companies could choose to disclose the diversity matrix on their websites, in their proxy statements, or in their Forms 10-K or 20-F. The information should be published in a searchable format.
- Additional disclosures permitted. Companies would be permitted to include more detailed information, including on a director-by-director basis, if they choose.
- No verification by Nasdaq. Nasdaq would not judge the accuracy of a director’s self-identification, and believes that the director's response will not subject the company to greater liability than other matters covered in D&O questionnaires.
The changes are discussed in a letter Nasdaq submitted to the SEC on Friday that accompanies the amended proposal.
See our recent reports: “Nasdaq Proposes Board Diversity Listing Requirements,” “SEC Publishes Nasdaq Board Diversity Listing Proposal,” “Nasdaq Board Diversity Disclosure FAQs Enlighten,” and “Republican Senators Urge SEC to Reject Nasdaq Board Diversity Rule,” and additional information & resources on our Board Diversity page.