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Frequently Asked Questions
  What will companies be required to do if the proposed board diversity and disclosure rules are approved by the SEC?
Identification Number 1745

If approved by the SEC, the new listing rules would require all companies listed on Nasdaq’s U.S. exchange to publicly disclose consistent, transparent diversity statistics regarding their board of directors, using a standardized disclosure matrix template.  Additionally, the rules would require most Nasdaq-listed companies to either (i) have at least two Diverse directors, including one who self-identifies as Female and one who self-identifies as either an Underrepresented Minority or LGBTQ+ or (ii) explain why they do not have two Diverse directors.  Foreign companies and smaller reporting companies would have additional flexibility in satisfying the minimum diversity objective with two Female directors, and companies with boards of five or less members can satisfy it with one Diverse director.

 A copy of the amended rule filing can be accessed here. For more information, read What Your Company Should Know about Nasdaq’s Board Diversity Rule Proposal. View Nasdaq’s disclosure matrix template here and examples of acceptable (i.e., same or substantially similar) and unacceptable (i.e., substantially different) disclosures here.

Publication Date*: 4/14/2021 Mailto Link Identification Number: 1745
Frequently Asked Questions
  When does Nasdaq expect the SEC to approve the board diversity and disclosure rule filing?
Identification Number 1746
We do not know at this time.  The SEC typically provides a maximum of 21 days from the date the SEC publishes a proposal or any related amendment in the Federal Register for the public (including investors, companies and their representatives) to have an opportunity to comment on the Amendment.  The SEC has up to 240 calendar days (or until August 8) from the date the original proposal was published in the Federal Register to approve the proposal and any accompanying amendments.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1746
Frequently Asked Questions
  Why is Nasdaq proposing this listing rule regarding board diversity and disclosure?
Identification Number 1747
The goal of the proposal is to provide stakeholders with a better understanding of a company’s current board composition and enhance investor confidence that all listed companies are considering diversity in the context of selecting directors, either by including at least two Diverse directors on its board (or at least one Diverse director for boards with five or fewer members) or by explaining its rationale for not having two Diverse directors.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1747
Frequently Asked Questions
  If the SEC approves the proposed board diversity and disclosure rules, when will companies be required to comply with the new rules?
Identification Number 1748

Under the proposal, all Nasdaq-listed companies will be required to publicly disclose director self-identified board-level diversity statistics through Nasdaq’s proposed disclosure framework by the LATER of one calendar year from the date the SEC issues an order granting approval of the proposal (the “Effective Date”) 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 10-K or 20-F) for its annual meeting of shareholders during the calendar year of the Effective Date. 

The timeframe to either meet the minimum diversity objectives set forth in the proposal or explain why the company does not meet the minimum diversity objectives will be based on a company’s listing tier.  Specifically, the diversity objective for companies listed on Nasdaq Global Select Market or Nasdaq Global Market is to have one Diverse director within two years of the SEC’s approval of the listing rule (or at that time explain why the company does not have one Diverse director), and two Diverse directors within four years (or at that time explain why the company does not have two Diverse directors). The diversity objective for companies listed on the Nasdaq Capital Market is to have one Diverse director within two years of the SEC’s approval of the listing rule (or at that time explain why the company does not have one Diverse director), and two Diverse directors within five years (or at that time explain why the company does not have two Diverse directors).  The diversity objectives for companies on any tier with boards that have five or fewer members is to have one Diverse director within two years of the SEC’s approval of the listing rule (or at that time explain why the company does not have one Diverse director).  If a company files its proxy statement or its information statement (or, if the company does not file a proxy, in its Form 10-K or 20-F) for the company’s annual shareholders meeting after the anniversary of the SEC’s approval of the listing rule in the calendar year for each respective year noted above, then the company will have until the date it makes such filing to meet, or explain why it does not meet, the applicable diversity objectives. 

For companies that are not in a position to meet the minimum diversity objectives within the required timeframes, they will not be subject to delisting if they provide an alternative public disclosure explaining why they did not meet the applicable minimum diversity objectives.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1748
Frequently Asked Questions
  Why didn't you just set a hard mandate like California, so there is some consistency in board diversity rules?
Identification Number 1749
Nasdaq believes this proposal drives change in a manner that is sensitive to the realities and challenges faced by listed companies.  Nasdaq’s disclosure-based rule framework will drive progress and provide stakeholders with a better understanding of companies’ current board compositions and philosophies regarding diversity, while at the same time offering companies flexibility and empowering them to maintain decision-making authority over their board’s composition.
Publication Date*: 11/30/2020 Mailto Link Identification Number: 1749
Frequently Asked Questions
  How will Nasdaq help companies find Diverse directors?
Identification Number 1750

Nasdaq is working to provide resources to help our listed companies and their advisors understand and achieve compliance with the proposed board diversity and disclosure requirements.  Nasdaq has developed a board diversity tool kit and created a dedicated mailbox to pose questions related to the proposed board diversity listing rules. Email your questions to drivingdiversity@nasdaq.com.

 

Nasdaq recognizes that companies want to leverage their own network to create a candidate pipeline, while also tapping into a broader community of candidates outside their immediate network through a cost effective, transparent process.  Therefore, Nasdaq has introduced a partnership with Equilar, a provider of corporate leadership data solutions, to aid Nasdaq-listed companies that have not yet met the proposed diversity objectives and would like assistance in doing so.  The services offered are complementary and are not mandatory.  Learn how your company can get free access to Equilar’s BoardEdge platform here.

Publication Date*: 2/26/2021 Mailto Link Identification Number: 1750
Frequently Asked Questions
  Where can companies view Nasdaq's board diversity matrix template?
Identification Number 1751
 A template of the board diversity matrix can be found here. Examples of acceptable (i.e., same or substantially similar) and unacceptable (i.e., substantially different) disclosures are provided here.
Publication Date*: 4/14/2021 Mailto Link Identification Number: 1751
Frequently Asked Questions
  If the board diversity and disclosure rule filing is approved, how will companies be required to disclose board diversity statistics?
Identification Number 1752
Companies would annually disclose director self-identified board-level diversity data using this Board Diversity Matrix or a format substantially similar.  Each company would be required to provide this disclosure in advance of the company’s next annual meeting of shareholders in any proxy statement or any information statement (or, if the company does not file a proxy, in its Form 10-K or 20-F) or on the company’s website.  If the company provides such disclosure on its website, then the company must submit such disclosure concurrently with the filing made pursuant to (a) and submit a URL link to the disclosure through the Nasdaq Listing Center, within one business day after such posting.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1752
Frequently Asked Questions
  How many years' worth of board diversity statistics would companies need to disclose under the proposed board diversity and disclosure rules?
Identification Number 1753
For the first year a company is required to disclose board diversity statistics, the company would be required to publish board diversity statistics for the current year only.  Each subsequent year, the company will be required to publish its data for the last two years.
Publication Date*: 11/30/2020 Mailto Link Identification Number: 1753
Frequently Asked Questions
  How did Nasdaq decide on diversity definitions for these rules?
Identification Number 1754
Nasdaq considered a number of factors before deciding on its terminology and definition of a Diverse director. These included the board diversity laws in effect or being proposed by various states, definitions and terminology used in the EEO-1 Report and discussions with numerous business leaders as well as social justice and governance organizations.
Publication Date*: 12/1/2020 Mailto Link Identification Number: 1754
Frequently Asked Questions
  Would a company need to give Nasdaq a copy of its board diversity disclosure matrix under the proposed board diversity and disclosure rules?
Identification Number 1755

Companies that choose to disclose the board diversity matrix only on their website must also submit a URL link to the disclosure through the Nasdaq Listing Center, within one business day after such posting.


Companies that choose to include the board diversity disclosure matrix in their proxy statement or information statement (or, if the company does not file a proxy, in its Form 10-K or 20-F), do not need to provide a copy to Nasdaq.

Publication Date*: 2/26/2021 Mailto Link Identification Number: 1755
Frequently Asked Questions
  How does Nasdaq define "Underrepresented Minority" for companies incorporated in the U.S.?
Identification Number 1756
For companies incorporated in the U.S., "Underrepresented Minority" means an individual who self-identifies as one or more of the following: Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or Two or More Races or Ethnicities.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1756
Frequently Asked Questions
  For purposes of the proposed board diversity and disclosure rule, who qualifies as an "underrepresented individual" for a Foreign Issuer?
Identification Number 1757
For a Foreign Issuer, an "underrepresented individual" is defined as a person who self-identifies as an underrepresented individual based on national, racial, ethnic, indigenous, cultural, religious or linguistic identity in the country where the Foreign Issuer’s principal executive offices are located.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1757
Frequently Asked Questions
  How does Nasdaq define "Smaller Reporting Companies" for purposes of the proposed board diversity and disclosure rule?
Identification Number 1758
For purposes of the proposed board diversity and disclosure rule, “Smaller Reporting Company” has the definition set forth in Rule 12b-2 under the Act.  Under 12b-2 of the Act, a Smaller Reporting Company “means an issuer that is not an investment company, an asset-backed issuer (as defined in § 229.1101 of this chapter), or a majority-owned subsidiary of a parent that is not a smaller reporting company and that: (1) Had a public float of less than $250 million; or (2) Had annual revenues of less than $100 million and either: (i) No public float; or (ii) A public float of less than $700 million.” 
Publication Date*: 11/30/2020 Mailto Link Identification Number: 1758
Frequently Asked Questions
  What flexibility is Nasdaq providing for Smaller Reporting Companies in connection with the proposed board diversity and disclosure rules?
Identification Number 1759

Nasdaq proposes to provide Smaller Reporting Companies with additional flexibility with regard to the second Diverse director.  Smaller Reporting Companies could satisfy the second Diverse director objective by including another Female director, or an individual who self-identifies as LGBTQ+ or an Underrepresented Minority.  In addition, all companies listed on our Nasdaq Capital Market will receive an additional year to meet the minimum diversity objective or explain why they do not meet the minimum diversity objective.  The minimum diversity objectives for these companies are one director within two years after SEC approval of the rule and two within five years of SEC approval.  If a company files its proxy statement or its information statement (or, if the company does not file a proxy, in its Form 10-K or 20-F) for the company’s annual shareholders meeting after the anniversary of the SEC’s approval of the listing rule in the calendar year for each respective year noted above, then the company will have until the date it makes such filing to meet, or explain why it does not meet, the applicable diversity objectives. 

Publication Date*: 2/26/2021 Mailto Link Identification Number: 1759
Frequently Asked Questions
  How does Nasdaq define "Foreign Issuer" for purposes of the proposed board diversity and disclosure rule?
Identification Number 1760
Nasdaq defines a Foreign Issuer as (a) a Foreign Private Issuer (as defined in Rule 5005(a)(19)) or (b) a company that (i) is considered a "foreign issuer" under Rule 3b-4(b) under the Act and (ii) has its principal executive offices located outside of the United States. This includes all Foreign Private Issuers and any foreign issuers that are not Foreign Private Issuers so long as their principal executive offices are also located outside of the United States.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1760
Frequently Asked Questions
  What flexibility is Nasdaq providing to foreign companies in connection with the proposed board diversity and disclosure rule?
Identification Number 1761
Nasdaq proposes to provide Foreign Issuers with additional flexibility with regard to the second Diverse director.  Foreign Issuers could satisfy the second Diverse director objective by including another Female director, or an individual who self-identifies as LGBTQ+ or an underrepresented individual based on national, racial, ethnic, indigenous, cultural, religious or linguistic identity in the country where the Foreign Issuer’s principal executive offices are located. Foreign Issuers may also elect to satisfy the board composition disclosure requirement through an alternative disclosure matrix template. View examples of acceptable (i.e., same or substantially similar) and unacceptable (i.e., substantially different) disclosures here.
Publication Date*: 4/14/2021 Mailto Link Identification Number: 1761
Frequently Asked Questions
  How is the proposed board diversity and disclosure rule applied to SPACs?
Identification Number 1762
SPACs listed under IM-5101-2 would be exempt from the proposed board diversity and disclosure rules. They are not required to provide the disclosure information or to have, or disclose that they do not have, any minimum number of Diverse 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 10-K or 20-F) for the company’s second annual meeting of shareholders subsequent to the company’s listing, with differing milestones depending on the company’s market tier.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1762
Frequently Asked Questions
  Are any companies exempt from Nasdaq's proposed board diversity and disclosure rules?
Identification Number 1763

Yes. The proposed rules currently exempt non-operating companies from the proposed rule. Consistent with Nasdaq’s corporate governance rules the following types of companies are exempt:

  • acquisition companies listed under IM-5101-2;
  • asset-backed issuers and other passive issuers (as set forth in Rule 5615(a)(1));
  • cooperatives (as set forth in Rule 5615(a)(2));
  • limited partnerships (as set forth in Rule 5615(a)(4));
  • management investment companies (as set forth in Rule 5615(a)(5));
  • issuers of only non- voting preferred securities, debt securities and Derivative Securities (as set forth in Rule 5615(a)(6)); and 
  • issuers of securities listed under the Rule 5700 Series.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1763
Frequently Asked Questions
  If a company ceases to be an Exempt Company under the proposed board diversity and disclosure rules, when would the company have to have two Diverse directors after it ceases to be exempt?
Identification Number 1764
Any company that ceases to be an Exempt Company will have until the later of: (i) one year from the date that the company no longer qualifies as an Exempt Company, or (ii) the date the company files its proxy statement or its information statement (or, if the company does not file a proxy, in its Form 10-K or 20-F) for the company’s first annual meeting of shareholders subsequent to such event.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1764
Frequently Asked Questions
  What happens if a company can't find Diverse directors by the applicable deadline set forth in the proposed board diversity rule?
Identification Number 1765

If a company has not been able to add two Diverse directors by the applicable deadlines, the company can satisfy the proposed board diversity rule by explaining why it does not have two Diverse directors, following the specific disclosure instructions set forth in proposed Rule 5605(f)(3).

Publication Date*: 12/1/2020 Mailto Link Identification Number: 1765
Frequently Asked Questions
  Can a company be de-listed for failing to add the minimum Diverse board members or for failing to disclose board diversity metrics as required by the proposed board diversity and disclosure rules?
Identification Number 1766

If a company (i) does not meet the applicable diversity objectives set forth under Rule 5605(f)(2) and also fails to provide the alternative public disclosure set forth in proposed Rule 5605(f)(3) (and is not otherwise subject to a grace period), or (ii) fails to hold an annual meeting of shareholders during the applicable periods in Rule 5605(f)(5) or (7) and therefore fails to meet, or explain why it does not meet, the diversity objectives of Rule 5605(f)(2), then Nasdaq’s Listing Qualifications Department would promptly notify the company that it has until the later of its next annual shareholders meeting or 180 days from the event that caused the deficiency to cure the deficiency. The company can cure the deficiency either by meeting the applicable minimum diversity objectives of proposed Rule 5605(f)(2) or by providing the alternative public disclosure set forth in proposed Rule 5605(f)(3).  If a company does not regain compliance within the applicable cure period, the Listings Qualifications Department would issue a Staff Delisting Determination Letter.  A company that receives a Staff Delisting Determination can appeal the determination to the Hearings Panel through the process set forth in Rule 5815.

 

If a company fails to disclose board diversity metrics as required by proposed Rule 5606, Nasdaq will notify the company that it is not in compliance with a listing requirement, and the company will be allowed 45 calendar days to submit a plan sufficient to satisfy Nasdaq staff that the company has adopted processes and procedures designed to identify and disclose the information required under Rule 5606 in the future. If the company does not do so, it would be issued a Staff Delisting Determination, which the company could appeal to a Hearings Panel pursuant to Rule 5815.

Publication Date*: 2/26/2021 Mailto Link Identification Number: 1766
Frequently Asked Questions
  Under the proposed board diversity and disclosure rules, do companies need to disclose board diversity metrics in an SEC filing along with their proxy materials?
Identification Number 1767

No. Companies can instead disclose them on their websites.  However, if a company chooses to make this disclosure on its website, then the company must submit a URL link to the disclosure through the Nasdaq Listing Center, within one business day after such posting.

Publication Date*: 2/26/2021 Mailto Link Identification Number: 1767
Frequently Asked Questions
  What if we have Diverse board members who don't want to be counted as Diverse (e.g., an LGBTQ+ community member who is not "out")? Would we have to add additional Diverse board members to comply with the proposed board diversity and disclosure rules?
Identification Number 1768
Directors may choose to opt out rather than reveal their Diversity characteristics to the company.  In that case, the company would identify these directors in the “Did Not Disclose” category in the board diversity disclosure matrix.  If a company is unable to meet the applicable diversity objectives as a result, the company may provide an alternative public disclosure under proposed Rule 5606(f)(3) explaining that the company has directors who do not wish to be identified or counted as Diverse in order to satisfy the proposed rules.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1768
Frequently Asked Questions
  Do companies have to replace current board members with Diverse board members or can companies bring on Diverse board members by expanding their boards in order to comply with the proposed board diversity and disclosure rules?
Identification Number 1769
The proposed rules do not limit board size.  A company has flexibility to meet the diversity objectives in the manner it sees fit, including by adding an additional board seat or by replacing a current director.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1769
Frequently Asked Questions
  We have a Diverse member on our company's advisory board. Would that director count toward having "two Diverse directors" for purposes of complying with the proposed board diversity and disclosure rules?
Identification Number 1770
No.  Proposed Rule 5605(f) would exclude emeritus directors, retired directors and members of an advisory board.  The diversity requirements of the proposed rule would only be satisfied by Diverse directors actually sitting on the board of directors of the company.
Publication Date*: 11/30/2020 Mailto Link Identification Number: 1770
Frequently Asked Questions
  What reasons does Nasdaq deem acceptable when explaining why a company does not have the minimum number of Diverse board members under the proposed board diversity and disclosure rules?
Identification Number 1771

Nasdaq will not assess the substance of the company’s explanation, but will verify that the company has provided one.  Nasdaq believes these disclosures will provide stakeholders with a better understanding of the company’s current board composition and its philosophy regarding diversity.

 

The following are three examples of such disclosure included in the rule filing for the proposed board diversity and disclosure rules:

  • If under Israeli law regarding board diversity, an Israeli company is required only to have a minimum of one woman on the board and such Israeli company chooses to comply with Israeli home country law in lieu of meeting the diversity objectives of Rule 5605(f)(2)(B), it may choose to disclose that “the Company is incorporated in Israel and required by Israeli law to have a minimum of one woman on the board, and satisfies home country requirements in lieu of Nasdaq Rule 5605(f)(2)(B), which requires each Foreign Issuer to have at least two Diverse directors.”
  • If a U.S. company had two Diverse directors but one resigned due to unforeseen circumstances, it could disclose, for example: “Due to the unexpected resignation of Ms. Smith this year, the Company does not have at least one director who self-identifies as Female and one director who self-identifies as an Underrepresented Minority or LGBTQ+. We intend to undertake reasonable efforts to meet the diversity objectives of Rule 5605(f)(2)(A) prior to our next annual meeting and have engaged a search firm to identify qualified Diverse candidates. However, due to unforeseen circumstances, we may not achieve this goal.”  In this case, the proposed rules provide the company with a grace period of one year from the event that caused the departure to have, or explain why it does not have, at least two Diverse directors.

A U.S. company may disclose that it chooses to define diversity more broadly than Nasdaq’s definition by considering national origin, veteran status or individuals with disabilities when identifying nominees for director because it believes such diversity brings a wide range of perspectives and experiences to the board.

Publication Date*: 2/26/2021 Mailto Link Identification Number: 1771
Frequently Asked Questions
  Will newly listed companies have a phase-in period to satisfy the diversity objective set forth in the proposed board diversity and disclosure rules?
Identification Number 1772
Yes. After the initial four or five year period set forth in proposed Rule 5606(f)(7) expires, newly listed companies on Nasdaq, including IPOs, direct listings, or a company listing in connection with a business combination with a SPAC (a “de-SPAC” transaction), 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 10-K or 20-F) for the company’s second annual meeting of shareholders subsequent to the company’s listing, with differing milestones depending on the company’s market tier.  Companies listing before the expiration of the initial four or five year period set forth in proposed Rule 5605(f)(7) would have the remainder of the applicable initial four or five year period or two years from the date of listing, whichever is longer, to satisfy the requirement.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1772
Frequently Asked Questions
  If a company is a Smaller Reporting Company (SRC) but does not apply the scaled disclosure requirements available to SRCs, is it still considered an SRC under Nasdaq's proposal?
Identification Number 1773

Yes, a company that is considered a SRC under Rule 12b-2 under the Exchange Act is treated as a SRC under Nasdaq’s proposal, whether or not it applies the scaled disclosure requirements available to SRCs.

Under 12b-2 of the Exchange Act, a company may qualify as a SRC if it has: (1) public float of less than $250 million; or (2) annual revenues of less than $100 million and either: (i) no public float; or (ii) public float of less than $700 million.

Publication Date*: 2/26/2021 Mailto Link Identification Number: 1773
Frequently Asked Questions
  Would companies transferring from another exchange need to comply with the proposed board diversity and disclosure rules?
Identification Number 1774
Yes, but there is a two year phase-in period.  If the newly listed company was not previously subject to a substantially similar requirement of another national securities exchange, the newly listed company must meet, or explain why it does 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 10-K or 20-F) for the company’s second annual meeting of shareholders subsequent to the company’s listing, with differing milestones depending on the company’s market tier.  Companies listing before the expiration of the initial four or five year period set forth in proposed Rule 5605(f)(7) would have the remainder of the applicable initial four or five year period or two years from the date of listing, whichever is longer, to satisfy the requirement.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1774
Frequently Asked Questions
  Is the diversity disclosure requirement set forth in the proposed board diversity and disclosure rules limited to the board of directors, or would companies also need to disclose diversity metrics for management and staff?
Identification Number 1775
The proposed diversity disclosure requirement is limited to the board of directors of the company.
Publication Date*: 11/30/2020 Mailto Link Identification Number: 1775
Frequently Asked Questions
  How are biracial or multi-ethnic directors counted under the proposed board diversity and disclosure rules?
Identification Number 1776
Directors who self-identify as biracial or multiethnic are counted as Diverse under Nasdaq’s proposal.
Publication Date*: 11/30/2020 Mailto Link Identification Number: 1776
Frequently Asked Questions
  How do Nasdaq's proposed board diversity and disclosure rules compare to California's Board Gender Diversity Mandate?
Identification Number 1777
 While Nasdaq’s definition of a “Diverse” director substantially aligns with California’s, there are some key differences. These are highlighted here.
Publication Date*: 11/30/2020 Mailto Link Identification Number: 1777
Frequently Asked Questions
  Can a director choose not to self-identify with respect to gender, race, ethnicity and/or LGBTQ+?
Identification Number 1778
Yes. Disclosure by a director is voluntary and directors are not required to self-identify with respect to gender, race, ethnicity and/or LGBTQ+.  The proposed rule’s standardized disclosure matrix template reflects aggregated information and allows for a company to indicate that certain information was not disclosed.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1778
Frequently Asked Questions
  How do Nasdaq's proposed board diversity and disclosure rules compare to the Meeks diversity disclosure legislation?
Identification Number 1782
While Nasdaq’s disclosure requirements align in several ways with the Meeks bill, there are some key differences. These are highlighted here
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1782
Frequently Asked Questions
  What happens if one of our company's two Diverse directors unexpectedly leaves the board?
Identification Number 1783
A company that met the diversity objectives of Rule 5605(f)(2) but no longer meets the diversity objectives due to a vacancy on its board of directors (for example if a Diverse director falls ill or resigns), has a grace period to regain compliance until the later of: (i) one year from the date of vacancy; or (ii) the date the company files its proxy statement or its information statement (or, if the company does not file a proxy, in its Form 10-K or 20-F) in the calendar year following the year of the date of vacancy, to satisfy Rule 5605(f)(2) or (3).  In lieu of providing the explanation required by Rule 5605(f)(3), a company relying on the grace period may publicly disclose that it is relying on the grace period provided by Rule 5605(f)(6)(B).  This is intended to notify stakeholders of the company’s change in board composition without imposing an additional, unexpected disclosure burden on the company.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1783
Frequently Asked Questions
  Are companies required to provide both the matrix and any explanation pursuant to proposed Rule 5605(f)(3) together?
Identification Number 1784
Yes. Both of these disclosures must be provided in the same manner and at the same time. 
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1784
Frequently Asked Questions
  If a company is listed on Nasdaq Global Select or Global Market, are there any circumstances under which that company can have the benefit of the longer timeline to meet the two Diverse director objective as companies listed on Nasdaq Capital Market?
Identification Number 1785

No. However, a company in this situation that does not meet the applicable timeline could provide an explanation, such as the below example, as to why it does not:

“While the Company is listed on Nasdaq Global Market, the Company believes that it is similarly situated to companies listed on Nasdaq Capital Market in terms of its annual revenues and public float, and therefore has chosen to meet the objectives of Rule 5605(f)(2)(C) in lieu of Rule 5605(f)(2)(A). The company has met these objectives by having at least two Diverse directors on the board within the timeframe provided under Rule 5605(f)(7) applicable to Nasdaq Capital Market-listed companies.”

Publication Date*: 2/26/2021 Mailto Link Identification Number: 1785
Frequently Asked Questions
  Do Nasdaq's proposed board diversity and disclosure rules require our Board members to disclose whether they are Diverse?
Identification Number 1786
No.  Disclosure by a director is voluntary and directors are not required to self-identify with respect to gender, race, ethnicity and/or LGBTQ+.  The proposed rule’s standardized disclosure matrix template allows for a company to indicate that the diversity information was not disclosed.  A company that indicates in the matrix that its directors’ Diversity characteristics are not disclosed would be compliant with the proposed rule’s requirement that listed companies publicly disclose board-level diversity statistics.
Publication Date*: 2/26/2021 Mailto Link Identification Number: 1786
Frequently Asked Questions
  What happens if a company with five or fewer directors adds a sixth director, is it then required to have two Diverse directors instead of one?
Identification Number 1787
Under the proposal, a company with a board of directors of five or fewer members must have, or explain why it does not have, at least one member of its board of directors who is Diverse.  Nasdaq seeks to avoid complexity for companies that attempt to satisfy the diversity objective by adding a Diverse director.  To prevent such companies from being subject to a higher threshold by virtue of adding a Diverse director, the proposal makes clear that if a company has five members on its board of directors before becoming subject to proposed Rule 5605(f), then it shall not become subject to the requirement to have, or explain why it does not have, at least two Diverse board members if it adds one director to satisfy the diversity objectives, thereby becoming a six member board. However, a company would become subject to the higher threshold if it subsequently expands its board, or if it already had one Diverse board member at the time it added the sixth board member.
 
Publication Date*: 3/4/2021 Mailto Link Identification Number: 1787
material_search_footer*The Publication Date reflects the date of first inclusion in the Reference Library, which was launched on July 31, 2012, or a subsequent update to the material. Material may have been previously available on a different Nasdaq web site.
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