Even though Nasdaq’s new board diversity rules were approved by the Securities and Exchange Commission (“SEC”) in August 2021, most public companies will not be required to comply with the rules’ standards until 2023, assuming the rules are not overturned based on the legal challenges they are currently facing. (Nasdaq, Rule 5605(f); Bre Bradham and Patrica Hurtado, Bloomberg Law). However, other corporate diversity advocates, including shareholders and institutional investors, are currently pushing for greater diversity on boards of directors and company disclosures stating the racial and gender make-up of the board of directors (“board”). . .
Read MoreNasdaq adopted a new board diversity rule in August 2021 requiring greater diversity in the boardroom for companies listed on its exchange, with the focus of the new rule requiring increased representation and disclosure of board members who self-identify as a female, an underrepresented minority, or LGBTQ+. (Michael Nagle, Bloomberg Law; Securities and Exchange Commission). While these new requirements are a step in the right direction, there is a category of underrepresented individuals excluded from the existing diversity rules – people with disabilities. . .
Read MoreWhile publicly-traded companies are coming under greater scrutiny and facing additional requirements to create diversity on their boards of directors (“boards”), private companies continue to skate under the radar on this front. One reason for this is that private companies do not face the same disclosure requirements that public companies do. (Ann Shepherd & Gené Teare, Crunchbase News). Another is that there is little information about the make-up of the boards of most private companies. However, in 2019 three organizations undertook a study of gender diversity of private company boards and built on that study in 2020 looking at both gender and racial and ethnic diversity. . .
Read MoreNasdaq Inc.’s - a United States financial services company that operates stock exchanges - proposed rules regarding diversity on boards of directors were approved by the Securities and Exchange Commission (“SEC”) on August 6, 2021. (SEC, SEC Release 34-92590). In order for a self-regulatory agency (an organization, such as Nasdaq, that provides standards for and regulates its own industry) to change a rule, it must file the proposed change with the SEC and seek approval. (17 CFR § 240.19b-4; Adam Hayes, Investopedia). Nasdaq filed two proposed rule changes with the SEC on December 1, 2020, which proposed changes were published in the Federal Register and underwent the standard review and comment process. (SEC, SEC Release 34-92590; SEC, Federal Register). . .
Read MoreOn November 5, 2019, the Securities and Exchange Commission (“SEC”) proposed amendments to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which governs the shareholder proposal process. The proposed amendments, which the SEC has said are meant to modernize the rules that have not been significantly updated since 1954 (SEC Press Release, SEC Proposes Amendments to Modernize Shareholder Proposal Rule), have the potential to limit activism by smaller shareholders.
Read MoreThe Public Company Accounting Oversight Board (PCAOB) is a nonprofit entity that was created with the passage of the Sarbanes-Oxley Act of 2002 and established by Congress to oversee the audits of public companies with the goal of protecting investors and the public's interest by promoting accurate and independent audit reports (About the PCAOB). In addition to its oversight of public company audits, the PCAOB also oversees the audits of brokers and dealers (About the PCAOB). Much like the Securities and Exchange Commission (SEC), the PCAOB's mission is to protect investors.
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