What Are The New NASDAQ Diversity Rules?
The Black Lives Matter movement, Gay Pride, and the gender pay gap have all forced society to re-examine its beliefs in the past few years. However, the NASDAQ stock market is the latest industry to make some big changes, with new rules in place for listed companies on the platform. To find out what this means for companies such as Apple and Facebook, carry on reading.
What Are The New Rules?
In a bid to make trading on the NASDAQ stock market more inclusive and more diverse, it’s been decided that companies must have at least two diverse directors from previously misrepresented backgrounds.
For example, the directive board would need to feature at least one woman, someone who identifies as LGBTQ+ or an individual from a minority background. Companies will also be required to release statistics surrounding the diversity numbers on their boards.
If there is a perceived failure to comply with these new regulations, it’s expected that a full explanation will be made as to why the company in question has not followed the rules.
If dissatisfactory, it could seriously hamper the company’s prospects on the NASDAQ market. These rules have been approved by regulating bodies such as the US Securities and Exchange Commission (SEC), meaning they are now binding.
Why Is The Stock Market Imposing These Regulations?
You may be sitting back wondering, why is the stock market imposing these regulations? Well, there are several reasons for this, including complaints about the lack of diversity in corporate America.
A study undertaken by NASDAQ last year also found that around 75% of companies listed on its market would not have met the new criterion, so it’s clear that big changes needed to be made.
SEC chair Gary Gensler said: “These rules will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity.
They reflect calls from investors for greater transparency about the people who lead public companies, and a broad cross-section of commenters supported the proposed board diversity disclosure rule.”