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Nasdaq-listed companies to face new diversity requirements

On Behalf of | Aug 16, 2021 | Federal Securities Law |

Many companies throughout Pennsylvania do their parts to have a diverse workforce. Unfortunately, not every business is experiencing the benefits of having a diverse team of employees. With that in mind, the SEC recently approved new Nasdaq rules that could put an end to non-diverse corporations.

Details about Nasdaq’s new rules

The Securities and Exchange Commission (SEC) approved rules created by Nasdaq to promote certain diversity targets. These new rules will make sure that companies meet both racial and gender diversity requirements. If not, a business will get forced to issue a written statement on why these diversity requirements weren’t met.

The goal of these new corporate diversity rules is for Nasdaq-listed companies to have at least one female director and another director who is either a minority or a part of the LGBTQ community. According to a recent study, over 75% of Nasdaq-listed companies currently don’t meet these previously mentioned diversity requirements.

The Chairman of the SEC, Gary Gensler, stated that these new rules allow investors to “gain a better understanding” of how Nasdaq-listed companies approach diversity on their boards.

The public’s reaction to the SEC’s ruling

While many people and companies support the SEC’s new ruling, others aren’t so happy about these new requirements. Those who oppose this new ruling feel that there are more pressing issues about securities law for Gary Gensler and the SEC to be focusing on.

To summarize, Nasdaq created a new set of rules concerning diversity for its listed companies. In support of these rules, the SEC recently approved them. While there are no official punishments for violating these rules, companies not meeting the SEC and Nasdaq’s diversity requirements must issue a written response about this matter.

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