NASDAQ146S BOARD DIVERSITY RULE WHAT NASDAQLISTED COMPANIES SHOULD KNO - PDF document

1 1 NASDAQ’S BOARD DIVERSITY RULE W
1 NASDAQ’S BOARD DIVERSITY RULE WHAT NASDAQLISTED COMPANIES SHOULD KNOWLAST UPDATED AUGUST Nasdaq’s Board Diversity Rule, whichwas approved by the SEC on August 62021, is a disclosure standard designed to encouragea minimum board diversity objective . or a format substantially similarto annually disclose boardlevel diversity data. ompanies willprovide this disclosure in the ompany’s proxy statement orits information statement or if the company does not file a proxy, its Form 10K or 20, or on the here . Companies must disclose the initial matrix in 2022 If a company files its 2022 proxy BEFORE August 8, 2022 and DOES NOT include the Matrix,then the company has until August 8, 2022 to provide the Matrix If a company files its 2022 proxy ON or AFTER August 8, 2022, then it must either include the atrix in its proxy or post the Matrix on its website within one business day of filing its proxy. If a company does not intend to file a 2022 proxy, then the company has until August 8, 2022 to provide the Matrix on its website ��2 &#x/MCI; 0 ;&#x/MCI; 0 ;Companies that elect to provide the Matrix on its website must also complete a short form through the Listing Center that includes the URL link to the disclosure.Companies need tomeeta board diversity objectiveor explain their reasons for not doing so, and the explanation could include describing a different approachNasdaqlisted companies that do not haveleast two diverse directors, including one who selfidentifies as female and one who selfidentifiesas either an underrepresented minority or LGBTQ+, would provide an explanation for not doing so, and their explanation could include a description of a different approach.This rule is not a mandate and does not set a hard target that companies must adhere to regardless of their circumstances. If a company chooses to explain why it does not meet the diversity objectives, it would provide its explanati

2 on in its proxy statement, information s
on in its proxy statement, information statement for its annual shareholder meeting, or on the company’s website. Nasdaq will verify that the company has provided an explanation, but will not assess the merits of the explanation.There is no right or wrong reason that a company may give for not having at least two directors. Smaller Reporting Companies, Foreign Issuersand companies with five or fewer directors haveadditional flexibility to meet the diversityobjectivemaller Reporting Companies have additional flexibility and canmeetthediversity objectivewith twofemale directoror with one female director andonedirector who is an underrepresented minority or LGBTQ+. Similarly, oreign Issuers meetthediversity objective with twofemale directoror with one female directorand onedirector who isn underrepresented individualbased on national, racial, ethnic, indigenous, cultural, religious or linguistic identity in the country of the company’s principal executive officesor LGBTQ+Companies with five or fewer directors can meetthe diversity objective by having at least one diverse director. As with other Nasdaqlisted companies, if a company chooses to explain why it does not meet the diversity objectives, it would provide its explanation in its proxy statement, information statement for its annual shareholder meeting, or on the company’s website. PACs areexempt from the Board Diversity Rule. SPACs listed under IMarenot required to provide disclosure information or to have, or disclose that they do not have, any minimum number of iverse directors until their business combination. Following the business combination, such companies must meet, or explain why they do not meet, the applicable diversity objectives by the later of two years from the date of listing or the date the company files its proxy statement or its information statement (or, if the company does not file a proxy, in its Form 10K or 20F) for the company’s second

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annual meeting of shareholders subsequent to the company’s listing.There is a transition period for Nasdaqlisted companies to meet the diversity objectives, or explain why they do not.Nasdaqlisted companies willhave a transition period to meet the diversity objectives or explain their reasons for not doing soand the timeframe is based on a company’s listing tier:Nasdaq Global Select Market and Nasdaq Global Market companies are required to have, or explainwhy they do not have, one diverse director by August 7, 2023, and two diverse directors by August ��3 &#x/MCI; 2 ;&#x/MCI; 2 ;• Nasdaq Capital Market companies are required to have, or explain why they do not have, onediverse director by August 7, 2023 and two diverse directors by August 6, 2026Companies with boardsof five or less directors, regardless of listing tier, are required tohave, or explain why they do not have, one diverse director by August 7, 2023.Nasdaqlisted companies have access to a variety of free board recruiting services. Nasdaq is proud to have established partnerships with Equilar, Athena Alliance, and the Boardlist to aid Nasdaqlisted companies in their search for highlyqualified, diverse, boardready candidates. We realize one size doesn’t fit all which is why we are building relationships with a growing number of collaborative partners. Here’s how your company can gain free access to Equilar’s BoardEdge Platform and Equilar Diversity Network , Athena Alliance’s community of women leaders, and theBoardlist’s premium talent marketplace. We are preparedto help. We are diligently working to provide a myriad of resources to help our listed companies and their advisors understand and achieve compliancewith these new requirements. FAQs. A list of Frequently Asked Questions is available on on Listing Center website here . Dedicated Mailboxfor QuestionsEmail your questions todrivingdiversity@nasdaq.com