Board Diversity
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Frequently Asked Questions
  What happens if a company with five directors adds a sixth director, is it then required to have two diverse directors instead of one?
Identification Number 1787

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.




Publication Date*: 8/6/2021 Mailto Link Identification Number: 1787
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