The second largest stock exchange of the United States has announced its decision to impose binding policies on gender and diversity in all listed companies.
Nasdaq firms including tech giants like Apple and Tesla will have to need to have at least two diverse directors. If they do not have a diverse board, they need to explain why they don’t.
Board Diversity
Directors of the public companies should include one person identifying as a woman and the other as a less represented community’s person or from LGBTQ +.
This decision comes after complaints about the lack of diversity of listed American companies.
According to a Nasdaq survey last year, more than 75% of its listed companies would not meet their proposed targets.
SEC Approves The Plan
The US Securities and Exchange Commission, which is the financial markets watchdog there, has approved the new rules on Friday.
Firms will also be required to issue various statistics about their boards.
Benefits
“These rules will allow investors to gain a better understanding of how companies are are doing in terms of diversification,” said SEC chairman Gary Gensler.
“These rules reflect calls from investors for greater clarity about the people leading public companies, and a large number of commentators have supported the proposed legislation to disclose board variations,” he added.
Based in New York City, the Nasdaq index tracks 3,300 shares and is ranked second in the US stock market, falling just behind the New York Stock Exchange.
Appreciation And Criticism
The Nasdaq operator has received praise from Democrats and other companies – including Goldman Sachs – for the new proposal.
However, Republicans have condemned the move, which began in December, with Senator Pat Toomey saying it would create a “one-size-fits-all quota”.