Infotech

Nasdaq demands diversity on boards



It is new. For the first time, a stock market operator will impose diversity on boards of directors. The Nasdaq has obtained from the American stock market policeman, the SEC (Securities Exchange Commission), the authorization to oblige the approximately 3,200 companies listed on its markets to include at least one woman on their board of directors as well as a member of an ethnic or gender minority.

These rules will not be imposed overnight. They will apply in stages. Within a year, companies will have to publish the racial and gender makeup of their boards. Those that do not have women or diverse members will need to explain why.

Then, within two years, all companies will have to have at least one diverse director. Then within four years, companies listed on the Nasdaq Global Select Market and the Nasdaq Global Market will have to have two diverse directors. Companies listed on the Nasdaq Capital Market, reserved for smaller caps, will have five years to comply with the new rules.

Today, more than a third of companies listed on the Nasdaq do not have a racially diverse director and more than one in ten do not include a woman, according to an analysis by ISS Corporate Solutions. About 8% had neither a woman nor a person of color on the board, according to the data.

SEC thinks about its own rules

These rules towards greater diversity could ultimately apply to all listed companies. The SEC is considering the appropriateness of adopting its own board diversity regulations. California, a pioneer in these matters, will require companies based in this state to have at least one director of diversity by the end of the year, or face a fine.

In France, imposing quotas on boards of directors for ethnic minorities is not about to happen. Unlike the Anglo-Saxon countries, the Constitution, which provides for the equality of citizens before the law without distinction of origin and race, prohibits ethno-racial statistics.

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