Companies that believe the disclosures required on the board diversity matrix are prohibited under home country law must still submit the matrix.  However, such companies should indicate “Yes” on the matrix where asked, “Disclosure Prohibited under Home Country Law.”  Nasdaq is relying on the representation by the company and will not require the company to also submit any legal analysis supporting its conclusion.

A Company must have one diverse director, or explain its reasons for not doing so, by December 31, 2023. Such disclosure can be provided in the Company’s proxy statement or on the Company’s website.  

Should your company choose to make this disclosure on its website, then the company must also notify Nasdaq by either sending an email to drivingdiversity@nasdaq.com with a URL link to the disclosure or by completing Section 10 (Board Diversity Disclosure) of the Company Event Form, which is available from the Listing Center.

Companies that choose to include the Board Diversity Matrix in their proxy statement or information statement do not need to submit the Company Event Form.   

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.

 “Two or More Races or Ethnicities” means a person who identifies with more than one of the following categories: White (not of Hispanic or Latinx origin), Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander.

Smaller Reporting Companies may satisfy the minimum diversity objective if they have two female directors, or if they have one female director and one individual who self-identifies as LGBTQ+ or an Underrepresented Minority.

Yes. The Board Diversity Rule exempts non-operating companies. 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. Note while closed end funds are exempt from the rule, business development companies are not (as set forth in Rule IM-5615-4);
• 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, including exchange traded products.

Exempt Companies include 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 non- voting preferred securities, debt securities and Derivative Securities (as set forth in Rule 5615(a)(6)) that do not have equity securities listed on Nasdaq; and issuers of securities listed under the Rule 5700 Series.  These companies are exempt from the Diversity Objective contained in Rule 5605(f) and the Board Diversity Disclosure contained in Rule 5606.

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 to satisfy the requirements of Rule 5605(f).

If a company (i) does not meet the diversity objectives set forth under Rule 5605(f)(2) and also does not provide an explanation as set forth in Rule 5605(f)(3) (and is not otherwise subject to a grace period), 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 Rule 5605(f)(2) or providing an explanation as set forth in 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 does not disclose board diversity matrix as set forth in 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.

The Board Diversity Rule requires all companies listed on Nasdaq’s U.S. exchange to publicly disclose board-level diversity statistics using a standardized disclosure matrix template.  Additionally, the Board Diversity Rule requires 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. There is a transition period before this rule fully takes effect. Foreign Issuers (as defined under Rule 5605(f)(1)) or Foreign Private Issuers and smaller reporting companies 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. In addition, a phase-in period is available to newly listing companies.

View instructions for completing Nasdaq’s disclosure matrix template here.  Examples of acceptable and unacceptable disclosures are provided here.

Nasdaq-listed companies have a transition period to achieve compliance. Transition periods vary based on a company’s listing date and market tier, as described in the chart below.^*

*  Reflects amendment filed in December 2022.

** Companies with 5 or fewer directors that listed on the Nasdaq Capital Market on or after August 6, 2021 have until December 31, 2026 or two years from date of listing, whichever is later, to meet the Diverse Director Objective or provide an explanation. 

Nasdaq is providing resources to help our listed companies and their advisors understand and achieve compliance with the Board Diversity Rule.  

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-listed companies have access to a variety of free or discounted board recruiting services.  We realize one size doesn’t fit all so we are building relationships with a growing number of collaborative partners.  To date, Nasdaq has established partnerships with the following organizations to aid Nasdaq-listed companies that have not yet met the diversity objectives and would like assistance doing so: 

• African American Board Leadership Institute
• Athena Alliance
• Bank on Women
• theBoardlist
• BoardReady
• Corporate Board Member
• Equilar
• Extraordinary Women on Boards
• Heidrick & Struggles
• Him for Her
• Latino Corporate Directors Association
• Take Your Seat

We also developed a board diversity tool kit to help companies determine which partner is right fit for their business. The services are complimentary or offered at a discount and it is not mandatory that any company use them. To learn more, visit our Board Recruitment and Composition Planning page or contact us at DL-NasdaqBoardDiversity@nasdaq.com.

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

The following are examples of such disclosures:

• If a company is listed on Nasdaq Global Select or Global Market but believes that it is similarly situated to companies listed on Nasdaq Capital Market in terms of its annual revenues and public float, it may explain that for these reasons it therefore has chosen to meet the objectives of Rule 5605(f)(2)(C) applicable to companies listed on the Nasdaq Capital Market in lieu of Rule 5605(f)(2)(A). 

• 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.

• 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.”

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) December 31 in the calendar year following the year of the date of vacancy, whichever is longer, 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). Such disclosure must be provided in any proxy statement or 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 also notify Nasdaq either by sending an email to drivingdiversity@nasdaq.com with a URL link to the disclosure or by completing Section 10 (Board Diversity Disclosure) of the Company Event Form, which is available from the Listing Center.

Companies that choose to include the Board Diversity Matrix in their proxy statement or information statement do not need to submit the Company Event Form.   

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:

Under Nasdaq’s Board Diversity Rule, 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.  However, such companies are not automatically subject to a higher threshold by virtue of adding a diverse director that expands their board beyond five members.  Specifically, if a company had a five-member board before it was subject to Rule 5605(f), and then the company adds a diverse board member once it becomes subject to Rule 5605(f), this company is still subject to the lower one-diverse board member objective despite the fact that it now has a six person board.  However, the rule makes clear that a company would become subject to the two-diverse board member objective if it subsequently expands its board, or if it already had one diverse board member at the time it added the sixth board member.

Yes.  Under Nasdaq’s Board Diversity Rule, a company with a board of directors of five or fewer members, even if the company is otherwise a Foreign Issuer (as defined under Rule 5605(f)(1)) or a Foreign Private Issuer or a Smaller Reporting Company, must have, or explain why it does not have, at least one member of its board of directors who is diverse.  

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

No. The Rule makes no distinction between independent and non-independent directors.   

Yes. Companies with smaller boards can meet the diverse director objective by having a male director who identifies as either an underrepresented minority or LGBTQ+ or a female director on their board.  

The following companies may satisfy the diverse director objective with two female directors:  

• Foreign Issuers (as defined under Rule 5605(f)(1)) or Foreign Private Issuers;
• Smaller Reporting Companies (as set forth in Rule 12b-2 under the Act); and
• Companies that have two directors who self-identify as female where one of the females also identifies as either an underrepresented minority or LGBTQ+.

No. A company cannot double count the same director in more than one diverse category. For example, if a company has one director who self identifies as female and Asian, and no other director self-identifies as female or in any of the other diverse categories, then that company would not satisfy both diversity objectives.  

Directors and nominees are typically required to complete a directors’ and officers’ (D&O) questionnaire and attest to the accuracy of their responses. A company would then use the director’s information provided in the D&O questionnaire to ensure that the company has accurately disclosed information in its SEC filings. Companies may want to consider including voluntary board diversity questions in their annual D&O questionnaire. Sample diversity questions a company may want to consider including in their D&O questionnaire are available here. 

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 matrix.  If a company is unable to meet the applicable diversity objectives as a result, the company may provide an alternative public disclosure under Rule 5605(f)(3) explaining that the company has directors who do not wish to be identified or counted as diverse in order to satisfy the Rule. Please see FAQs 1768 and 1778.  

Companies that choose to disclose the Board Diversity Matrix only on their website must also notify Nasdaq either by sending an email to drivingdiversity@nasdaq.com with a URL link to the disclosure or by completing Section 10 (Board Diversity Disclosure) of the Company Event Form, which is available from the Listing Center.

Newly listed operating companies have one year from the date of listing to publicly disclose board diversity statistics using the Board Diversity Matrix template found here, or a format substantially similar.

Should your company choose to provide the Board Diversity Matrix on its website, the company must also notify Nasdaq either by sending an email to drivingdiversity@nasdaq.com with a URL link to the disclosure or by completing Section 10 (Board Diversity Disclosure) of the Company Event Form, which is available from the Listing Center.

Companies that choose to include the Board Diversity Matrix in their proxy statement or information statement do not need to submit the Company Event Form.    

Instructions for completing the board diversity matrix and sample templates can be found here. Examples of acceptable and unacceptable disclosures are provided here.  

Companies are required to annually disclose director self-identified board-level diversity data using the Board Diversity Matrix template found here, or a format substantially similar.  Each company is required to provide this disclosure in advance of the company’s next annual meeting of shareholders in any proxy statement or 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 by December 31 annually.

If a company elects to provide such disclosure on its website, then the company must also notify Nasdaq either by sending an email to drivingdiversity@nasdaq.com with a URL link to the disclosure or by completing Section 10 (Board Diversity Disclosure) of the Company Event Form, which is available from the Listing Center.

Yes. A company may supplement its disclosure by providing additional information related to its directors within its board diversity matrix or in a separate table.  For example, a company may choose to provide the information on a director-by-director basis or may choose to include any skills, experience and attributes of each of its directors that are relevant to the company.  However, a company may not substantially alter the matrix. 

Please refer to the board diversity matrix examples provided here.

To the extent a company elects to provide supplemental information in any year, it is not required to continue to provide the same disclosure in disclosures in subsequent years.