Nasdaq Inc. aims to require most listed companies to include women and people of diverse races or sexual orientation on their boards, the exchange operator said Tuesday.
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Nasdaq filed a proposal with the Securities and Exchange Commission that would require listed companies to have at least one female board member, plus one board member from an underrepresented minority or who is Lesbian, Gay, Bisexual or Transgender. Companies that don't meet the standard would be required to explain why not.
Nasdaq has determined that over the past six months, more than three-quarters of its listed companies would have fallen short of the proposed requirements.
Foreign companies and smaller companies could meet the requirement with two female directors, Nasdaq said.
If the proposal is approved by the SEC, companies would be required to disclose board-diversity statistics within a year. Time frames to meet diversity requirements for board composition would depend on a company's listing tier, Nasdaq said.
Nasdaq Chief Executive Adena Friedman said the rule would help promote inclusive representation in corporate leadership.